What are some of the common driving forces that can impact firms, entire industries, or even the economy as a whole?
In contemporary business arenas, business executives are faced with the challenge of aligning their businesses with changes in social, economic, technological, and political environments. There are some common driving forces that firms, industries, and economies face; the forces can be broadly be classified as social forces, economic forces, political forces, and technological forces.
The rate of economic growth experienced in an economy determines the rate of success of business within the economy. Countries with high economic efficiency have favorable business environments than those with a slowing or deteriorating economy. When referring to economic growth, it refers not only to GDP growth but also socio-economic growth (Morgan, 2012).
Social and political forces
Social and political dynamics taking place within and without an economy has a negative or positive impact on the economy itself, industries, and companies operation in the economy. Changes in the forces are likely to shape the direction that firms take as well as the decisions they make.
Changes in technology shape the direction of companies, countries, and industries. Technological advancement has enhanced efficiency within an economy, industry, or individual businesses. When technology is enhanced, markets have been enlarged more-so with the development of a global market.
When business/industry/economy leaders are making related decisions, they look into the effect that the above forces have on their organizations; it is through the understanding of the effects of forces that they can make the right decision (Poister, 2010).
Why is it so important to consider these forces when formulating strategy?
When formulating strategies, leaders need to understand that the success of the strategy is based on how well it has been integrated into the forces prevailing in an economy. When formulating strategies, it is important to consider the effect of social forces, economic forces, political forces, and technological forces to facilitate making strategies that respond to challenges they are meant to make.
Organizations, industries, and economies are considered as going on concerns thus there is a need to understand the current forces affecting them to correctly predict futuristic effects of such or changing forces. Considering the forces assists leaders to lead their organizations to prosperity as it mitigates against a business or otherwise risks.
Which forces most impact your firm and how has that affected your firm’s strategy and success?
Although my firm has been affected by all the forces listed above, economic forces seem to have taken center-stage. The world is recovering from the global financial crisis, the crisis has made doing business challenging as management not only needed to make cost minimization strategies but also has to look for ways to enlarge their market. Cost minimization in the past had been attained through embracing the economies of scale paradigm; this was challenged by the global crisis as markets hardly grew in size. To increase sales, the firms were keen to venture into the international market, this was, however, a challenge in the global financial crisis-era (Lewis, 2011).
The world is recovering from the crisis but the recovery has come with its challenges. Governments are enacting trade sanctions and not-tariff barriers to limit international trade; it has been a challenge retaining the firm as a going on concern with the new set of challenges at hand. Changes in consumer preferences and wants are also affecting the firm’s business-strategies (Gamble, & Thompson, 2010).
Gamble, J. & Thompson, A. (2010). Essentials of Strategic Management: The Quest for Competitive Advantage (2nd Edition). New York: McGraw-Hill Irwin
Lewis, M. O. (2011). An Integrated Approach to Teaching the Capstone Strategic Management Course: A Left- and Right-Brained Approach. Business Education Innovation Journal, 3(2), 66-72.
Morgan, N. (2012). Marketing and business performance. Journal of the Academy Of Marketing Science, 40(1), 102-119.
Poister, T. H. (2010). The Future of Strategic Planning in the Public Sector: Linking Strategic Management and Performance. Public Administration Review, 70(1), 246-254.