Purpose: To discuss the external environment of the firm, PESTEL analysis, and the Porter Five Force

Assignment: Write a two paragraph (or more) analysis of the following question – Why is it so important that a company understand and remain highly responsive to the external environment? Can you discuss the external environment within the context of your company’s particular industry and macroeconomic environment? Use one facet of PESTEL analysis or one of the Porter Five Forces to describe a characteristic of your company’s external environment. It is important that you describe a real, specific example from your or your company’s personal experience. If you are not currently employed, you may describe a former employer or company.

Materials that may be helpful with this question includes Chapter Three from the textbook and the Porter (2008) article from the Harvard Business Review.

Then, read and post a reply to two of your classmates regarding their industry analysis. Specific questions to address include: Did your classmate analyze their company and its industry situation through the lens of the PESTEL analysis or the Porter Five Forces Model? What thoughts can you provide your classmate that may deepen their analysis of their company and industry situation? Does the PESTEL analysis or the Porter Five Forces Model adequately describe the situation that your classmate describes? Do you understand your classmates’ industry better following your reading of their analysis?

Rule: Post one (1) original thread and two (2) replies to other threads for a total of three (3) posts on the discussion board. Your original thread must be unique to you and your employer’s circumstances.

Example: Pepsico and the U.S. Snack Food Industry

One of the large Macro-Trends that is described by the PESTEL Analysis in Chapter Three (Gamble, 2017) is Sociocultural. In Table 3.1, one sociocultural force was described as the trend in the U.S. toward healthier lifestyles, which is described as being manifested in the shift of consumer spending toward purchases of water instead of sodas, and the purchase of natural and organic foods instead of snack foods (ibid, p. 39). Within the framework of the Porter Five-Forces Model, this could be described as the competitive pressures stemming from buyer bargaining power (Porter, 2008). In the context of the Porter Five-Forces model, low switching costs would mean that companies that do not produce and sell healthy and natural products would be increasingly at a competitive disadvantage. This strongly suggest that it is both prudent and wise for companies to remain closely attuned to broad changes in sociocultural trends as well as the spending habits of snack food industry customers.

The Wall Street Journal article on PepsiCo (Estrl, 2016), however, does not agree with this analysis of U.S. sociocultural trends. What the sales of PepsiCo indicate, by contrast, is that U.S. consumers say that they want to eat healthier, but their actual purchasing patterns suggest that they act differently than their stated intentions at the point of actual purchase. At the point of purchase, the U.S consumer apparently wants Cheetos, Doritos and Pepsi. The U.S. consumer’s love for junk food is apparently still far from over. When analyzing the bargaining power of industry buyers, it would appear wise to observe what the U.S. consumer actually does rather than listen to everything that the U.S. consumer says. The mismatch between statement and action likely makes the job of companies like PepsiCo even more difficult as they attempt to grapple with a deeply conflicted and mercurial U.S. consumer.

References

Esterl, M. (2016, Dec. 11). “PepsiCo wants to sell healthy food, consumers want chips.” Wall Street Journal. Retrieved at www.wsj.com.

Gamble, J., Peteraf, M., & Thompson, A. (2017). Essentials of Strategic Management, 5th Edition. NY, NY: McGraw-Hill.

Porter, M. (2008, January). “The Five Competitive Forces that Shape Strategy.” Harvard Business Review. Retrieved at hbr.org.

I Attatched chapter 3 and here is the link for the article The Porter that is recommended by the professor. I also attatched the two of my classmate assisgments that you need to reply some the questions asked on the assigment. The same format as the one last week, Two paragraph for my response and one paragraph for each answer of my classmate. Just like last week it was perfect.

https://hbr.org/2008/01/the-five-competitive-force…

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