PESTEL Analysis

July 30, 2011 1 Comment

PESTEL model is useful for leaders and managers to analyze the microeconomics of business environment they are working in or attempting to enter in the future. Strategist use PESTEL model to find the macro-environmental factors that can or will affect their strategy implementations and the organizational performance. PESTEL model include six environmental influencers, which are Political, Economic, Social, Technological, Environmental, and Legal. These influencers may look independent but they are related to each other in different ways. Change in the political situation may change the economical and the environmental regulations. The environmental standards may be relaxed which make the organizational investments unjustified, on the contrast, the environmental regulations may become more stringent which may need more investment in an approved project.

Political factors: governmental instability make the intended market undesirable because new government may revoke contracts or change social policies (Evans & Richardson, 2007). The unexpected changes may consume the intended profit margin. Tax policies and trade regulations, like NAFTA, are equally important political factors.

Economic factors include unemployment rate, buyers disposable income, and credit accessibility (Carpenter & Sanders, 2009). These three factors affect the individuals buying power. Strategist need to look at these factors along with interest rate and inflation before offering their products and services in the intended market.

Social Factors are lifestyles, educational levels, wealth distribution, and population demographics (Evans & Richardson, 2007). A product or service may be successful in a country or part of the country because of the lifestyle of that area but could be unsuccessful in another. Trendy cafes may be successful with the young population but gourmet coffee shops are more desirable for the older population.

Technological factors like innovations and discoveries can affect the pace of technological obsolescence (Carpenter & Sanders, 2009). The introduction of iPod in the market signaled the obsolescence of the Sony Walkman. The same situation can be noticed with the DVD use over VHS tapes and now the online rent services made the DVD lose market share fast. Digital and audio books affected the printed books heavily. Boarders, the bookshop chain, just announce its troubled operations and its intention to close more stores.

Environmental factors are increasing and becoming more stringent every year. Waste disposal, energy conservation, and protections laws are the most important factors but not all. Environmental laws keep on increasing the limits after the noticed global environmental changes. Managers and business leaders need to plan for more changes in the protection laws because of the constant demand from the environmental groups and the international environmental organizations.

Legal factors are changing constantly depending on the market needs, or government political views (Carpenter & Sanders, 2009; Evans & Richardson, 2007). Change in the employment regulations like minimum wage, discrimination laws, and health and safety regulations can affect the operational cost.

Managers and business leaders should expect the risk of the changes in the above factors. Well planned and risk managed strategy can decrease the cost and maybe signal good opportunities in the future.

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

Evans, C., & Richardson, M. (2007). Assessing the environment. Manager: British Journal of Administrative Management(60), i-iii.

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CSF and KPI

July 26, 2011 1 Comment

Acronyms are everywhere these days and they can mean different things to different people. In the business lingo, CSF means Critical Success Factor. These factors are what will make or break the organization. The organization should focus on a limited number of CSFs, typically between 3-8, that affect the services efficiency, or product quality. The success in the CSF will differentiate the organization from it’s competitors. For a hairstylist, the the design and beauty of it’s styles would be it’s CSF. For a baker, the freshness and taste of the it’s backed products will be a CSF. Successful surgeries with few (or no) complications is a good CSF for a medical surgeon. The CSF needs a Key Performance Indicators (KPI) to measure them. The old saying “What gets measured, gets done!” is so true in this situations. The critical success factors have key performance indicators which the organization should carefully monitor. The key Indicators should be measurable but not all of them can be measured easily. Customer satisfaction is a good KPI but very difficult to measure. However, number of units produces can be calculated easily.

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Political Aspects of Organizations

July 23, 2011 2 Comments

The researchers, Chang, Rosen, and Levy (2009) state, organizational politics are widespread and affect the employees’ performance and resources allocation. Employees’ use of politics depends on the work situations, workplace, and type of goal they want to achieve (Bodla & Danish, 2009). Organizational politics will have positive results when used with good intentions to achieve important tasks. Bodla and Danish (2009) state that organizational politics are important for the organizational life and these politics affect the employees differently. Organizational politics has a negative effect when the employees misuse the politics. Employees who understand and control these politics respond less negatively, so employees should be aware of the politics and its effect on the organizations. Bolman and Deal (2008) explain that some groups have more access to decision makers and can take advantage of this closeness.The following discussion will develop organizational model to govern the organizational culture, climate, internal, and external stakeholders, and human capital issues. The model will discuss the difficulties in working with international teams and suggest a guideline for the organizational leadership to morally and ethically approach the international teams’ problems. Read the full research …

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Technical Position Training

July 21, 2011 Leave a comment

Technical employees need intensive technical training but also need managerial and leadership training to advance in their jobs. Some organizations start the administrative and managerial training too late which make the technical employees struggle in approving and implementing their ideas.


Technical Position Training Model

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Organizational Climate

July 12, 2011 Leave a comment

Organization climate is defined by Shapira-Lishchinsky and Rosenblatt (2009) as “shared perceptions that help employees to comprehend work processes and their organizational surroundings” (p. 720). The organizational climate affects the workers behavior positively and negatively. The workers behavior will be positive when the organization focus on morality and ethics (Shapira-Lishchinsky & Rosenblatt, 2009). Organizational climate is better defined by Hunter, Bedell, and Mumford (2007) as people’s “perceptions of, or beliefs about, environmental attributes shaping expectations about outcomes, contingencies, requirements, and interactions in the work environment.” (p. 70). Organizational climate is different from the organizational culture by being a localized experienced affecting on the individual or group in the organization. The organizational climate is changed esear than the culture because the climate is influenced by peer group and supervisory relations, the level of organization autonomy, management support, reward orientation, and mission clarity (Hunter, Bedell, & Mumford, 2007).
The transformational style is best set for the organization during the climate change process. But the transactional leadership style is needed to force the climate change because some groups in the organization require authoritarian style to force the change. Charismatic leaders are needed to use their charisma to support the climate changes offort. Charismatic leaders are required for their quick influences to score quick wins, but they will not be effective if hired from outside the organization.

References:
Shapira-Lishchinsky, O., & Rosenblatt, Z. (2009). Perceptions of organizational ethics as predictors of work absence: A test of alternative absence measures (Vol. 88, pp. 717-734): Springer Science & Business Media B.V.
Hunter, S. T., Bedell, K. E., & Mumford, M. D. (2007). Climate for Creativity: A Quantitative Review. Creativity Research Journal, 19(1), 69-90. doi:10.1080/10400410701277597

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Kids have the best sound filter

July 9, 2011 1 Comment

I am on vacation with the family and had good time with them. I discovered that kids have excellent sound filter to remove the noise and undesired sounds. I found that they can filter phrases like “I am talking to you”, “Finish your food first!”, “Slowly … slowly … no need to run”, “We will be there soon”, “I do not have money with me now!”. But the kids can hear other phrases even if you whisper them in the other room. The phrases they will always hear and acknowledge are “Pizza”, “Ice cream”, “Yes I will buy it for you”, “OK…OK… I will take you there tomorrow!”

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