When performing an external environment analysis it is important to distinguish between the macro environment (that can be analysed using a PEST analysis) and the micro environment – industry (that can be analysed using a Porter 5 forces analysis). Concerning the macro environment, this can be usually analysed using the PEST (Political, Economic, Societal, and Technological factors), more recently the PESTEL or PESTLE (which adds ecological and legal factors), the ScanStep© (Pitt and Koufopoulos, 2012) (which also includes security and cultural issues), or the ESTEMPLE (Angwin et al., 2011) (which adds ethical and media factors) analysis. But the important thing to keep in mind is not how many factors of the micro environment you are going to analyse, but how these impact the industry and thereby your company. Specifically, all these factors of the macro environment, impact the micro environment (industry) in which your company is operating in. Therefore, by impacting the industry that the company is operating in, they have an impact on the strategy that the company is following or has to follow. This is why companies have to constantly monitor the external environment to see for and predict changes, so as to adjust their strategy to achieve competitive advantage. Therefore it is important to identify and analyse the most important external environment factors that will (or have the potential to) impact the industry and thereby the company.
Similarly the stakeholder analysis is mainly performed to identify the main stakeholders that will have an impact on company (Mitchell et al., 1997). Based on these stakeholders’ expectations the company will have to formulate a strategy to meet and exceed their expectations. Thereby, the first step in this process is to again identify the most important stakeholders that will (or have the potential) to impact the company.
Based on the above, which factors of the external environment and which stakeholders do you consider to be most important for Thermo Fisher Scientific that you have analysed?References
Angwin, D., S. Cummings & C. Smith, (2011) The Strategy Pathfinder: Core Concepts and Live Cases,Chichester: John Wiley & Sons.
Mitchell, R. K., B. R. Agle & D. J. Wood, (1997) 'Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts', Academy of Management Review, 22 (4) pp.853-886.
Pitt, M. R. & D. Koufopoulos, (2012) Essentials of Strategic Management,London: Sage.