Models to aid understanding of organisational context and shape strategy

For my first proper week of B121, I’ve been looking at models to aid understanding of organisational context, and help reveal factors that could shape strategy.

The models are:

STEEP

This model helps you think about the environment in which your organisation operates, and enables you to construct a forecast based on the following key factors:

  • Social
  • Technological
  • Environmental
  • Economic
  • Political

PEST and PESTLE

Similar to STEEP, but focusing more on the following factors for PEST:

  • Political
  • Economic
  • Social
  • Technological

and the same again, plus the following for PESTLE:

  • Legal
  • Environment

Porter’s Five Forces

Possibly one of my favourite models for understanding the forces shaping an industry. Porter’s Five Forces looks at:

  • The threat of new entrants
  • The bargaining power of suppliers
  • The bargaining power of buyers
  • The threat of substitutes or alternatives
  • The rivalry among existing competitors

Porter’s Value Chain

Another interesting model that I have never really looked at before, which is concerned with the activities or functions within an organisation which contribute to the creation of the product or service delivered to customers. The five primary activities are:

  • Inbound logistics
  • Operations
  • Outbound logistics
  • Marketing and sales
  • Aftersales service

However, Porter also adds support activites:

  • Firm infrastrusture (e.g. finance, planning)
  • Human resource management
  • Technology development
  • Procurement

There is a good diagram in the Manager’s Good Study Guide on p. 205.

SWOT analysis

I’ve used this one many times before. It’s perhaps one of the most common models to aid understanding of organisational context, and looks at:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

The key here is that the SWOT analysis helps to identify an organisation’s strengths and weaknesses, giving a picture of the organisation as it is now. The opportunities and threats give two possible future pictures – one negative, the other positive.

Using the components identified by Porter’s Value Chain model aids the analysis of strengths and weaknesses within SWOT, while STEEP and Porter’s Five Forces model aid analysis of opportunities and threats.

(Source: Tyler, 2007).

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