Critical Analysis of the External Environment (Essay Sample)

Comprehensive and critical analysis of the external environment
(Name)
(College/University)
Introduction
ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "ISBN" : "9781111789695", "author" : [ { "dropping-particle" : "", "family" : "Griffin", "given" : "R", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2010" ] ] }, "publisher" : "Cengage Learning", "publisher-place" : "Massachusetts", "title" : "Management", "type" : "book" }, "uris" : [ "/documents/?uuid=f48d2704-75d5-43dc-b0ab-07c2c1950773" ] } ], "mendeley" : { "formattedCitation" : "(R. Griffin 2010)", "manualFormatting" : "Griffin (2010 p.127)", "plainTextFormattedCitation" : "(R. Griffin 2010)", "previouslyFormattedCitation" : "(R. Griffin 2010)" }, "properties" : { "noteIndex" : 0 }, "schema" : "https://github.com/citation-style-language/schema/raw/master/csl-citation.json" }Griffin (2010 p.127) regards the external environment as consisting on an inner organizational environment that is surrounded by an external industry environment with forces that shape change. Key forces within the external environment according to ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "ISBN" : "9780199214884", "author" : [ { "dropping-particle" : "", "family" : "Grieves", "given" : "J", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2010" ] ] }, "publisher" : "OUP Oxford", "publisher-place" : "Oxford", "title" : "Organizational Change: Themes and Issues", "type" : "book" }, "uris" : [ "/documents/?uuid=a9670037-18f9-451e-b1a3-1f40ca22c62b" ] } ], "mendeley" : { "formattedCitation" : "(Grieves 2010)", "manualFormatting" : "Grieves (2010 p.126)", "plainTextFormattedCitation" : "(Grieves 2010)", "previouslyFormattedCitation" : "(Grieves 2010)" }, "properties" : { "noteIndex" : 0 }, "schema" : "https://github.com/citation-style-language/schema/raw/master/csl-citation.json" }Grieves (2010 p.126) include extent of regulation; potential for growth; degree of competition within the industry; influence of macroeconomic factors; technological pressures; and standardization of products.
As more business pursues new markets, the integration of employees from varied cultural backgrounds and customers with varied preferences and behaviors necessitates a strategic review of the business practices of an organization. The management bodies of contemporary businesses can no longer thrive on the conventional models that emphasized on just setting objectives for their organizations, planning, and implementing of changes while measuring outcomes to make adjustments. Instead, occurrences like the recent global financial crisis greatly illustrated that the survival and performance of a business goes beyond just setting goals and pursuing them. It requires a wholesome overview of the operating environment, especially the external environment to be able to adapt quickly and handle any challenges amicably without negative ramifications on the business. This paper undertakes a comprehensive and critical analysis of the external environment for Hewlett-Packard Company and the role of human resources in addressing arising issues.
Discussion
Hewlett-Packard (HP) Company is a technology firm that focuses on providing products, services, software, and technological solutions to its global customer base. To keep pace with the rapid technological advancements, it is crucial for technology companies to keep themselves aware of its surrounding environment because the success of its business is largely dependent on its awareness about the surrounding environment. Information on changes taking place within the business external environment enables the organization to identify opportunities and adjust itself appropriately. Besides, such information may also inform the organizations of impeding threats thereby giving the business some time to formulate strategies of turning the threats to the advantage of the business ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "ISBN" : "9788188597574", "author" : [ { "dropping-particle" : "", "family" : "Jain", "given" : "T. R.", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Trehan", "given" : "Mukesh", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "Trehan", "given" : "Ranju", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2009" ] ] }, "publisher" : "Vk Publications", "publisher-place" : "New Delhi", "title" : "Business Environment", "type" : "book" }, "uris" : [ "/documents/?uuid=dbcd3d3d-a4ea-44ad-a5ff-f81c2a4da6b0" ] } ], "mendeley" : { "formattedCitation" : "(Jain et al. 2009)", "manualFormatting" : "(Jain et al. 2009 p.24)", "plainTextFormattedCitation" : "(Jain et al. 2009)", "previouslyFormattedCitation" : "(Jain et al. 2009)" }, "properties" : { "noteIndex" : 0 }, "schema" : "https://github.com/citation-style-language/schema/raw/master/csl-citation.json" }(Jain et al. 2009 p.24).
The development of a corporate-level strategy at the Hewlett-Packard Company is necessary for addressing changes in the macro environment and microenvironment. This requires the application of tested analytical tools. To conduct a worthwhile external environmental analysis, systemic collection, and evaluation of information is crucial. This data has to be up to date and identify only the significant issues in the myriad of detail as in an external environment analysis. Notably, external analysis should be a routine affair not an isolated exercise.
A number of analytical tools have been developed for analyzing the external e environments of businesses. These include SWOT analysis, PESTLE analysis, and Porters five forces model. Usually, the PESTLE assessment tool is a precursor to developing SWOT analysis of the internal strengths and weaknesses of an organization compared with the opportunities and threats in the external environment. These tools will be applied to undertake a comprehensive and critical analysis of the external environment in which Hewlett-Packard Company operates. Impact of the findings on the human resource dimension will then be assessed.
Porter five forces model
Michael Porter developed the five forces model in 1980 as a tool for assisting managers to make strategic decisions by analyzing industries and competitors ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "ISBN" : "9783656404835", "author" : [ { "dropping-particle" : "", "family" : "Walder", "given" : "J", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2013" ] ] }, "publisher" : "GRIN Verlag", "publisher-place" : "Munich", "title" : "A critical evaluation of Michael Porter\u2019s five forces framework", "type" : "book" }, "uris" : [ "/documents/?uuid=0bf3b337-2cbe-4a05-b5fa-5908a6357f41" ] } ], "mendeley" : { "formattedCitation" : "(Walder 2013)", "plainTextFormattedCitation" : "(Walder 2013)", "previouslyFormattedCitation" : "(Walder 2013)" }, "properties" : { "noteIndex" : 0 }, "schema" : "https://github.com/citation-style-language/schema/raw/master/csl-citation.json" }(Walder 2013). The model provides a framework within which the intensity of competition in an industry can be analyzed.
Threat of entry by new competitors in the computer industry within which Hewlett-Packard is operating greatly determines its future. High entry barriers including high economies of scale, huge capital outlay, brand recognition and high switching costs disadvantage new entrants and the business is likely to experience low competition in the near future. The computer industry has significantly low barriers to entry because of outsourcing options available to new entrants.
Bargaining power of suppliers could greatly jeopardize a business if they exhibit monopolistic tendencies. In such instances, they could increase prices or tamper with quality with no substitutable inputs obtainable from competing suppliers. In the computer industry, there is a wide range of suppliers competing against each other thereby eliminating overreliance on single supplier.
Bargaining power of buyers in the computer industry is significantly low. Having few major buyers is unhealthy for a business in the event that they threaten to boycott demanding products or services from a business. However, for HP despite the bargaining power of buyers being insignificant, rivalry on prices with other competitors ensures that prices are reasonable.
Threat of substitute products and services is significantly high in the industry that Hewlett-Packard operates. There is great ease of substitution of products within the computer industry thereby making price and product differentiation the critical determinants of consumer choice. This has increased rivalry between existing companies in the computer industry especially in terms of market concentration, product differentiation, brand recognition, barriers to exit and entry, and heterogeneities ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "ISBN" : "9783640471041", "author" : [ { "dropping-particle" : "", "family" : "Ger", "given" : "S", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" }, { "dropping-particle" : "", "family" : "J\u00e4ger", "given" : "S", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2009" ] ] }, "page" : "13", "publisher" : "GRIN Verlag", "publisher-place" : "Munich", "title" : "Globalization Drivers for Renewable Energies Referring to Electricity Production of E.ON", "type" : "book" }, "uris" : [ "/documents...