The strategic environment

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To develop a relevant strategy a close look at the environment it intends to operate must be analysed.

Consideration must be give to the macro environment, industry and sector analysis,competitive markets and forecasting.

The macro-environment can be analysed using the PESTEL model which allows the organisation the determine the growth prospects for the industry within which the business operates.

Porter's five forces can also be used to assess the macro environment. It comprises of :

buyers power

suppliers powerwas

competitive rivalry

new entrants

substitutes

Scenario planning was introduced to deal with unforeseen future market positions ignored by PESTEL and 5 forces model. Scenario planning forces managers to think about future divergencies from and plan for the eventualities. However, it is time consuming and costly.

Gaining success in new markets according to Porter was based on these four areas

Factor conditions

Demand conditions

Related and supporting industries

Firm strategy, structure and rivalry

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