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The Competitive, Technological, Political and Sociocultural Environment

This document discusses the external operating environment for organizations, including the competitive, technological, political, and sociocultural factors. It covers Porter's five competitive forces model and analyzes the threat of new entrants, power of suppliers and buyers, threat of substitutes, and degree of competitive rivalry. Technological changes can create new opportunities or make existing products obsolete. The political environment is shaped by government policy. Sociocultural factors that impact demand include demographics, lifestyles, culture, and attitudes in society.

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Audrey R
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26 views

The Competitive, Technological, Political and Sociocultural Environment

This document discusses the external operating environment for organizations, including the competitive, technological, political, and sociocultural factors. It covers Porter's five competitive forces model and analyzes the threat of new entrants, power of suppliers and buyers, threat of substitutes, and degree of competitive rivalry. Technological changes can create new opportunities or make existing products obsolete. The political environment is shaped by government policy. Sociocultural factors that impact demand include demographics, lifestyles, culture, and attitudes in society.

Uploaded by

Audrey R
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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THE COMPETITIVE,

TECHNOLOGICAL,
POLITICAL AND
SOCIOCULTURAL
ENVIRONMENT
The External Operating Environment
OBJECTIVES:

•competitive environment;
By studying this chapter, students
•technological environment;
will be able to describe and
•political environment;
analyze an organization’s:
•sociocultural environment.
ENVIRONM
ENTAL
SCANNING:
THE
COMPETITIVE
ENVIRONMENT
Porter’s Five Forces Of Competitive Analysis
PORTER’S FIVE
COMPETITIVE
ANALYSIS
 the threat of entrants
 the power of suppliers
 the power of consumers
 the threat of substitutes
 competitive rivalry.
New entrants may stimulate more price
competition or more investment in product
differentiation as they attempt to win market
share and profits and existing firms seek to
defend market share and profits.
The extent of the threat of new entrants will
THE THREAT depend upon barriers to entry such as:
OF  economies of scale

ENTRANTS  capital and experience barriers to entry


 advertising barriers to entry
 availability of distribution channels (vertical
integration)
 anticipated entry wars
 natural monopoly conditions
 brand proliferation barriers.
Suppliers of an organization’s inputs have a key
impact on prices and quality
 the greater the power of suppliers, the lower margins will be
for the ‘supplied to’ organization.

THE POWER
 Supplier power is increased by the degree of OF
monopoly or oligopoly in the supplying industry, and
whether there are high costs of switching suppliers. SUPPLIERS
 Because of this airport operators are often able to exert
considerable supplier power when negotiating with airlines.

 Supplier power is diminished where the organization


buying inputs has large purchasing power.
Reasons for power of buyers:

THE POWER
OF BUYERS
●
Where the buyer is a monopsonist (single buyer) or a
near monopsonist
●
When there is intense competition between suppliers
●
Different airlines giving lots of routes
●
Level of buyer knowledge
●
Information about goods and services on offer and
prices of competitors
●
The overall state of the market
Substitutes can take several forms.
THE THREAT
OF
SUBSTITUTE
S
●
a new product or service may make a current one obsolete.
●
a substitute may result in a new product or service
competing closely with existing ones.
●
to some extent all goods and services compete or consumers’
limited incomes and thus new products even in distant
markets may have some impact on a variety of unrelated
organizations.
Competitive rivalry within an industry is
increased by the threat of new entrants and the
threat of substitutes, but it is also influenced by
current conditions in the industry.
THE DEGREE
These include:
OF
 whether competitors can cross-subsidize
COMPETITIV
 degree of market leadership and number of
E RIVALRY competitors
 changes in capacity
 high storage costs/perishability.
THE
TECHNOLOGICA
L ENVIRONMENT
cost reductions
new products and markets

Technological change offers two key opportunities Technological change also poses threats where existing
for leisure and tourism organizations: products become obsolete in the face of new developments.

THE TECHNOLOGICAL
ENVIRONMENT
MULTIMEDIA
CONTINUES TO BE A KEY
DRIVER OF
TECHNOLOGICAL
CHANGE
HOSPITALITY TOURISM

TECHNOLO
GICAL
IMPACTS
LEISURE AND
RECREATION. MAY BE
ANALYZED
IN THE
FOLLOWIN
G AREAS:
THE POLITICAL
ENVIRONMENT
THE POLITICAL
ENVIRONMENT
Sources of information on changes in the
political environment include:
 government reports
 party manifestos
 other interest groups
 changes in the law

The government itself will be subject to its


own operating environment and thus policy
will be shaped by the economy, international
relations and interest group activity
THE
SOCIOCULTURAL
ENVIRONMENT
SOCIOCULTURAL FACTORS INCLUDE
THE MAKE-UP OF SOCIETY
DEMOGRAPHICS LIFESTYLES

CULTURE ATTITUDES
Demography is the study of population, and
population trends are important for the leisure
and tourism sector for three key reasons:
 important factor in determining demand
 the population provides the labor force DEMOGRA
PHICS
 an ageing population is likely to have a less
progressive culture and adapt to change less
easily.
 age, sex, geographical and socioeconomic
distribution
LIFESTYLES,
CULTURE AND
ATTITUDES
 Culture refers to the dominant beliefs, values
and attitudes of society or a sub-grouping in
society.
 Changing beliefs, values and attitudes affect
the way in which people perceive, demand and
use leisure and tourism products
THANK YOU!

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