PESTLE analysis

PESTLE is a tool which through six ways to analysis the external (Macro) environment most related to a company and how they influence the company in the future. It includes political, economic, social, technology, legal and environment. http://www.youtube.com/watch?v=4mkVc6ZZtJw Link with the nearest post, I will use the smartphone industry (Samsung) for an example:

Political

Samsung is a global company born in Korea. there are  different regulations and taxation policy in different countries, it will affect to the manager decision making.

Economic

This factor influence company cost and consumer spending, such as interest rate, inflation rate and labour cost.

Social

There are huge numbers of people in the world, they change from using mobile phone into smartphone. Also, each people have at least one smartphone, this is a big market to Smartphone Company. However, the sense of protecting environment are increasing. The green issue, which is electronic waste, affect to the company. The reason that people buy a new phone is not because their old phone had broken, it is because a new smartphone launch. As the result, they will throw or sell their old phone, it increase the electronic waste and influence to our environment.

Technology

Nowadays, people are focus on technology and quality of life. Technology improve their life, such as access information and communication technology instantly no matter where they are. Therefore, crate a new technology and develop existing technology are more important to company. The Android system is a good example, Samsung using Android system on their phone, and they are keeping improve it. Smartphone company not only enhance the quality of software, but also the hardware to improve the battery life and faster response to meet customer’s needs.

Legal

Smartphone is very popular all over the world. Samsung sells their phone to many countries, such as UK, USA, Hong Kong and China. These countries have their own law, and they affect to Samsung operation.

Environmental

I have talk a little about green issue in social factor; the electronic waste is a problem in the world. Although some component in the phone can reuse, the other parts are going to landfill. It does not mean it is disappear, it cannot be decomposition and it will be under the landfill forever. The landfill will be full in the future, so it will affect to the company.

Porter’s 5 forces

A company should analysis the micro and macro environment to understand it situation. Porter’s 5 forces is a tool to analysis the micro environment and identify the profitability of a company. It analysis on 5 ways, threat of substitute products, threat of new entrants, bargaining power of buyers, bargaining power of suppliers and intensity of rivalry within the industry. http://www.youtube.com/watch?v=9CHZ44_at6I This video is using sports wear for an example, and below I will use Smartphone industry for an example :

Threat of substitute products (+ +)

Smartphone is a useful thing for everyone, most people have own at least one of it. A smartphone not only can call or text to someone else, but also playing games, listening music or watching video.  http://www.youtube.com/watch?v=2LHv1FPd1EcThere are no substitutes can replace it in any other industry.

Threat of new entrants (+ +)

There are high barriers to entry this industry, high cost, high switching cost and hard to separate market share from other company. If a company would like to enter this industry, they should invest a lot of money on technology, engineering, development and design, and this increase the switching cost. Apple and Samsung are the market leader in this industry; they own a large percentage of market shares and have a lot of loyal customers. Thus, a new entrance is very difficult to own many market shares.

Bargaining power of buyers (+)

Customers have low bargaining power in this market. Although there are a lot of different brand of smartphone on the market, they cannot affect to the price because smartphone is high-technology products, it has its market price. The bargaining power is on the company.

Bargaining power of suppliers (-)

A high bargaining power of suppliers influences the company profit. There are few suppliers and the products are distinctive, so the company cannot argues on the price.

Intensity of rivalry within the industry (-)

It is a high intensity of rivalry within the industry; there are many brands such as Apple, Samsung, Google, Blackberry, Sony and HTC provide similar products in the market. They all and fight for market share, therefore, company should focus on development on the phone become more different to other brand to attract customers buy their products.

Organization structure

Organization structure is important in any organization, even it is a small company. It describes how organization divide, supervise and co- ordinate work to achieve company objective. It clearly shows the employee title, responsibility, whom to report and whom report to him. Also, it identify the relationship between employees and how they communicate to each other e.g. Operatives → Supervisor → Team leader. We can see clearly on the figure below.

There are different types of structure shows below: 

http://education-portal.com/academy/lesson/types-of-organizational-structures-functional-divisional-matrix-team-network.html#lesson

In this video, it introduces the functional structure and the divisional structure.

Functional structure

Functional structure is division similar skills and expertise into a department, for example, Marketing, HR, Accounting and Financial department. This structure has clear career path and professional development, high standard and efficiency and good internal relation because of common professional interest.

Divisional structure

Divisional structure is division work by product or service, it focus on customer needs, and meet customer quality. Also, they have the same objective, so it has a good influence to the internal relationship between employees. For example, Car company division the group by car model.

The link below is a video about Matrix structure:

http://education-portal.com/academy/lesson/types-of-contemporary-organizational-designs-matrix-team-network-designs.html#lesson

Matrix structure

This structure combines above two structures, which are functional and divisional structure. For example, a cloths company want to creates a new product; they would take some employees from each relevant department, employees from accounting to calculate the cost, marketing employees think about the promotion and advertisement and designer for new design. Using matrix structure is more flexibility and lower costs, because company could gather employee as soon as possible, and all employee will back to their own department after the project. Employees are focusing on the projects; it can increase the productivity and have faster response.

Which company should use which structure? Are there any BEST structure?

There are no standard answers for which company should use which structure or which the best is. Choosing which structure is based on the company needs.