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Analysis of the Task Environment using Porterís 5 Forces Model of Competition
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DescriptionTask environment on SPM
TOPIC: Analysis of the Task Environment using Porterís 5 Forces Model of Competition
External Environment refers to the major factors and forces outside the organization that have the potential to significantly affect the performance of an organization. External environment can significantly influence the effectiveness of the organization to large extent.
The external organization comprises of all the entities that exist outside its boundary, but have significant influence on its growth and survival. An organization has little or no control over its environment but needs to constantly monitor and adapt to these external changes, a proactive or reactive response leads to significantly different outcome.
External Environment Ė Analyze in 3 ways to reduce uncertainty:
1. Macro/Societal environment (PEST):
General forces that do not directly touch on the short-run activities but often influence its long-run decisions.
2. Task environment (5 Porterís forces):
Those elements or groups that directly affect the corporation and, in turn, are affected by it. The task environment is the industry within which that firm operates.
3. Industry analysis (Group Map):
An in-depth examination of key factors/competitors within a corporationís task environment.
It is usually the environment that most organizations like to focus on. The task environment is very helpful to the organization because it helps them to specifically identify environmental factors that are important in the companyís success. This environment is made up of five parts. The first part are the competitors. Competitors compete mostly for customers dollars for example Nike, Adidas and Puma all compete for customers that are looking for athletic shoes, soccer cleats etc. Organizations also compete against one another but not only for customers money, but also for things like the right to buy a piece of real estate, or for a loan if the bank has limited funds they can lend. The second part is customers. Organizations have individual customers as well as wholesalers, retailers, and schools that are also customers to companies. For example hospitals buy food in bulk from McDonalds which makes the hospital a Micky Ds customers. The third part are suppliers, the ones who provide resources to other organizations. For example McDonalds buys soda from Coca Cola, and ketchup from Heinz. Most companies donít buy ALL their supplies from just one supplier, because if that supplier goes bankrupt then so does the company that relied completely on them.†The fourth part are strategic partners. This means that two companies work together in order to help each other. An example of this would be McDonalds will promote Disney toys in happy meals and Disney will build McDonalds in their parks. This can help companies get expertise from other companies that they tend to lack in.†In this environment the manager will be able to ...
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