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Corporate strategy

 Introduction to environment
 Macro environmental factors
 Analysis on PESTEL framework
 Strategic capability and characteristics
 Characteristics of strategy decision
 References
 Generally, environment refers to the surrounding. As concerned to the business organization
environment is the key element that gives the life to any kind of business organization. The
environment plays the vital role from the establishing to the success of any kind of organization.
The environment could be either micro or macro. The micro environment means the inner set of
condition or the process where the organization gets its life from its internal sources. The macro
environment means the whole factors that effect the organization or surrounding that enforces
the business organization to in its dynamic way by its willingness or unwillingness.

Macro Environmental Factors and PESTEL analysis

As far as concerned to the macro environmental factors, these factors covers the wider area that
influence the business organization in various way. The macro environmental factors cannot be
handled by the business organization which makes the organization to think about the future
goals, the decision making, its performance and the strategy. These are the factors they are
totally out of the organization and out of the organizational control. As the macro environment is
the highest layer of any organization it is composed of the framework called PESTEL. The
PESTEL means political, economic, social, technological, environmental and legal environment
which effects the organization.

To the extent of the example I have chosen the coca cola company for the PESTEL
framework.

The company was established by the pharmacist named Pemberton in Atlanta in 1886. As we
know the company is the soft drink and carbonated company leading percentage in the soft drink.
Here is the PESTEL framework for the coca cola.

Political factors
The carbonated soft drink industry which is the leading percentage in the soft drinks as
compared to the other soft drinks company. As we know the coca cola company is the globalised
company it is very fast to invest and take the maximum advantage whenever the political factor
is normal. The company has to follow some code of conduct that has been set up by the
government. Like in the USA the soft drink company has to obey the rules with Food and Drug
Administration (FDA). So the coca cola has to follow the path under FDA.
 Another factor that affects the company is the taxation policy. In the US the taxation policy is
quite fair enough so that the production of the coca cola is high and more consumption by the
people as well.

Economical factors
The inflation plays the great role as the economical factors whereas the interest rates and the
exchange rates also affects the soft drink company. The soft drinks company operates in the
process of globalization where there is a contact with the foreign currency policy. The company
can suffered in the production by the rise in the oil prices and the substitution of its raw
materials, since the company uses the cost minimization policy. The consequences of the rise in
the oil price make the product costly. The main economic factor is the inflation as the inflation
sets up the price of any product. Similarly the exchange rate is not constant and relying on the
interest rates the profits get harmed in the home country. Talking about the employment it offers
large amount of human resources to carry on the business.

Sociological factors
The sociological environment gives the great opportunities for the soft drink companies. Since
the coke is the highly recommended among the people the consumer wants the healthier products
which are the major sociological factor for the company. The company is aware of the
population demographics so that the company tries to reach among the population with its
products so quick by changing the sociological markets. The company has picked up with the
population so that it can overcome with the needs of the population.

Technological factors
Technology is one of the essential parts in the organization for the production process. The
recently added technological developments are the increase in the communication technology as
it is done by the advertisement so the company can boost up their sales. The technology may find
the modern means of maximizing the profit with its minimum resources keeping the originality
of the product .similarly the coca cola uses original formula and the principle for the production.
The technological factors not only includes in the production process but also for the channel of
distribution and the record keeping of the products.

Environmental factors
The destruction of the environment is the major issue. There is the destruction of the
environment and has reaches to its enormous level since the waste and the disposal are the key
elements to lead the environmental disasters. The coca cola company has used sustainable
packaging, energy management and climate protection and recycle of bottle and can . The
company has got the three objectives such as to use the less water in the production of the
beverages, recycle the water which is used in the production process and let them go in the
environment safely and replace the water in nature with the collaboration and planned program
of work. The company has made various change In order to sustain with the environment like
“keep Australia beautiful” in Australia, the “tidy Britain group” in great Britain and “keep
America beautiful” in US.

Legal changes
Whenever the words come to the legal it denotes some of the law, government intervention
that effects the organization and the particular group. Not only the law bound on its own way but
sometimes also gives opportunities for the organization. Some of the legal notes that recently
coca cola faced up are:

 In the 70’s India was forced to share its formula to run the business but coca cola
temporarily stopped the business for 16 years.
 Eu member countries tried to put the ban on the coca cola because of the poisoning of
children in Belgium.
 Indian people demanded coca cola to stop because of over use of ground water and
controversy of the use of pesticides and harmful chemicals.

Strategic capability

The environment remains changing all the time where the business organization operates.
Strategic capability is the main pillar for an organization in the modern world where the every
business organization competes with each other. It is the capacity of the business organization,
the resources that business organization can exploit and the skills that how it can overcome to
give the long term life for any kind of business organization in accordance to the change of the
environment in the competitive world.

When we take an overview for the strategic capability we can conclude the following points for
the

 Value
 Rarity
 substitution
 Inimitable
 Dynamic

Rarity:
The organization can compete with any kind of business organization and can earn maximum
advantages if the organization covers the rare product or the unique sources. For e.g. the apple
company uses the rare product and the resources so it can compete with the competitor strongly.
Similarly the copy rights are the factor that mostly organizations use as the rarity. The three
other factors to be kept in mind to sustain

 Ease of transferability: whenever the business organization enters into the market it
may look for easiness of the transferability of products as accordance of the
environment.
 Sustainability: an organization may not remain long time because of the rarity since the
rarity can be the temporary factor. So the it is necessary to be alert with the other means
of sustainability
 Core rigidness: as the product is rare and is the natural resources therefore the
organization may be in the problem. So the top level management should invent the
various means for the sustainability.

Inimitable:
Nowadays, it is more often easy to copy the product and the way of running the business
organization. The organization should be capable to find out the capabilities that are difficult for
the competitor to obtain or imitate. Similarly, the performance should be high and better in
comparison of the competitor. The three other factor related to achieve the inimitability are:

 Complexity: any organization they are complex and is difficult to copy what they follow
for the sustainable competition because of the internal linkage of the activities of the
organization and the external linkage with the customers. Since the organization
develops the product in which the customers are heavily dependent.
 Culture and history: since in the organization there are various people working around
and there will be harmonious interaction and that will be done by the various ways.
 Ambiguity: the important aspect of the difficulty in the competence is that they cannot
outline the reasons how the organization is taking the advantage known as ambiguity.
Ambiguity are of two types characteristic in which importance of the characteristics
itself is unclear to the competitor, linkage ambiguity is the ambiguity where the
competitors cannot understand the linkage of the activities which makes the
competences.

Non -substitutability:
the organization bears the risk from the substitution since there are two types product when
there is a substitution of the product then the product might get risk. For e.g. postal services
overcame by e-mails, competence substitution is at the competence level for e.g. the workers are
replaced by the modern tools. Therefore the managers should know that substitution is bridge.

Dynamic:
This is the characteristics of the organization that they change the plan and the strategy with the
need of the changing environment. Dynamic capabilities may be the formal as well as informal
where the formal is the physical or the capital structures and the informal means the decision
making process according to the change in environment. So the organization requires the
capacity to change, explore, and learn to establish the dynamic capabilities.

Characteristics of strategic decisions

Generally, the strategic decisions mean the decisions that are made at the top most level.
These types of decision are of long-term are unique and of course centralized. Strategic decision
makes directly link with the allocation of the resources available to its product with market
opportunities. Moreover concerned to the characteristics it complies following:

 Future orientation: strategy concerns with the future value of the organization. The
strategic decision is made keeping the specific goal as a reference so strategic decision
got the future orientation. The strategic decisions define the future structure of the
business organization.
 Complexity: they are often complex because they are accompanied by the long term
direction operation, environment fit and scope of the organization as well. The
complexity is because of the high level of uncertainty as it bears the future reference,
major changes in the organization and it is integrated not only this but is very difficult to
implement as well.
 Effects operational decision: since the decision is made over the running strategy so the
operating strategy might overcome by the new strategy designed to achieve the goal.
 Creates opportunities and scope: the strategic decision creates opportunities to the
organization as well as to the consumer as there will be new structure designed by the
decision made. as the managers make the strategic decision the scope will be more wider
than before.
 New path and structure: as the organization is backed up by the new plan and the
decisions the organization or the operatives gets new path and the different way to
achieve the goal. as concerned to the layout it would rise from the traditional structure to
the new and excellent dimensions.
Besides, these major characteristics there are different other factor that effects
indirectly to the characteristic as such stressful, time consuming. While making the
strategic decision there might be various kind of factor which may arise the stress to any
managers as well the decision cannot even be made in short time as the managers have to
outlook the overall situation.

References:
 Richard lynch, N.B.(22nd Nov 2002) corporate strategy, 3rd Ed prentice hall
 Jerry Johnson, Evan Scholes and Richard Whittington, N.B. (2009) fundamental of
strategy 1st Ed prentice hall.
 The Oxford English Dictionary (1989) Vol. 3, Oxford: Clarendon Press.
 http://www.pearsoned.co.uk
 http://vig.pearsoned.co.uk/catalog/uploads/ECS8_C03.pdf
 http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm
 http://www.pdftop.com/view/aHR0cDovL2ZycmwuZmlsZXMud29yZHByZXNzLmNvb
S8yMDEwLzA0L3Blc3RsYW5hbHlzaXMucGRm
 http://www.thecoca-colacompany.com/citizenship/sustainability_roadmap.html
 http://www.scribd.com/doc/36949119/PESTEL-Analysis
 http://wiki.answers.com/Q/What_is_Strategic_Capability