Analysis of the Macroenvironment

Chapter 6

External Analysis
External microenvironment External macroenvironment

SPENT analysis

External Macroenvironment

Learning Objectives
Understand the meaning of the term macroenvironment Explain Ginter and Duncans mechanisms of carrying out macroenvironment analysis Describe the components of each of the SPENT influences Understand how SPENT influences are linked

SPENT Analysis
Socio-demographic Political Economic Natural environmental Technological

Macroenvironment
Macroenvironment is generally understood as the far environment (outside an organizations industry and markets)

Characteristics of the Macroenvironment

Influences the microenvironment (industry and market) Will impact all organizations in an industry, a market, or even all organizations in an economy Source of competitive advantage being able to predict changes in the macroenvironment and take action

Analysis: Ginter and Duncan

Scanning the microenvironment for possible changes Monitoring environments for specific trends and patterns Forecasting future directions of changes Assessing current and future trends and how they affect the organization

Limitations
Complexity Speed of change Uncertainty

SPENT: Socio-Demographic Influences

Influences originating from changes in society Main influences

social culture (values, attitudes and beliefs) demography social structure

SPENT: Political Influences

Includes political, governmental, legal and regulatory influences Influences at 3 levels:

National level Subnational level Supranational level

SPENT: Economic Influences

Macroeconomic changes and influences on the macroeconomy by governments

Fiscal policy government regulation related to taxing and spending Monetary policy government regulation of the money supply

SPENT: Natural environment influences

Includes influences such as natural catastrophes, weather, environmental degradation Characteristics:

Difficult to predict and avoid Risk varies by location

SPENT: Technological Influences

Focuses on how changes in technology affect an industry, organizations in the industry, and activities of the organizations Includes areas such as:

Goods and services Production processes Information and communications Transport and distribution Society, politics and economics

SPENT Linkages
Analyze separately, but understand how they influence each other

What to Analyze
The industry in which the organization competes Markets Internal parts of an organization core competences, strategies, resources and values