Sunday, October 23, 2011

MGT603 Assignment No 1 Fall 2011 (28-10-11)

Semester “Fall 2011”
“Strategic Management (MGT603)”
Assignment No. 1                                           
 Marks:  15
Let us suppose that you are the Managing Director of “Antillia Network”, a popular TV 
channels group. In a meeting of its Board of Directors, it is decided to launch a new sports 
channel  in  Pakistan  to  telecast  major  indigenous  and  international  sports  events.  As  the 
Managing  Director  of  the  group,  you  are  entrusted  with  the  responsibility  of  launching 
this new sports channel. 
You are required to identify  any  seven “Key External Factors” which  may influence  the 
launching and functioning of your upcoming channel.

Important Tips
1. This  Assignment  can  be  best  attempted  from  the  knowledge  acquired  after 
watching  video  lecture  no.  01 to  lecture  no. 09 and  reading  handouts  as  well  as 
recommended text book).  
2. Video lectures can be downloaded for free from

Opening Date  Oct 21st, 2011
Due Date  Oct 28th, 2011

Note: Only in the case of Assignment, 24 Hrs extra / grace period after the above mentioned 
due  date  is  usually  available  to  overcome  uploading  difficulties  which  may  be  faced  by  the 
students on last date.  This extra time should only be used to meet the emergencies and above 
mentioned due dates should always be treated as final to avoid any inconvenience.
Important Instructions:
Please read the following instructions carefully before attempting the assignment solution.
 Make  sure  that  you  upload  the  solution  file  before  the  due  date.  No 
assignment will be accepted through e-mail once the solution has been 
uploaded by the instructor. 
Formatting guidelines:
 Use the font style “Times New Roman” and font size “12”. 
 It is advised to compose your document in MS-Word 2003. 
 Use black and blue font colors only. 
Solution guidelines:
 Use  APA  style  for  referencing  and  citation.    For  guidance  search  “APA 
reference  style”  in  Google  and  read  various  website  containing 
information  for  better  understanding  or  visit
 Every  student  will  work  individually  and  has  to  write  in  the  form  of  an 
analytical assignment.
 Give  the  answer  according  to  question,  there  will  be  negative  marking
for irrelevant material.
 For  acquiring  the  relevant  knowledge  don’t  rely  only  on  handouts  but 
watch the video lectures and use other reference books also. 
Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
 It has been submitted after due date
 The file you uploaded does not open or is corrupt
 It is in any format other than .doc (MS. Word)
 Copied material will be graded zero.
 It is cheated or copied from other students, internet, books, journals etc…



After you line up financing, find a suitable location, hire staff and organize a potentially successful business plan, you must turn to external factors to effectively predict your future. There are a slew of factors to take into consideration that usually are beyond your control. While you may have contingency plans in place to deal with outside influences that affect your business, sometimes the best you can do is improvise when they occur.

The global economy is one of the biggest external factors that will, at some time, affect your business. Market fluctuations based on politics, terrorism attacks, wars and currency devaluation eventually trickle down to most commercial enterprises.

Wall Street and the solvency of big banks and financial institutions may not seem to have much to do with your business, but eventually they may affect your ability to continue doing business. Interest rates, the availability of credit and consumer loans are external factors you rarely can control.

If man could control the weather, vacation resorts would know exactly when to charge the highest room rates. Storms, tornadoes, hurricanes and wildfires are outside your purview of controllable business factors. In addition to the direct impact a storm may have on your ability to open your doors at any given time, widespread weather events often carry a substantial trickle-down effect to a wide range of businesses.

Zoning laws, highway construction and housing development are particularly important to retail establishments, restaurants, manufacturers and other businesses that rely on a location for success. Changes in the local infrastructure may prove either disastrous or fortuitous to your company.

State, local or federal changes in the laws can have a direct impact on your business if the service or product becomes highly regulated or outlawed. Cigarette manufacturers learned this lesson when public smoking was outlawed in many areas and smoking indoors has become practically nonexistent. Government regulations such as those that affect the environment or communication are beyond your control and could have a direct impact on your business.

While you may spend a good part of your profits on marketing in the hopes of favorably influencing trends, some are beyond your control. An increase in technology use by your customers may be built into your strategic planning, but you may not have planned for the widespread use of social media that could affect your business. Celebrities who become advocates for a cause or decide to boycott a certain business practice can start a trend that could seriously affect your business if you're on the wrong side of the trend.

Customer Base
Your target customer base may change suddenly or slowly over a period of time. The changing makeup of your neighborhood that attracts more singles or young renters can affect your business for example if you cater to a more upwardly mobile, family-oriented customer base. Cultural implications of a changing neighborhood may affect your business negatively or positively depending on your ability to meet the needs of changing demographics.

External Environment: introduction to the external environment
A business does not operate in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.
The main factor that affects most business is the degree of competition – how fiercely other businesses compete with the products that another business makes.
The other factors that can affect the business are:
  • Social – how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.
  • Legal – the way in which legislation in society affects the business. E.g. changes in employment laws on working hours.
  • Economic – how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.
  • Political – how changes in government policy might affect the business e.g. a decision to subsidise building new houses in an area could be good for a local brick works.
  • Technological – how the rapid pace of change in production processes and product innovation affect a business.
  • Ethical – what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights.
Markets are changing all the time. It does depend on the type of product the business produces, however a business needs to react or lose customers.
Some of the main reasons why markets change rapidly:
  • Customers develop new needs and wants.
  • New competitors enter a market.
  • New technologies mean that new products can be made.
  • A world or countrywide event happens e.g. Gulf War or foot and mouth disease.
  • Government introduces new legislation e.g. increases minimum wage.
Though a business does not want competition from other businesses, inevitably most will face a degree of competition.
The amount and type of competition depends on the market the business operates in:
  • Many small rival businesses – e.g. a shopping mall or city centre arcade – close rivalry.
  • A few large rival firms – e.g. washing powder or Coke and Pepsi.
  • A rapidly changing market – e.g. where the technology is being developed very quickly – the mobile phone market.
A business could react to an increase in competition (e.g. a launch of rival product) in the following ways:
  • Cut prices (but can reduce profits)
  • Improve quality (but increases costs)
  • Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money)
  • Cut costs, e.g. use cheaper materials, make some workers redundant
Social change is when the people in the community adjust their attitudes to way they live. Businesses will need to adjust their products to meet these changes, e.g. taking sugar out of children’s drinks, because parents feel their children are having too much sugar in their diets.
The business also needs to be aware of their social responsibilities. These are the way they act towards the different parts of society that they come into contact with.
Legislation covers a number of the areas of responsibility that a business has with its customers, employees and other businesses.
It is also important to consider the effects a business can have on the local community. These are known as thesocial benefits and social costs.
A social benefit is where a business action leads to benefits above and beyond the direct benefits to the business and/or customer. For example, the building of an attractive new factory provides employment opportunities to the local community.
A social cost is where the action has the reverse effect – there are costs imposed on the rest of society, for instance pollution.
These extra benefits and costs are distinguished from the private benefits and costs directly attributable to the business. These extra cost and benefits are known as externalities – external costs and benefits.
Governments encourage social benefits through the use of subsidies and grants (e.g. regional assistance for undeveloped areas). They also discourage social costs with fines, taxes and legislation.
Pressure groups will also discourage social costs.


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