Analysis of Dynamic Forces and Five Forces

The assignment requires analyzing the relationship between an organization and external environmental factors such as political, economic, social, technological, legal, and environmental (PESTLE) influences. It also involves evaluating the five forces that impact strategic planning, including threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and rivalry among existing competitors. The assignment aims to understand how these factors affect organizational decision-making and strategic planning.

Running Head: Contemporary Management Issues
Contemporary Management Issues

Contemporary Management Issues 1
‘Review of key dynamic forces impacting on business and society and their impact of
decision making.’
The aim of this task is to provide a brief overview of the key dynamic forces affecting the
strategic decision making process of a company. The essay talks about a critical review of the
literature of the dynamic forces that impact the change in an organization. Further, it also talks
about the relationship between the decisions taken by the company and the dynamic forces
affecting that. The latter part of the essay talks about the review of drivers of social change and
international dimension. The business environment of an organization refers to the internal and
external factors which affect the different activities organized in the company. The environment
includes both internal and external factors that impact the growth of the organization (Srdjevic,
Bajcetic, and Srdjevic 2012). The external dynamic factors that affect the decision making
process of an organization are determines through PESTEL Analysis. The analysis includes
political, economic, social, technological, environmental and legal factors affecting the activities
of the business. These factors create an impact in both positive and negative way in the
environment of the organization. These macro environmental factors have direct impact on the
activities and decisions making process.
According to Armstrong, Kotler, Harker, and Brennan, 2015 the initial factor which affect the
business environment is the political factor, the political factors refers to the activities of the
public and non-public institutions that affect the environment of an organization. The public
institutions include government, government agencies, statutory bodies etc. and non-public
institutions include groups representing society, NGOs etc. Further, it should be noted that this
aspect includes the actions taken by the above mentioned bodies that reflect on the decision
making process of a company. The political factors is further segregated in macro and micro
political factors; the macro factors includes activities like war results, change in the government
and micro factors includes political risks such a taxation policy, regulations imposed by the
government on industries (Vecchiato, and Roveda 2010). The organizations present in business
environment monitor their activities so that they do not face political risk. Such risks might affect
the company in good or bad ways, in good ways like the government can provide subsidy to
specific industries which positively impact the growth of the company. And in negative ways
like, suddenly the government gets changed which can greatly affects ongoing contracts of the

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organization with the governmental bodies. Along with political factors, in the view of
Lawrence, and Weber, 2014 the economic factors that affect the business environment refer to
the factors related to the economies of the country like inflation, import, export etc. the economic
factors have a direct impact on the profit generation activities of the business. An organization’s
day to day activities get affected with the economic factors of the country. Further it is also
segregated into micro and macro-economic factors, the micro factors includes activities related
to the people spending incomes and the macro factors includes demand and supply issues and
governmental control on businesses and policies related to that. With respect to Tian, and Martin,
2011, the social factors are also among the dynamic factors impact the activities and
environment of business. It refers to the factors that involves shared belief and attitude of
population towards the certain product or services which they provide in the market. Population
growth rate, unemployment rate, taste and preference etc. becomes a part of the social factors.
Further the cultural factors that impact the activities of a business are also social factors. These
factors particularly talks about the interest of the people and how they impact on the products
and services served in the market. The social factors are one of the most influential factors as it
talks about the trend prevailing in the target market. Talking about the drivers of social of
change, it should be noted that perception of people is the biggest driver of social change. This
aspect influences changes in the organization which gives rise to social change. Further the
technological factors have now emerged in a greater sense that affects the activities of a business
in long run. Technological factors refer to the technological changes present in the industry that
directly impacts on the growth of the company. If the organization is present in an industry
where technical changes appear in every short span of time then it becomes difficult for them to
attain that technology and use it in the production in order to be competent. Further,
Koulopoulos, and Keldsen, 2016 said that use of technology makes an organization competent
enough to lead the target market; but it can also harass the success attained through it as it is not
easily for all organizations to adapt hi-tech techniques in their business. Next comes the
environmental factors that talks about the changes in the nature affecting the activities of an
organization. Now days, societies are getting more concerned towards the environment and
nature and they want organizations to adhere their corporate social responsibility and initiate
activities for the sustainability of the nature. If activities are not fulfilled then the government of
the country might impose penalties to the companies. Lastly, legal factors present in the

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environment talks about the aspects that relate to the law present in the environment. Customer
rights, labour laws, equal opportunity, right to information etc. are some of the laws which form
a part of the legal factors present in the environment. Further, it is important for the organizations
to follow the legal code of procedure present in the environment in order to trade successfully.
Also the organizations trading internationally needs to comply with the laws and regulations of
all the countries (Meissner, and Wulf 2013).
The above mentioned are the key dynamic forces that affects the business in the external
environment. These sources have direct link with the activities initiated in an organization. As
the organization works in an external environment so all the changes present in that environment
will affect the business as well. Positive change in environment might positively impact the
decision making process of one organization but it might not affect positively to other. For
instance, if the government of the country decides to provide subsidies to the leather
manufacturing organization and reduces the profit margin of leather shoes. So, for leather
manufacturing organizations it will affect positively as they can earn more profits by producing
more leather. But for the leather shoes making organizations, it will impact negatively as they
will purchase the leather at same price and sell it by reducing the profit margins. Thus, it will
affect the decision making process of both the organization as one organization will positive
increases the sales while organization will reduce the sales. According to Issa, Chang, and Issa,
2010, it should be noted that the way in which an organization will make decision is based on the
impact of the external factor and this impact might vary from organization to organization. An
organization can take effective decision only when they have adequate knowledge of the target
market. Additionally it should also be noted that the dynamic factors are important tool which
helps the company to initiate accurate decisions as the decision making process requires a
strategic evaluation of all the factors present in the environment which can influence the
activities of the business in any way. So, this process helps in analyzing those factors and taking
adequate measures to solve the problems proactively. According to Kiptoo, and Mwirigi, 2014,
when it comes to the process of decision making, it is important for organizations to attain all the
information and then analyze the strategies to apply on the business. So, it should be noted that a
decision can only effective only when it is taken considering all the dynamic forces present in the
market. These forces help an organization to build fail proof plan which helps in growing in the
external market. Also, the dynamic capabilities present in the external factors helps in identifying

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opportunities and threats for the business. This factor also helps an organization in evaluating the
favorable conditions resent in the international environment which can helps an organization to
expand. It talks about polies and culture of foreign countries in which an organization can grow.
Thus, it should be noted that such information is immensely valuable in building strategies which
are effective and efficient as well (Gohel, and Gondalia 2013).
As all organization wants to use the dynamic forces in such a way that it brings positive
outcomes for them, so it should be noted that they initiate strategic decision making process that
positively help the company in its future growth. As discussed above that the dynamic forces
present in the environment might show positive or negative response to the activities of the
company. So, the company present in the environment aims to use their resources and
capabilities in such a way that it satisfies the objectives of plan by considering the dynamic
forces. The organizations use the dynamic forces present in the industry and combine it with the
resources to fulfill the objectives of the organization. A strategic set of response is created using
the decision making techniques so as to respond to the key dynamic forces present in the
contemporary business world. The organizations aims to cover all these losses occurred with the
change in the external factors and reciprocate it with the positive outcomes for the company.
Depending upon the negative dynamic forces affecting to growth, the company initiated
techniques accordingly (Njeru, Stephen, and Wambui, 2013). Like, changes in the economic
environment can be rectified through changing the strategic choices and product development
process. Thus, it should be noted that every organization’s response to the key dynamic forces
are different depending upon the type of impact the external dynamic forces lay on them. If the
organizations receive positive response from these forces then they aim to use it more so as to
earn more profits, but if negative response is received to the company then they aim to use these
forces in such a way that it does not affect to objectives of the company. The external
environment is turbulent and ever changing which makes it difficult for companies to maintain
their growth. Thus, the external forces somehow help the organization in analyzing and
evaluating the market conditions which can help in their sustainable growth (Wang, Chen, and
Chen 2012).
As discussed earlier that the dynamic factors adequately drives changes in the organization, also
Ackermann, 2011, said that it is important for an organization to change according to these

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factors in order to remain competent in the external environment. There are many decision
making tools that analyze the contemporary drivers for change present in the environment.
Market research is the prime and foremost decision making tool, as it helps in evaluating the
attributes present in the environment that are likely to change (Babatunde, and Adebisi, 2012).
Market research refers to the process of gathering information about the industry in which an
organization prevail such as the government regulation, taste and preference of customers,
buying behavior of customers etc. The market research is an important tool in the process of
strategic planning and decision making because it gives a vision to the company about the
requirements of the customers which can help the management team of the organization to
prepare mission and goals accordingly. Also, Tung, Baird, and Schoch 2014, evaluated that
market research will analyze the above mentioned dynamic forces present in the environment
and inform the company about the risks coming in their way. Through this the management can
take proactive measures to skip the risks. Another tool is the cost benefit analysis which talks
about the cost and potential benefits associated with different activities of the organization. This
process basically helps an organization in choosing the best option which can provide maximum
benefits to the company. Relation it to the contemporary drivers for change, it should be noted
that this process helps the organization to opt for an option which provides maximum profit
margin to the company by initiating a decision. Also this process identifies the opportunity cost
of an event and helps in taking adequate decisions for the betterment of the organization (Crisp,
and Turner 2011). For instance, a project is expected to provide ‘x’ amount of costs and ‘y’
amount of benefits to the company but with the change in the taste of customers, the company
attains another tender under which they can earn more profits than the project 1. So, according to
the cost benefit analysis, the company should go with the second project which provides them
better benefits according to the market fluctuations. Thus, in the limelight of above mentioned
event, it should be noted that the analysis of the dynamic forces is very important for an
organization as it evaluates the changes which can happen in the management. Evaluation of
these changes also talks about the five forces which majorly impact on the decision making
process of the company. Thus above mentioned literature critically reviews the relationship of an
organization with these forces and how they affect them in their strategic approach as well.

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References
Ackermann, F., 2011. How OR can contribute to strategy making. Journal of the Operational
Research Society, 62(5), pp.921-923.
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Babatunde, B.O. and Adebisi, A.O., 2012. Strategic Environmental Scanning and Organization
Performance in a Competitive Business Environment. Economic Insights-Trends &
Challenges, 64(1).
Crisp, R.J. and Turner, R.N., 2011. Cognitive adaptation to the experience of social and cultural
diversity. Psychological bulletin, 137(2), p.242.
Gohel, H. and Gondalia, V., 2013. Executive information advancement of knowledge based
decision support system for organization of United Kingdom. International journal of advanced
and innovative research, pp.41-50.
Issa, T., Chang, V. and Issa, T., 2010. Sustainable business strategies and PESTEL
framework. GSTF International Journal on Computing, 1(1), pp.73-80.
Kiptoo, J.K. and Mwirigi, F.M., 2014. Factors that influence effective strategic planning process
in organizations. Journal of Business and Management, 16(6), pp.188-194.
Koulopoulos, T. and Keldsen, D., 2016. Gen Z Effect: The Six Forces Shaping the Future of
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Lawrence, A.T. and Weber, J., 2014. Business and society: Stakeholders, ethics, public policy.
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Meissner, P. and Wulf, T., 2013. Cognitive benefits of scenario planning: Its impact on biases
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Njeru, N.E., Stephen, M.M. and Wambui, M.A., 2013. Analysis of factors influencing
formulation of strategic plans in Embu North District, Embu County, Kenya. Global Business
and Economics Research Journal, 2(5), pp.116-129.

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Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multicriteria
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