Impact of Macro Environment on Organization Strategies

This article discusses the impact of macro environment on organization strategies, focusing on the use of PESTLE analysis to understand the external environment. It explores the political, economic, social, technological, legal, and environmental factors that affect JP Morgan's business. The article also evaluates the internal environment of JP Morgan using SWOT and VRIO analysis. Finally, it examines Porter's five forces model in the context of JP Morgan to assess its competitive position in the industry.

Business Strategy
Contents

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact of macro environment in a organisation strategies...............................................1
TASK 2............................................................................................................................................4
P2 Analysis of internal environment of JP Morgan...............................................................4
TASK 3............................................................................................................................................6
P3 Evaluate porter's five forces model in context of the organisation...................................6
TASK 4............................................................................................................................................8
P4 Formulating and Implementing strategic models and theories.........................................8
CONCLUCION.............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy refers to an integration of all the decision taken and actions that is
performed by a company to achieving the goal of the organisation and to secure the competitive
position in the market (Business Strategy, 2020). It is the backbone of every business that leads
to complete the specific goals in the business. JP Morgan is one of the leading global financial
services company since 1968, which provide solutions in different fields like securities, treasury
services, investment banking, markets, private banking, merchant services and commercial
banking in more than 100 plus countries. This firm serves millions of customers, institutional,
government clients etc. further this report through the light on impact of macro environment in
the company external and internal conditions and revenues. After that using porter's model to
evaluate the competitors that are present in the market. Thereafter the company use various
model, theories and concepts to determine the strategic capability of the business and critically
evaluate this to know the sustainability.
TASK 1
P1 Impact of macro environment in a organisation strategies.
Macro environment refers to the external environment which affect the business overall
activities either positive or negative (Fritscher and Pigneur, 2020). This factor is uncertain and
they have an impact in a overall performance of an employees and its working. It is the factor
that is affected by the monetary policy, fiscal policy, GDP, employment rates and consumer
spending. The impact of macro environment affects the decision making process such as
spending, borrowing and investing. Here, J P Morgan use PESTLE analysis tool to better
understand the organisation environment and its sustainability over time.
 Political Analysis- It is the factor that affect the overall business unit by its
profitability or survival. It plays a significant role in the profitability and
sustainability of the JP Morgan because government continues to implement tough
rules and regulations on the financial industry (Ojiako, 2020). To overcome this
monetary issue company applied more strict restrictions to consumers account.
Maximise the level of tax may demotivate the company to increase their profits.
 Economic factors- This factor impacts the sustainability and profitability of the
business. It involves various factors like interest rates, economic growth, exchange
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rates, disposable income of an individuals and business. This factors affect the
purchasing power of the customers (Ghauri, Grønhaug and Strange, 2020). The GDP
growth of the country affect the JP Morgan sustainability in the near future and the
interest rate of the the nation also affect the person willingness to borrow or invest.
Therefore, high rates result in greater investment and it would maximise the growth
of the company. Financial market also affect the companies capital in a way that keep
in mind the demand and supply. The stability in the nation currency creates a great
impact on the longer survival of the firm.
 Social Factors- This factor refers to the individual beliefs, costumes, values and
attitudes who live in a particular society (Al-Surmi, Cao and Duan, 2020). This factor
involve population growth, health consciousness, age distribution and so on. This
factor directly point out the customers satisfaction and what derives them. It affects
the JP Morgan company in a way that it is very essential to carefully understand the
consumers, education level, lifestyle and values and beliefs in a society. There are
various social factors which affect the firm popularity. Firstly, the population of the
company, in their respective age and genders is greatly impact the product that would
offer by the company. Here, the firm would unable to sell their premium class product
to the general public where majority of people are belong to lower class rather they
would focus on the niche marketing. Because of knowledge differentiation firm
would be very careful to not to lose their connection to the potential customers
priorities and interests.
 Technological Factors – This factor involves the change in technological innovation
and development that effect the merchandise and firm (Yu, Park and Hong, 2020).
Elements in this analysis are automation, digitalisation, mobile technology etc.
Technological analysis majorly focus on the developments that would taken place
only in digital technology and this also offer the new channels of distribution,
logistics and manufacturing. In context of JP Morgan, it distance itself from the free
user banking firm and refocusing on their company plans onto the digital platforms.
The essential reason of digitalisation is easily connect with their customers and
financial firm. This type of change is important because it is the primary interaction
between the individuals and the company. The very important change that the
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organisation adopts is the quick deposit features for cellphone device. This technique
helps the customers to easily and quickly deposit their check and cash by using their
personal phones. And where the further improvement is needed firm invested in the
R& D departments where they analyse and identify more new ways to connect with
the people and earns profits over a long period of time.
 Legal Factors- This factor includes advertising standards, consumer's rights, health
and safety, opportunities, product labelling and safety. In this each firms need to
know about what is right and what is not legal on order to trade successful (Cardoni,
Kiseleva and Lombardi,2020). If the organisation deals internationally than it is very
difficult task to know each country legal laws. Discrimination laws are placed in the
JP Morgan to protect the every employees right in a way that they equally treat and
offers a same opportunities according to the skills and capabilities of the staff
members regardless of age,religion gender etc. health and safety laws are also
maintained by the company for their employees so they work effectively and
efficiently. This will also increase the growth of the company.
 Environmental factors- It refers to that factors which rely on the environmental
aspects like climate, weather, farming, tourism, insurance and agriculture. This factor
come into trend after CSR ( corporate social responsibility). In context of JP Morgan
a finance company that extremely done paper works and waste large amount of
paper. To become a healthy environment company move towards a online paper
work to manage their environmental habits.
From the above explained external factors of environment JP Morgan evaluate this to
increase its profitably, revenue and growth in the market. Here, the political factor affects
negatively in it. This factor enables to understand what are the customer preferences and needs
and according to that company can make their products. They use digital marketing so they
easily connect with their customers and other financial firms. They should follow the
employment law to fairly treat their employees which in result in a good productivity for every
employees. Because of CSR, company use environmental friendly product offerings so they earn
higher profits and maximum growth.
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TASK 2
P2 Analysis of internal environment of JP Morgan.
Internal environment is an essential part of business. This climate refers to surroundings
which are presently available within organization that can influence the functioning of
organization (Ahamat and Chong, 2020). This particular environment contains physical,
financial, human, technological resources as well as goodwill image and corporate culture of an
organization. Business has control over such elements through which company can formulate
and identify its strategies. There are two models SWOT and VRIO by which capabilities of JP
Morgan can be understood.
SWOT Analysis of JP Morgan Chase
SWOT analysis is a study carried out by company in order to determining its strengths
and weakness along with extrinsic opportunities and threats. It refers to a matrix of strategic
planning which is intended for utilizing in beginning of decision making and use for evaluating
the overall competitive position of an organization in industry or market (Lartey and et. al.,
2020). In context with JP Morgan, the firm is one of the foremost ruling organisation in financial
industry. JP Morgan uphold its well known position by thoroughly examine and analysing its
SWOT matrix to understand the present scenario of challenging environment.
1. Strengths: These are features which provide advantage over other rivals to business
enterprise. In current time, JP Morgan has various strengths which enable them to prosper
and grow in market. This helps in maintaining secures market share and explore new
markets. Some of strengths are JPMC operates its business in more than 60 countries
serves its services to different institutions, banking sector and government clients.
Company has wide diversified and balanced revenue streams with distinct financial
segments like corporate and consumer banking, asset management so on. It sustain
fruitful returns on its capital expenditure because of its thriving accomplishment of
exclusive projects.
2. Weaknesses: These are characteristics which slow down the functioning of business and
act as disadvantage for organisation (De Haes and et. al., 2020). There are some areas at
which JP Morgan can enhance its weakness and convert them into positive possibilities.
JP Morgan faces various fluctuation in market due to which it creates instability situation
within organisation. There are number of competitors fighting for same market share with
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different or similar products which generate stiff competition condition for JPMC.
Another major weakness of JPMC is raise in expense management because its non
interest and operational expense is increasing year by year. Further, company revenue are
majorly dependent on single market of US which makes firm position weak and slow
down its business.
 Opportunities: These are elements which provide benefits to business or project. Low
inflation rate of country brings opportunity for JP Morgan as it create stable market for
company by which it enable the firm to provide lower interest rates to target consumers.
Another opportunity for JPMC is government green drive through which company can
offers its products to state and federal government contractors. New taxation policy
impact positively which generates opportunities for JP Morgan to raise its profitability.
 Threats: these are components which creates hurdles for business enterprise. The major
threats face by JPMC is regulatory challenges which means frequently changes in legal
laws creates situation of increasing costs for JP Morgan which in turn influence its
operating margins. Any financial crisis or recession situation will affect adversely over
the working of JPMC.
VRIO Analysis of JP Morgan
VRIO analysis is one of the popular mechanism to identify and evaluate the company
resources and its competitive edge (Hasimu and Soegoto, 2020). This framework contains four
elements valuable, rare, imitable and organization. This analysis can be understood by following
matrix.
Resource Valuable Rare Imitable Organisation
Financial
resource
YES NO NO NO
Human resource YES YES NO NO
Patents YES YES YES NO
Distribution
Channel
YES YES YES YES
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 Valuable: these resources are foremost resource which are valuable of organisation and
enable them to implement best strategies in effective and efficient manner (Vidgen,
2020). In case of JP Morgan, financial resources are valuable for company as they enable
they enable the firm to make investment in external opportunities such as various
projects and business this helps the organisation to enhance its profitability and overcome
from threats.
 Rare: The rare resources are those which can be attain by few competitors. For JP
Morgan chase, company's rare resources are its highly talented and skilled employees
which cannot be acquire by other firms easily. To retain these potential workforce JPMC
needs to provides better compensation packages and effective work environment.
 Imitable: These are those resources which cannot be easily sustain by other firm
irrespective of few rivals. In case of JP Morgan, its imitable resources are its patents and
copyrights which are extremely difficult to imitate or copy by others because it is illegal
to imitate patented product or service also it is an expensive process to develop or
purchase copyrights.
 Organization: The above resources required to be properly organized with purpose of
creating value and sustain competitive advantage of organization. For JP Morgan, it has
well organized distribution network which enables firm to offer its services and products
to its target customers on time when need arises.
From above frameworks, it can be summarise that JP Morgan Chase has effective
abilities and core competencies which helps firm to sustain immense success and growth in
market. These mechanism enable the company to identify its strengths and opportunities so that
it can effectively sustain its competitiveness among its competitors. Moreover, it helps
organisation to cultivate adaptive climate so that they can modify and formulate strategy on basis
of external changes.
TASK 3
P3 Evaluate porter's five forces model in context of the organisation
Porter's five forces model was proposed by Michael Porter. It is an analytical tool to
identify the firm's revenue and profitability in its business industry. This model examines the
rivals in the market and for this they considers four factors which affects the organisation growth
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and success (Coulson-Thomas, 2020). In context of JP Morgan, managers use porter's five force
model to evaluate its sustainability and profitability in the industry . Threats of new Entrants- Organisation's power was affected by the new entrants into its
markets. To directly compete with the JP Morgan, new entrants brings with new
innovation, new ways of doing things etc. and than they compete with the firm. If a new
entrants come up with a creative ideas it puts the pressure on the firm (Legaspi, 2020).
JP Morgan manage all the challenges and build effective barriers to overcome this
threats. They introduce new and creative products and services that attracts more new
customers and gives a reason to old ones to buy their products. By established economics
of scale so that it lower the fixed cost per unit. Spending more money on the research and
development departments to fear the new entrants. Bargaining power of the suppliers- Many financial companies buy their raw materials
from different suppliers. Dominance position of supplier's affect the profit margins of the
JP Morgan in a way they they will not high their prices of offings. More powers in the
hand of suppliers in the monetary sectors affect the cost and lowers the profitability of the
industry (Tardieu and et. al., 2020). To overcome this problem JP Morgan build efficient
supply chain with numerous of suppliers. They experiment different product designs
using diverse materials so when the price of one producers high they shift to the another
one. Bargaining power of Buyers- Firms will greatly influenced by the bargaining power of
buyers. In JP Morgan buyers power are relatively high because of intensity of the
competition among rival firms in the banking service industry (Rolaskhi and Soegoto,
2020). The best example in this factors is when financial sectors provide payment for
new targeted consumers. Another trend that follow in this that increasing fashion of
internet where customers are more reliable on the technology and company use research
team to analyse the buyer's demand. By constantly innovating new products and services
firms attract more new users and this will reduce the bargaining power of buyers and it
will positively impact the proficiency. Threats of substitute products- When a offering products of the firm match with the
competitors than it will create difficult situation for the firm. JP Morgan is majorly a
service oriented company where they understand the customers preferences and
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perception and according to that they offer and invent the services. However, they also
increasing the switching cost for the customers by analysing the core needs rather then
what they buy.
 Rivalry among the firms- If the competitor is present in a same industry this will cause to
down the prices and decrease in overall profits (Lyneis, 2020). For this JP Morgan build
a sustainable difference and build a image better than the competitors. Collaborating
with rivalry to increase the market share so that they capture the whole market large as
well as small.
From the above information it has been analysing that five force model of porter can gain
the complete knowledge of the revenue, its profits, sustainability of the organisation in the
financial sectors and banking industry. To understand the porter model managers can give the
shape of those factors in a positive way by using various methods and strategies. For this they
innovate the new services, products to stay in the competitive market. This will also restrict the
new entry in the same industry.
TASK 4
P4 Formulating and Implementing strategic models and theories.
Organizations required to develop and implement different strategic plan in order to
expand its brand name and growth in different other areas or beyond the boundaries of country.
There are numerous models of strategic planning which helps a company to be a first mover to
attain different opportunities and possibilities to convert the disadvantage into advantage. These
models are useful for firm in accomplishment of organisational mission goals effectively and
efficiently (Kasemsap, 2020). JP Morgan can make use of Ansoff matrix strategy for purpose of
expanding its business units in different market. This helps them to gain information regarding
present scenario and conditions prevailing in other areas. Ansoff matrix is a growth and product
development strategy by which firm can assess its potentiality and core abilities that helps them
to decide which strategy can be adopt by organisation. This approach contains four different
strategies.
1. Market Penetration: this particular strategy emphasise on raising its current sales
volume of products within its existing market (Ansoff Matrix, 2018). Market Penetration
is a method to penetrate the market share of the company by reducing existing rates in
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order to stimulate large number of customers through giving attractive offers. Company
can expand its promotional activities so that it can communicate with huge range of
consumers. This particular strategy is adopt by firm when it want growth expansion
within known market.
2. Product Development: this strategy concern with introducing new brand product in
current market. This method of expansion involves research regarding development of
product range which means a proper examination of external environment for purpose of
gaining knowledge about customer's taste and preferences so that firm can produce its
product accordingly. This particular strategy is applicable by when it has absolute
knowledge of existing market and able to offer better solutions to satisfy the emerging
requirements.
3. Market Development: this strategy focus on tapping new market with existing products
or services by organisation. With the help of this approach company can explore new
markets by means of new geographies or regions, different customer base(Alkan, 2020).
This particular strategy is affluent when company has updated version of technology that
brings lucrative opportunities in new markets, when consumers value firm's product.
Organisation have various options to tap new market it can enter in new domestic market
and expand its business regionally otherwise internationally by tapping foreign markets.
4. Diversification: this one is last strategy on matrix as it is most riskiest method to choose.
This strategy mainly focus on entering new market with new developed products.
Diversification means to develop different featured products which has no previous
existence in market. There are two types of product diversification one is concentric
diversification in which company produce products which related to existing product
portfolio whereas second is conglomerate diversification which specify new product is
completely different from its current products.
From above analysis of strategy, JP Morgan can consider Market Development strategy
to expand its business products in different locations. As it is discussed above that JP Morgan's
major part of revenue is highly dependent on US which becomes the reason of slow down in its
productivity. By adopting this strategy company can serve its products in different geographical
areas so that it can create strong customer base and enhance its total earnings.
Strategic Management Plan
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Company overview: JP Morgan Chase is one the leading financial institution which deals in
variety of financial services like asset management, investment management, stock trading,
wholesale funding, wire transfers and many more. It is world's most valuable bank by market
capitalization. Company has its operations in more than 60 countries and now entity wants to
expand its commercial activities in Haiti.
Vision: The vision statement of JP Morgan is to aspire to be the best and cultivate finest team
and healthy as well as winning culture.
Mission: To be the best financial institution across globe.
Smart Objectives: Main aim of company behind expand its business activities in new market is
as follows:
 To increase the number of its profits by 10% in coming one year.
 To enhance its market, share by 15% in 1.5 year.
Strategies and tactics: Market development is the strategy adopted by Tesla to achieve its
objective of increase profits and market share.
Monitoring and evaluation: JP Morgan can evaluate the effectiveness of its implemented
strategy by measure the number of its profits and by examine the sale of its offerings.
CONCLUCION
From the above given information, it can be summarised that every business organisation
operates in a flexible and dynamic environment that affect the commercial operations of entity. It
is very essential for every company to identify and study those factors for which various tools are
there that could be use by organisations. PESTLE and SWOT analysis are the tools that could be
use by enterprise to examine the external forces and to measure its internal capabilities. Further,
porter five force analysis could also employ by firms in order to examine the competitive forces
of industry. Further, with help of strategic management plan company can attain its set
organisational objectives and can sustain in market for long run.
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