Source / Reference:
1. Cornelius H Sullivan Jr, Systems Planning in the Information Age
2. Omar A.EI Sawy, Redesigning Enterprise Processes for e-Business
3. PEST Analysis
Response:
For each company or organization, they may face different context or problem. In order to increase the operation efficiency and profit, they need to use some technology to analyze the current situation before making a decision.
There are three things that the organizations need to know - External Environment, Pressure Groups and stakeholders, and Internal business strategizing and planning.
External Environment
We always use PEST to analyze the External Environment. In PEST, we can separate into 4 factors. They are Political and legal factors, Economic factors, Social factors and Technical factors.
l Political and legal factors
It always relates to the government and legal. For example, Hong Kong government increases the wine and tobacco tax, the organization who sell the red wine need to increase their selling price. If the price is increased, it also affects the customer decision making.
l Economic factors
Financial tsunami brings us many economic crisis and it affects Hong Kong a few years. In these years, Hong Kong is financial stringency because Hongkongnese do not want to spend more on buying non-necessaries.
l Social factors
Before selling a product to customer, we need to understand what are their needs and wants. In marketing, we need to understand the target market, such as their culture, needs, wants, or behavior.
l Technical factors
Technology is growing very fast. There is no denying that smart phone and internet is affecting our life and changing our culture and style, the user can also receive much information from the phone. Company can use some IT method to sell or introduce their products directly.
Pressure Group and stakeholders
They can pose the threats and offer opportunities to the organization. Pressure groups are characterized by making demands of the organization to acknowledge their existence and satisfy their particular interests. Stakeholders have a direct financial interest in the organization, and demand a fair share of the wealth created.
In other words, organizations should fit the pressure group and stakeholders needs and wants.
Internal business strategizing
We always use SWOT to analyze the internal business environment. There are 4 parts of SWOT - Strengths, Weaknesses, Opportunities, and Threats.
SWOT and PEST can analyze the business environment, but SWOT can analyze the internal and external at the same time. For Strengths and Weaknesses, they focus on the internal helpful and harmful object; for Opportunities and Threats, they focus on the external helpful and harmful object.
For example, if the current assets are not enough in a company, it is Weakness because it is harmful for a company. If the government decreases the tax of red wine, it is an Opportunities because it is a good news for some company which selling red wine (increasing the selling price and attract more customer.)
In case, we can apply the SWOT analysis into a real business venture, UNIQLO.
In Strengths, UNIQLO has high quality products and global materials procurement. The UNIQLO Material Development Team is able to procure high-quality materials at low costs through direct negotiations and bulk purchases form material manufactures throughout the world.
Also, UNIQLO has high reputation. It is because UNIQLO has an efficient Product Exchange Regulations which allows customers to exchange their dissatisfied products.
In Weakness, the amount of retail store is not enough. Compared with other competitors, UNIQLO only has 14 retail stores. Therefore, it is inconvenient for customers who live in rural area.
In Opportunity, cotton is the main material of cloths. Fortunately, the cotton cost decrease gradually after the 14th March. This is a good opportunity for UNIQLO to implement the lower the cost, the higher the profitability.
In Threats, the major consideration of UNIQLO is the foreign currency. The abundant of UNIQLO products are produced in China. Under condition that Yen depreciates against Renminbi for a prolonged period, an adverse impact could result in business.
Meanwhile, the global economy is the other consideration of UNIQLO. The financial crisis has swept the world and brought numerous problems. Therefore, this may seriously affect the sales and profitability of UNIQLO.
