Business Strategy: Analysis of Macro Environment Factors and Internal Capabilities

This document provides an analysis of business strategy, focusing on the impact of macro environment factors on an organization's strategies. It explores frameworks like PESTEL analysis and VRIO analysis to analyze the external and internal environment of an organization. The case study on Nissan highlights the influence of government policies and technological advancements on the company's business strategies.

Business Strategy

Contents
INTRODUCTION...........................................................................................................................................3
LO 1..............................................................................................................................................................3
Apply the relevant frameworks and analyze the impact of the different macro environment factors on
an organization as well as its strategies...................................................................................................3
LO 2..............................................................................................................................................................5
Analyze the internal environment as well as capabilities of an organization using relevant frameworks
.................................................................................................................................................................5
LO 3..............................................................................................................................................................9
Application of Porter’s Five Forces model and evaluation of the competitive forces of market on an
organization ............................................................................................................................................9
LO 4............................................................................................................................................................10
Application of different theories, concepts and models and interpretation of strategic planning for an
organization...........................................................................................................................................10
CONCLUSION.............................................................................................................................................13
REFERENCES..............................................................................................................................................14

INTRODUCTION
Actions and decisions that are taken by an organization in order to attain its goals and also to
remain competitive in the market is known as business strategy. It guides the organization and also helps
in the decision-making process. It assists businesses in understanding where they are positioned in the
market and identify their strengths as well as weaknesses (Baraibar‐Diez, Odriozola and Fernández
Sánchez, 2017). A business strategy ensures that an organization utilizes its resources in the efficient
manner. Organization chosen for this report is Nissan, a Japanese automobile company that was founded
in the year 1993. The company is headquartered in Nishiku, Yokohama. Nissan sells its products under
different brand names like Infiniti, Nissan and Datsun. Respective company’s business strategies are
influenced by the government policies regarding issues relating to climate change. The report explains
influence of different external factors on an organization using relevant frameworks. It also evaluates the
outcomes of Porter’s Five Forces model in the market.
LO 1
Apply the relevant frameworks and analyze the impact of the different macro environment factors on an
organization as well as its strategies
PESTEL Analysis
PESTEL analysis is a strategic framework that organizations use in order to identify the different
external environment forces that can have an influence on their overall business operations. It also
contributes in planning and expansion of business for a company. One of the advantages of using this
framework is that it is time and cost effective as well as helps businesses in analyzing potential threats.
The PESTEL analysis of Nissan is as follows –
Political Factors – The United Kingdom is a politically stable nation and one of the most
powerful countries. Also, the country maintains good relations with countries like United States in the
world. However, Brexit has created some uncertainties as well as political issues for the country. Brexit
can create uncertainties in the business of Nissan within the United Kingdom along with a high level of
taxation.
Economic Factors – Although the United Kingdom is an economically stable country, the
recession of 2008 put its economy in trouble (Bentley-Goode, Omer and Twedt, 2019). Due to this, the
economy of UK has recovered slowly. The country has a large population which means that even small
businesses can make profits. The exchange rate can affect the overall profitability of the firm and that too
if it operates internationally.

Social Factors – These factors play an important role and can have an influence on the overall
performance of an organization. The UK government offers various public services without any charge to
the citizens. But the dependency ratio among people living in the nation is continuously increasing.
Differences in the educational levels of the target market can make it difficult for the company to
advertise and promote its products in an effective manner.
Technological Factors – The nation has a good access to technology and people who have an
expertise in Information Technology and Science (An Example PEST Analysis of The UK. 2020). The
United Kingdom has various legislation that are associated with the intellectual property. But the overall
technological development of the UK is slow as compared to the US. Technological advancements made
by the competitors can affect the popularity of Nissan within the market.
Environmental Factors – Different government policies about clear air as well as issues related
to climate change. Due to this, the company has manufactured automobiles that have powerful built-in
battery, along with innovative technology. This has helped the company in gaining a greater number of
customers. Changes in climate can make some of the company's products less useful. Therefore, it is
important to keep in mind the various environmental factors.
Legal Factors – All organizations that operate within the United Kingdom, are expected to
adhere to different legislation (Chen, Eshleman and Soileau, 2017). Respective company is expected to
adhere to Employment Act 1996 as well as Equality Act 2010. In Equality Act 2010, the companies are
responsible to ensure that all employees are treated in a fair and consistent manner. Employment Law
must be followed in order to protect the workers from any kinds of wrong doings from the employers.
Therefore, various factors of the PESTEL analysis can impact the strategy of the company. For
example, if the company fails to use latest technology in its products, the customers will not find them
attractive and might not purchase the same. This is because customers are considered to be one of the
most important stakeholders within a company. Also, since people are increasingly becoming aware about
the environment, it is important for the company to focus on this. For example, it can develop
automobiles so that there is not carbon emission.
Stakeholder Analysis
Stakeholder Analysis is a framework that allows a company to identify and establish appropriate
communication with its stakeholders. This is an important technique that helps organizations in
identifying key stakeholders as well as their needs. Nissan has many stakeholders both inside the
company as well as outside it. The stakeholder analysis of respective company is as follows–

High Power, High Interest – These are those stakeholders that the company should manage
closely. These people must be kept fully engaged and the company should make various efforts in order
to keep them satisfied. This is because they possess high power over the projects of the company. Owner
of the company, General Manager, Board of Directors as well as shareholders of the company. Also,
these stakeholders should be involved in the decision-making process.
High Power, Less Interest – These stakeholders possess high power but low interest in the
project of a company (Evans and et. al., 2017). These people should be kept satisfied and enough work
should be put in to ensure the same. The stakeholders that fall under this category are the customers,
government, investors of the company as well as sponsors. They should not be bombarded with
information so much so that they become bore of the same.
Low Power, High Interest – Respective company, Nissan, should inform these stakeholders
with adequate information in order to make sure that they are not facing any major issues ( Stakeholder
Analysis, 2020). Stakeholders like employees and suppliers can be very helpful with the details during a
particular project.
Low Power, Less Interest – These stakeholders should only be monitored and there is no
requirement of a lot of efforts to be made. These stakeholders possess very less power as well as interest
in a particular project of the company. Security guards, cleaners and receptionist fall in this category.
They should not be bored with excessive communication from the company.
LO 2
Analyze the internal environment as well as capabilities of an organization using relevant frameworks
VRIO Analysis
It can be defined as a framework that is used in order to evaluate the resources that are available
with the company and as a result gain competitive advantage (Grayson and Hodges, 2017). It helps an
organization in its planning as well as decision-making process. The VRIO analysis for Nissan is
explained below-
Resources Valuable Rare Inimitable Organized Competitive
Advantage
Products ✓ Temporary
competitive
advantage
Financial
Resources
✓ ✓ Competitive
equality
Patents ✓ ✓ ✓ Unused

competitive
advantage
Employees ✓ ✓ ✓ ✓ Long-term
competitive
advantage
Valuable
 These are those resources that are have a high perceived value among customers and are
differentiated from the competitors (Habib and Hasan, 2017). Products are a valuable resource for
Nissan because they are highly differentiated due to which their perceived value is high. They
will help the company in gaining a competitive advantage because such products are not offered
by competitors.
 Financial resources of the company are valuable and can help Nissan in gaining a competitive
advantage as they assist it in investing in to various external opportunities of growth and
expansion.
 Patents are also valuable for the company because they allow it to sell finished products in the
market without any kind of interference from the competitors. Respective company can gain a
competitive advantage through patents as the competitors cannot copy the same.
 Lastly, employees of the company are valuable to it because they help the company in attaining
its goal, objectives and gain a competitive advantage.
Therefore, for the organization it means that it will be able to stand out from the competitors and
also attract a greater number of customers. This will further contribute to the company’s overall
performance as well as profitability.
Rare
 These are those resources that can be acquired by either one or very few organizations and
provide competitive advantage for a short duration of time (Helfaya and Moussa, 2017). The
products of Nissan are not rare because they can be provided by competitors.
 Financial resources are rare because strong sources of finance can only be possessed by few
organizations.
 Patents are considered to be rare as they are not available easily and cannot be owned by the
competitor brands.

 Lastly, employees are a rare resource for the respective company because they are highly skilled
and trained, as compared to other organizations.
Inimitable
 A resource that is either costly or difficult to imitate can be referred to as inimitable resource. The
products as well as financial sources of Nissan are not inimitable because they are not as costly to
imitate. If the competitors invest carefully, they can develop similar products.
 Patents on the other hand are inimitable, because they cannot be copied as they are not legally
allowed to be imitated.
 Employees are also inimitable resource because the skills and expertise possessed by the staff
members of Nissan might not necessarily be present in employees working for other companies.
Organized
 A company should organize its policies, management processes, culture as well as organizational
structure in order to utilize its resources in the most efficient way (Johnson and et. al., 2017). The
products of Nissan are not organized as they are already separated into different product lines.
 Patents of the company are not well organized because the company is not using them to their full
potential. The company should start selling products that are patented before the patents expire.
Employees of the company are organized into different departments as well as teams.
Value Chain Analysis
Value Chain Analysis is a process wherein an organization recognizes its different primary as
well as support activities that are responsible for adding value to its finished goods. Value chain analysis
also helps companies in analyzing their internal activities in order to increase differentiation as well as
reduce costs. The primary purpose of this model is to increase the overall production efficiency so that
maximum output can be generated with a minimum cost involved. The value chain analysis for Nissan is
explained below –
Primary Activities
Inbound Logistics: It is important for the respective company to build strong relationship with its
suppliers as they are necessary to receive, store as well as distribute finished goods (Leonidou and et. al.,
2017). Therefore, an analysis of inbound logistics will involve the company focusing on every aspect that
is involved in the transformation raw material to final products.

Operations: Different activities that fall under this category can include packing, assembling,
testing and maintenance. It is important to analyze the different operations activities so that the overall
productivity of the company is improved besides an increase in the efficiency. This will help Nissan in
standing out from the rest of the competitors within the market.
Outbound Logistics: Activities that include a product to pass through various intermediaries are
referred to as outbound logistics. Examples of outbound logistics can include warehousing, scheduling,
transporting, processing and delivering the final goods to the destination. If Nissan will manage these
activities effectively, the satisfaction of the customers as well as growth opportunities for the firm will
increase.
Marketing and Sales: This stage will involve the respective company highlighting the benefits as
well as points of differentiation of the products to the customers (Lim, Chalmers and Hanlon, 2018). It is
important for the company to invest effectively in the marketing as well as sales activities of the finished
goods. Different marketing and sales activities can include promotions, pricing, advertising etc. Effective
sales and marketing activities will help the company in standing out from the competitors.
Services: The services that are offered by the company before as well as after the sale of finished
products play an important role because they will help in satisfying the needs of customers as well as
gaining their trust. Modern customers consider post-sale services to be of more importance as compared
to marketing as well as promotional activities.
Secondary Activities
Firm Infrastructure: Activities that fall under this are accounting, financing, planning as well as
strategic management. Proper strategic management will help the company in optimizing its overall value
chain (Value Chain Analysis Of Nissan, 2019).
Human Resource Management: Human resources management can be analyzed by respective
company by evaluating the different aspects of HR like recruitment, selection, training and development,
rewarding etc. Effective management of the human resources will allow the company to keep its
employees motivated as well as committed to their jobs.
Technology Development: Today, value chains of all organizations depend on technical support.
Nissan should understand the importance of technology in different processes that are involved in the
manufacture as well as marketing and promotion of finished goods (Nagy and et. al., 2018). Some
examples of technological activities are automation service, customer-service supported through
technology etc.

Procurement: It explains the different processes that are involved in purchasing the equipment
that can include equipment, machinery, supplies, raw material as well as other important items that are
necessary for producing final goods. Nissan should carefully analyze its procurement activities in order to
optimize its overall value chain.
Therefore, the company can get more value from operations, technology development and
services because they will contribute to the overall productivity of the firm. Not only this, the profits and
revenues of the company will also increase. This means that the organization will be able to attract a
greater number of potential customers and turn them permanent. This is because efficient after service
will also lead to people promoting the company with others.
LO 3
Application of Porter’s Five Forces model and evaluation of the competitive forces of market on an
organization
Porter’s Five Forces model can be defined as a framework that can be used by organizations in
order to analyze their competitive environment. The framework consists of five forces that can influence
the performance as well as productivity of an organization in the market. Nissan can use this framework
in order to adjust or revise its strategy so as to increase overall profitability and also, gain a competitive
edge. The Porter’s Fiver Forces model is explained below in context of Nissan –
Threat of New Entrants – This is a weak force because Nissan Motors as it has already set
standards that are high for its product portfolio, which makes it tough for the new entrants to enter the
market with similar products as that of Nissan. Also, in order to build a business that is successful as well
as highly profitable, a high investment is required (Oldman and Tomkins, 2018). This can be difficult for
the new entrants. Also, they will not be able to find new suppliers who can provide raw material at
affordable rates.
Bargaining Power of Suppliers – The automobile industry needs components and accessories in
large quantities. Nissan sources raw material for its products from trusted suppliers who supply them at
affordable rates. This can lead to an increase in their overall power to bargain. It is important for the
respective company to maintain positive and healthy relations with its suppliers and also, keep seeking
new ones so as to avoid increase in costs. Because if Nissan will keep earning profits, the suppliers are
also likely to increase their costs.
Bargaining Power of Buyers – The customers of Nissan have a relatively low bargaining power
because of the already set high prices of the products. Also, the company offers products that are highly
differentiated in terms of specifications as well as features. By doing so, the company has been able to

maintain its profitability as well as efficiency within the market. Therefore, this is a weak force because
the company has a deep and clear understanding of the market that it operates in.
Threat of Substitute Products – This is a comparatively high force because of many people
today are increasingly becoming aware about the environmental issues and thus prefer commuting
through public transport in order to cut down the harm being caused to the environment (Ransbotham and
et. al., 2017). Many automobile companies have taken this under consideration and therefore, have started
working upon manufacturing vehicles that will help cut down carbon emissions. Competitors of Nissan
like Hyundai, and Toyota can pose threat by bringing in electric cars.
Rivalry among Existing Competitors – Nissan operates in the automobile industry, which is
one of the most competitive industries in the market. Respective company faces intense competition from
brands like Toyota, Hyundai and General Motors. In order to reduce this force, it is important for the
company to pay focus on differentiating its products from competitors. It can also consider partnering up
with a competitor.
Based on the above five forces, it can be said that the Nissan is position in the market as a brand
that offers highly differentiated products as compared to its competitors. Also, the five forces can affect
the company if it does not develop effective strategies and implement them. Al the forces that are stated
above, have the ability to improve the overall market position of the company in the future if it adopts
various measures to do so.
LO 4
Application of different theories, concepts and models and interpretation of strategic planning for an
organization
Porter’s Generic Strategies
Porter’s Generic Strategies is a set of three strategies that describe how an organization pursues
competitive advantage within the marketplace. This is an important framework for organizations so that
thy can identify their potential niche. The three strategies in this framework are explained below –
Cost Leadership Strategy – Cost leadership involves an organization gaining the advantage of
standing out in the market, by lowering the cost of products. This is the main strategy that Nissan uses in
order to achieve a competitive advantage in the market. Respective company focuses on affordability as
well as easy accessibility within the market. Respective company offers discounts as well as coupons in
order to achieve sales targets.

Differentiation – Respective company uses differentiation strategy along with cost leadership
strategy, in order to grow its business (Shuen, 2018). Nissan differentiates its products through innovation
and addressing the increasing concerns of the consumers. This allows the company to stand out in the
market and attract a greater number of customers. Apart from this, the company also is also used to
differentiate products and services as it has helped in building a strong brand image.
Focus Strategy – This is the last strategy in the framework that involves encouragement of
organizations to lay attention on their resources on expanding the segments that are narrowly targeted. If
the company adopts this strategy, it will focus on a particular market segment. The company adopts this
strategy in order to offer the best value to customers. This is also done by revising branding strategies as
well as bringing in changes in the product designing.
Nissan has implemented differentiation strategy wherein it offers products that are have different
features. This has helped the company in gaining a competitive advantage over competitors in the market.
Also, the company is able to gain customers who are loyal for the company.
Bowman’s Strategic Clock
This model outlines the different strategic positions of the products in the market so that the
company gets an advantage of standing out, which explains how products should be positioned in the
market. The model described 8 positions that are explained below in context of Nissan –
 Low Price and Low Value Added – This is not considered to be a very competitive and
appropriate position for an organization. This is because the products of the company are not
differentiated from each other and also, the customers do not perceive a lot of value, although the
price of products is low.
 Low Price – Organizations that place themselves in this position of the framework are referred to
as market leaders that sell their products at very low prices in the market. This position requires
the strategy of cost minimization.
 Hybrid – This is another position of the Bowman’s Strategy Clock that involves some element of
less price as well as product differentiation (Viardot, 2017). The main aim of organizations in this
position is to persuade consumers to purchase the products.
 Differentiation – The primary motive of this position is to offer products that are perceived very
high by the customers and branding along with product quality plays a very important role in this
in this strategy.

 Focused Differentiation – In focused differentiation, the company places its products at price
levels that are high as compared to competitors. Therefore, the customers buy products because
their perceived value is high in the market.
 Risky High Margins – This positioning strategy involves a lot of risk and in this, a company sets
prices that are high and does not offer anything extra with the products. If customers will
continue buying these products, the profits of the company will be high.
 Monopoly Pricing – In this strategic position, there is only one business that offers a particular
product in the market. Therefore, the customers do not have choices.
 Loss of Market Share – This is the riskiest position as it involves low price products that have a
low perceived value. Therefore, a company should not position itself here.
As far as Bowman’s strategic clock is concerned, the respective company, Nissan could
implement differentiation. And it can be implemented by offering products that are perceived high by
the customers.
Objectives
 To introduce electric cars in the market within a year in order to increase overall sales by 20%.
 To introduce innovative ideas as key less feature and so on in order to attract a greater number of
customers.
From the basis of evaluation of Porter's five Forces Model, it can be said that Nissan should
implement the differentiation position in the Bowman's strategy clock. This is because, in this position,
the products will be perceived high by the customers. The different steps include company aiming to offer
products that are of high quality at average prices in order to create a different identity in the market and
thus, gaining a competitive advantage.
CONCLUSION
The above report concludes that business strategy plays a significant role for an organization to
be successful and profitable in the market. This is because it not only helps in making decisions that are
effective but also guides the management as to how can the resources be utilized in the most efficient
way. This is because organizations can identify their strengths as well as weakness and build a business
whose products are highly perceived in the market. A firm can use different models and frameworks like
Porter’s Five Forces model, Porter’s Generic Strategies, PESTEL analysis etc. so that proper strategies

can be developed and the company also stands out from its competitors. This can further lead to the
company gaining a lot of new potential customers.

REFERENCES
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