MGT603 Assignment 1 Solution

Semester “Fall 2011”

“Strategic Management (MGT603)”

Assignment No. 1 Marks: 15

Let us suppose that you are the Managing Director of “Antillia Network”, a popular TV channels group. In a meeting of its Board of Directors, it is decided to launch a new sports channel in Pakistan to telecast major indigenous and international sports events. As the Managing Director of the group, you are entrusted with the responsibility of launching this new sports channel.

You are required to identify any seven “Key External Factors” which may influence the launching and functioning of your upcoming channel.

Solution # 1

Solution:

Key External Factors

• Social – how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.
• Legal – the way in which legislation in society affects the business. E.g. changes in employment laws on working hours.
• Economic – how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.
• Political – how changes in government policy might affect the business e.g. a decision to subsidies building new houses in an area could be good for a local brick works.
• Technological – how the rapid pace of change in production processes and product innovation affect a business.
• Ethical – what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights

Solution # 2

After you line up financing, find a suitable location, hire staff and organize a potentially successful business plan, you must turn to external factors to effectively predict your future. There are a slew of factors to take into consideration that usually are beyond your control. While you may have contingency plans in place to deal with outside influences that affect your business, sometimes the best you can do is improvise when they occur.

Economy

The global economy is one of the biggest external factors that will, at some time, affect your business. Market fluctuations based on politics, terrorism attacks, wars and currency devaluation eventually trickle down to most commercial enterprises.

Finance

Wall Street and the solvency of big banks and financial institutions may not seem to have much to do with your business, but eventually they may affect your ability to continue doing business. Interest rates, the availability of credit and consumer loans are external factors you rarely can control.

Weather

If man could control the weather, vacation resorts would know exactly when to charge the highest room rates. Storms, tornadoes, hurricanes and wildfires are outside your purview of controllable business factors. In addition to the direct impact a storm may have on your ability to open your doors at any given time, widespread weather events often carry a substantial trickle-down effect to a wide range of businesses.

Infrastructure

Zoning laws, highway construction and housing development are particularly important to retail establishments, restaurants, manufacturers and other businesses that rely on a location for success. Changes in the local infrastructure may prove either disastrous or fortuitous to your company.

Laws

State, local or federal changes in the laws can have a direct impact on your business if the service or product becomes highly regulated or outlawed. Cigarette manufacturers learned this lesson when public smoking was outlawed in many areas and smoking indoors has become practically nonexistent. Government regulations such as those that affect the environment or communication are beyond your control and could have a direct impact on your business.

Trends

While you may spend a good part of your profits on marketing in the hopes of favorably influencing trends, some are beyond your control. An increase in technology use by your customers may be built into your strategic planning, but you may not have planned for the widespread use of social media that could affect your business. Celebrities who become advocates for a cause or decide to boycott a certain business practice can start a trend that could seriously affect your business if you’re on the wrong side of the trend.

Customer Base

Your target customer base may change suddenly or slowly over a period of time. The changing makeup of your neighborhood that attracts more singles or young renters can affect your business for example if you cater to a more upwardly mobile, family-oriented customer base. Cultural implications of a changing neighborhood may affect your business negatively or positively depending on your ability to meet the needs of changing demographics.