Analysis of Competitive Environment Models and Tools Essay
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‘Closed’ systems are described as systems having no relationship, communications and interface to its outside world. Systems including human organizations, which is self-sustaining (both food producing and waste material recycling) has always been in touched with other organizations and its environment. Imagine an entity floating in outer space carrying living organisms in it. And such are producing their own food, energy and raw materials needed for survival. But such entity will die in the future for it will need to replenish its need, energy to use and food to eat.
This fact makes an entity virtually lonely and survival impossible, thus organizations, social groups and social entities are interconnected.
This connections and interactions render them as ‘open’ entities. This connection allows entities to exchange the necessary things that will allow the survival and sustainability of its existence. Organizations interact with its environment and other organizations for resources, information and technology, weapons, goods and services. Thus transformation of organization becomes inevitable.
The point is it is a necessity rather than a requirement for organizations to work with or against other organizations and its environment for growth, survival and development. A typical example of an entity, which houses everything that it needs and for its consumer: the hypermarkets.
Hypermarket is a combination of a supermarket and a department store. It is a huge retail store which house a wide range of products. A well planned hypermarket allows a consumer to purchase everything in this type of facility. Like malls and grocery stores, hypermarkets follows a on high-volume, low-margin sales model. The size of hypermarket facility covers an average of 150,000 square feet. Such facilities are located on suburban and highly accessible areas for vehicles to accommodate large numbers of shoppers. (Wikipedia, 2007).
In 1957, Carrefour was the first to introduce hypermarkets in 1957 owned by Fournier and Defforey (Wikipedia, sec 1). This entity targeted a wide range of customers that the concept of housing all the necessary things human beings would possibly need was made in one entity. Analysing this kind of organization using the different environmental analysis models and tools, we can get rich lessons from Carrefour.
The STEP checklist (Social, Technological, Economic and Political).
STEP is simple and has many applications in many fields. STEP is an acronym, which stands for Social, Technological, Economic and Political Checklist. This method determines the factors that influences organizations/entities accurately and systematically. The STEP checklist facilitates ease of determining the factors that influences the organization (Armson et al, 12-13).
Social factors include demography, culture and values of an organization, vision and mission. The physical aspects of the society are measured by sociological factors like age, class, trends in migration and emigration, and so on. Carrefour had integrated a multilevel marketing strategy based on this indicator. A family as a unit has special need for each member. If Carrefour could bring all these needs in one place, the family need not go on separate ways. As they acquire the needs, the company of each member is not sacrificed. Exchange of opinions regarding clothes for each member and the amount of consumption and expenditure is also discussed while they go shopping around.
Technological factors refer to machines, discoveries and techniques developed that improve communication, systems, and the general way of life. Economic factors refer to the financial growth, family income and other economic indicators. Political factor translates to the rules and regulations, government and system of governance and the political direction of the organization in terms of leadership. Carrefour in this example had brought in together in one place the advances in technology. The barcodes that we have, the electronic transactions that we have are all products of the chain reaction in putting together shops in one place. The need for efficiency and fast movement of goods was conceptualized little by little.
The Transformation Model
The STEP model is an overview of everything that occurs in an organization. It determines individual movement of society and its causal agent. In transformation model, inputs determine the output using a certain ‘transformation’ process.
This Input-Process-Output process has been borrowed from Ludwig von Bertalanffy in 1950 in his general systems theory (Wikipedia, par 1, sec. 1). This theory is an approach that looks into the properties of systems in terms of relationships and processes and those that emerge from these relationships and processes which also conveys the whole.
In the point of view of customer relations, Carrefour had encountered a lot of challenges that it evolved into an efficient system of customer service. A special section perhaps dealing with product complains, product testing and purchase returns was created. The reaction to its competitors was to move the same. Show the customer concerns and care for their needs as they value their hard earned money. Other inputs like management had evolved from simple to complex structure. But as this processes occurred, everything also move with them like customer perception, supplier value-adding activities, government regulations and even lifestyle of the community which they exist.
Physiognomy was used by palm readers to read lines in human hands in relation to the human character. In this case, we use faces to read characters of organizations. Mintzberg believes that organizations should forged links or ‘coalitions’. These coalitions are useful when problems that require resolution arise. When the different interests relating to the problem represent different groups, power groups are said to arise (Armson et al, 12-13).
In addition to this, Mintzberg created ‘cast lists’ of every groups and/or coalition, which could be used as checklist also. He named key players in these coalitions such as owners, associates, associations, and publics.
Economic Sector Analysis
Another method of dissecting business environment is the use of sectors and markets in the economics point of view (Armson et al, 14-15). Economists termed sector (more like industries) in the use of economic activities. In a sector, similar goods and services are produce such that each is affected by one another. For example, a growing sector affects other sectors as well as the organizations within that sector. Whether these effects are large or small, the use of sector analysis allows us to explore organizations in the same sector especially what is distinct in that organization. Again Carrefour as a hypermarket entity pioneer spurred other hypermarket entities to compete and also join industries to lobby for government policies.
Armson, Rosalind, John Martin, Susan Carr, Roger Spear and Walsh Tony. The Open University: Managing in Organizations: Identifying Environmental Issues. 1995. p11-15.
General Systems Theory. Wikipedia- the Free Encyclopedia. 2006. <http://en. wikipedia. org/ wiki/ Systems_theory.>
Hypermarket. Wikipedia- the free encyclopedia: 2007 <http://en.wikipedia. org/wiki/hypermarket >
“Carrefour” Wikipedia- the free encyclopedia. 12 February 2007. <http://en.wikipedia. org/wiki/Carrefour>