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 www.youtube.com/vu.
Schedule
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.
Deadline:
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
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
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
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Copied material will be graded zero.
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IDEA
SOLUTION
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.
Economy
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.
Finance
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.
Weather
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.
Infrastructure
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.
Laws
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.
Trends
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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