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PESTEL and Porter's Five Forces in the future (Porter's Five…
PESTEL and Porter's Five Forces in the future
PESTEL
some problems
too generalised = misses the key details
no guide on what to include, what to omit and how often to perform
too detailed = paralysis by analysis and unable to filter out what matters
time sensitive like printed maps = outdated very soon
trends missed by PESTEL
micro-segmentation – segmenting at a more individualised level giving more tailored choices and more lifestyles which are detected through new trends/technologies such as loyalty schemes;
disintermediation - the disappearance of the ‘middle man’;
Globalisation – brands such as Subway are found round the world, supply chains are being re-engineered and call centres are being transferred abroad as some examples;
dematerialisation – more concentration on services e.g. media boxes, renting movies online, emails instead of letters, etc.
analytical frame work looking at the environment
social issues highlighting demographics and changing social influences
technology issues highlighting innovations such as the internet and nanotechnology.
economic issues highlighting macroeconomic factors such as exchange rates, business cycles and differential economic growth rates around the world
environmental issues highlighting green issues, sustainability, pollution and waste
political issues highlighting the role of governments
legal issues highlighting legislative constraints and opportunities
Conclusion
lookout for these when detecting change
Inflexion point i.e. when trends shift, such as shift from renting DVD/VHS to internet media platforms
Weak signals i.e. signs of change that seem insignificant e.g. rise in Asian business schools success where the earlier weak signal was the first Hong Kong University making the Financial Times top 50.
Megatrends
use finding from both for scenario analysis
have limitations but still useful starting point
Porter's Five Forces
like PESTEL can be too detailed or too general
no guide on what to include, what to omit and how often or when to perform
usually such decisions are the manager's discretion
time sensitive as competition can change
Kodak & Blockbuster will not have recognised any threats from substitutes in the 1980s
if Kodak and Blockbuster did another analysis now then they would find threats such as DVDs, Blu-Rays, Digital Cameras, Smarthones, Online Rentals, etc
does not mention 'co-operation' but this can be looked at separately using four-links analysis
ignores complimentary products such as fuel prices affects on car sales
ignores globalisation - can buy at wholesale prices from China over eBay
analytical framework for the competitor-environment
Bargaining power of buyers
Threat from new entrants to the industry
Threat from substitute products and services
Bargaining power of suppliers
Competitive rivalry of firms within the industry.