Discussion Thread: Competitive Approach, Competitive Scope, and Decision Models

Discussion Thread: Competitive Approach, Competitive Scope, and Decision Models

Introduction

The external environment entails conditions or factors that are outside the organization but impact the operations of an organization. In an organization, the external environment consists of elements linked to dimensions that are out of control by the business, such as regulations, economy, society, and political system (Stamevska, Dimitrieska, and Stankovska, 2019). There are two types of external environments; macro and micro external settings. The micro-environment comprises factors that directly impact the operations of a company, such as the customers, suppliers, public views, and financiers, while the macro environment consists of the general impacts that the business has no control over, such as the legal, political, socio-cultural, environmental and technical considerations. Although the environmental factors are broad, they offer a deep understanding from a macro perspective and help craft a long-term strategy for an organization.

Evaluating the External Environment

Assessing the external environment entails assessing the factors outside the business that greatly impact the business. Analyzing a business’s external environment is vital in preparing a strategic plan (George, Walker, and Monster, 2019). However, this is a complex task that entails collecting various data regarding the macro and micro-external environment and analyzing how they impact the business performance. A company can make the right decisions and prepare a strategic plan based on the external environment analysis. For instance, a company needs to identify the trending things in the business line, asses the market and understand the market share, analyze the competitors, and identify the competitive and industry threats, which helps the organization develop a realistic picture of the situation. One of the most common processes of examining the external environment is the PESTEL analysis. The PESTEL analysis allows an organization to examine the economic, political, technological, social, and environmental factors (Jaya, Nasir, and Dewi, 2021). Additionally, an organization can rely on the PESTEL analysis to realize the disruptive changes to a business model that may increasingly influence the future of a business. For instance, the PESTEL analysis allows an organization to understand the changes in technology, political climate, and economic issues for certain clients. An organization needs to consider how to respond to an external threat or opportunity.

Ideally, the events and conditions that happen around the organization lead to negative or positive forces that impact the organization’s decision-making. A PESTEL analysis offered contextual information about a business direction, the growth targets, brand positioning, and productivity risks. This allows an organization to determine the validity and value of the existing services and products and examine their product development. For instance, the PESTEL analysis can be used to scrutinize an organization’s current happenings and future trends. The reason behind gathering information from the external environment is for the organization to be aware and conscious of the trends that influence the organization and read the signs of whether they are to make the best decisions and how they can respond to the external settings ((Stamevska, Dimitrieska, and Stankovska, 2019). Gathering information from the external environment enables an organization to make future decisions that will positively impact its goals and society.

Strategic Thinking

Strategic thinking is considered a strong leadership tool that offers organizations the insight and foresight required to succeed in the long term, especially when implemented within an organization. Strategic thinking allows an organization to see the emerging circumstances that can potentially lead to competitive advantage (Krogerus and Tschäppeler, 2017). An organization can identify new markets through strategic thinking and lead real solutions that boost a business. Relatively, strategic thinking helps visualize, scan, and interpret the environment for information regarding the current and future organization. Through strategic thinking, employees at different levels and functions increasingly scan for opportunities that contribute to the success of an organization. For instance, strategic thinking enables the management team to focus on the markets they are likely to succeed.

Corporate culture is a key source of power in the organization. Corporate culture includes the behaviors and beliefs that determine how the management and employees engage and handle business operations. The corporate culture is a tactic for social order within the organization since it shapes the behaviors and attitudes in ranging ways. Ideally, organizational culture cannot be copied or replicated. An organization becomes more engaged and contributes to its success by cultivating positive cultural aspects. A culture helps attract the right people to the organization, which gives an advantage over expertise within an organization.

The decision-making model entails the management team’s approach to making decisions. The most significant factor in making decisions is that all the management team members clearly understand the decision and are engaged in decision-making. The creative decision model is among the most suitable decision-making models since it uses original ideas to create innovative ideas that overcome challenges and achieve goals. A creative decision-making model entails thinking through the issue and finding a solution without considering similar or past occurrences. Creative decision-making models add value to decision-making since the solutions are unique, thus contributing to the organization’s competitive advantage. Other decision-making models being considered include rational and thin outside the box model, which creates successful and effective solutions. For instance, the rational decision-making model focuses on logic, objective data, and analysis rather than intuition and objective that helps in reaching a goal and solving a problem. The rational decision-making model relies on steps that help to identify a problem, pick a solution from a number of alternatives and get an answer to the issue affecting the organization. Proverbs 15:22 states that decisions fail due to lack of counsel but after will multitude of consultations, decisions are successful. Therefore, decision-making should focus on evaluating different views and alternatives to derive the most appropriate.

Conclusion

Organizations rely on environmental scanning when preparing a strategic plan. External environment analysis plays a major role in shaping the future of a business and keeping the business ahead of the competitors. Through external analysis, the management team is able to adjust the strategies to reflect the environment in which the businesses operate. Corporate culture helps organizations to formulate systems and values that promote their employee productivity, performance, and engagement. Relatively, strategic thinking requires creative decisions making, which is why most organizations are focused on the creative decision-making model to make an informed decision that facilitates organizational success.

Annotated Bibliography

George, B., Walker, R. M., & Monster, J. (2019). Does strategic planning improve organizational performance? A meta‐analysis. Public Administration Review, 79(6), 810-819. https://doi.org/10.1111/puar.13104

The study focused on strategic planning and how it improves organizational performance. The study shows that strategic planning has been widely integrated into the management approach in contemporary organizations. The study undertook a meta-analysis that revealed the effect of strategic planning on organizational performance. The study suggests a strong positive impact of strategic planning on organizational performance.

Jaya, Y. F. T., Nasir, M., & Dewi, P. (2021). The Impact of External Environment on Competitive Advantage through SME Differentiation Strategy in Central Java. Universal Journal of Management, 9(2), 38-43. https://doi.org/10.13189/ujm.2021.090202

The study focused on the impacts of the external environment on the competitiveness of the small medium enterprise differentiation approach. Considerably, the changing conditions in the business environment require the small-medium enterprise to focus on systematic and continuous analysis of the external environment. This allows the owners to have various sources of information regarding the outside world, which helps in maintaining a competitive gain and realizing trends and unexpected opportunities. The study results indicated that the external environment has a significant impact on the differentiation strategy and the competitive advantage.

Krogerus, M., & Tschäppeler, R. (2017), The decision book: 50 models for strategic thinking., W.W. Norton & Co. (Revised ed.), New York, NY. ISBN: 9780393652376.

Stamevska, E., Dimitrieska, S., & Stankovska, A. (2019). The role, importance, and benefits of strategic management. Economics and Management, XVІ, 2, 58-65. https://doi.org/10.12691/jbms-9-2-2

The study shows the role of strategic management in the achievement of organizational goals. Strategic management enables an organization to set goals and remain flexible towards any external changes. The study shows how strategic planning offers a road map for a business to thrive and shape its future. This is because employees get a broader view of the organization and can better understand their roles and how they fit in the organizational plan.