Impact of External Business Forces on Strategic Capabilities: A Case Study of Smart in Philippines

This research report explores the impact of external business forces on the strategic capabilities of Smart Communications in the Philippines. It examines the concept of external business forces, analyzes the strategic capabilities of Smart Communications, and investigates the relationship between external forces and internal capabilities. Recommendations are provided for the organization to enhance its long-term performance.

Running head: RESEARCH REPORT
RESEARCH REPORT
Name of the Student
Name of the University
Author Note

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Executive Summary
This report is based on the research which is collected in regard to the analysis of the numerous
external forces which tend to have a very solid influence on the business situation. The business
situation can be taken to be very complex and various factors influence the performance of the
firm. Hence, the firm which has been selected for the purpose of the analysis is the Smart
Communications in Philippines. The report provides an Introduction, Review of Literature, and
Research Methodology, Findings and analysis and the Conclusion. Certain suggestions have also
been given.

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Table of Contents
Research Topic................................................................................................................................4
Introduction......................................................................................................................................4
Overview......................................................................................................................................4
About the Firm.............................................................................................................................4
Research aim................................................................................................................................5
Research Questions......................................................................................................................5
Research Objectives.....................................................................................................................5
Research Rationale.......................................................................................................................6
Review of Literature........................................................................................................................7
Strategic Capabilities...................................................................................................................7
Thriving in the International Market............................................................................................7
Identification of Critical Competencies.......................................................................................7
Strategic Value Analysis..............................................................................................................8
Aspects of the Strategic Capability..............................................................................................8
External forces.............................................................................................................................8
Economic Influences....................................................................................................................9
Political and Legal Influences....................................................................................................10
Demographic Factors.................................................................................................................10
Social Factors.............................................................................................................................10
Technology.................................................................................................................................11
Research Methodology..................................................................................................................12
Research Outline........................................................................................................................12
Research Philosophy..................................................................................................................12
Research Design.........................................................................................................................12
Research Approach....................................................................................................................13
Research Strategy.......................................................................................................................13
Data collection...........................................................................................................................13
Data analysis..............................................................................................................................13

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Ethical considerations................................................................................................................14
Findings and Analysis....................................................................................................................15
Findings from the Literature Review.........................................................................................15
Findings from the Primary data collection.................................................................................15
Implications for the firm............................................................................................................17
Conclusions and Recommendations..............................................................................................18
Recommendations:.....................................................................................................................18
References......................................................................................................................................19
Appendix........................................................................................................................................21
Interview Script..........................................................................................................................21

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Research Topic: The Impact of External Business forces on the strategic capabilities of the
business: A case study of Smart in Philippines
Introduction
Overview
The external business environment is considerably dynamic in nature and in relation to
this, there are various external forces which have an influence on the performance of the firm
and affect the overall strategic capabilities of the business. These forces may comprise of the
Political forces, the Economic forces, the Social forces, the Technological forces, the Legal
forces and the Environmental forces. These forces although performing externally, can have a
sound impact on the internal capabilities of the organization. The primary reason why these
aspects are being considered is because they tend to affect the operations of the business and
sometimes either limit or support the overall capability of the business.
About the Firm
The SMART Communications can be ideally defined as the wholly owned wireless
communications and digital service subsidiary of the PLDT which is a telecommunications as
well as digital service provider which is based in Philippines. The company has a total of 58.3
million mobile subscribers and has a total of 3.8 million users under the Smart Bro and the Sun
wireless broadband. Additionally, the firm tends to offer a large collection of the wireless
services with the help of which, it is successfully able to deploy its services in various key areas
of Philippines. The company has also undertaken a research phase for the development and

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research of the 5G services (Morden 2016). The company is being supported by the satellite
communication which as the tendency to serve the global maritime industry.
Research aim
The primary aim of the research is to be to find the impact of the various External
business forces on the strategic capabilities of the Smart Communications in Philippines.
Research Questions
The research questions have been selected as follows:
1. What is the concept of External business forces in the context of Philippines?
2. What are the strategic capabilities of Smart Communications in Philippines?
3. What is the impact of the external business forces on the strategic capabilities of the
firm?
4. What is the relationship between the external business forces and the internal capabilities
of the firm?
5. What recommendations can be provided to the organization which would assist them in
understanding the manner in which the firm can perform well in the long run?
Research Objectives
The research objectives have been stated to be as follows:
 To understand the concept of External business forces in the context of Philippines.
 To examine the strategic capabilities of Smart Communications in Philippines
 To analyze the impact of the external business forces on the strategic capabilities of the
firm.

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 To find the relationship between the external business forces and the internal capabilities
of the firm.
 To provide recommendations to the organization which would assist those in
understanding the manner in which the firm can perform well in the long run.
Research Rationale
The primary reason for which this research has been adopted can be largely contributed
to the fact that, the external environment of the business can be assumed to be very active in
nature and it is with respect to this fact that it often becomes very difficult for the business to
ensure that it will effectively be able to carry out the research on a comprehensive manner which
would assist in finding the means in which the external forces either support or limit the strategic
capabilities of the organization (Hitt and Duane Ireland 2017).

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Review of Literature
Strategic Capabilities
Strategies are deployed by the different organizations in order to be successfully being
able to compete in the business environment for various returns which comprise of aspects like
the market share, the revenue, the customers and various related tactics (Bryce 2017). Hence, it
is the duty of the leader to ensure that he is effectively able to shape various strategies for the
organization and be able to assure that the organization is being able to come up with various
advantages which would benefit the organization in the long run. Hence, according to Hitt,
Ireland and Hoskisson (2016), strategic capabilities can be rightfully referred to as the strengths
of the company, the people, the skills as well as capacities which provide a competitive edge to
the firm and are able to perceive that the firm is being able to perform very well.
Thriving in the International Market
As discussed earlier, the strategic capability of an organization may assist it in growing
financially and help the firm in prospering well irrespective of the various strategic limitations
which exist in the market regarding aspects like competition and the various legislations and
regulations.
Identification of Critical Competencies
There are a large number of critical competencies which can contribute towards ensuring
that the strategic competency and capability of a business can be enhanced (Steiss 2019). The
aspects like cash, patents and related property also contributes towards ensuring that a firm is
able to deploy the right kind of strategies and is being able to perform well in the long run.

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Strategic Value Analysis
Just having the strategic capability is not enough and any association which objects to
perform better would be obligated to have an assessment of the strategic capabilities which is
indeed a complex procedure. The procedure of evaluating the overall business strategic
capability can be defined as the strategic value analysis.
Aspects of the Strategic Capability
The strategic capability may comprise of a number of factors involved in the business and
may comprise of factors like the Manufacturing of the product or the service delivery which
assists in ensuring that a firm is being able to manufacture in the right manner and engage in
adequate service delivery as well. The strategic capability of the business also lies in its supply
chain management whereby the firm would be obligated to see to it that it is being able to have a
good control over its supplies (Ansoff et al. 2018). The other strategic capabilities of a business
are often focused on the Research and Development along with the skills of the employees and
managers. With respect to this, it can be rightfully mentioned that, all the employees of a firm
are required to be skilled adequately which will help in seeing to it that the firm is being able to
have a good standing in the market (Zhao et al. 2017).
External forces
The businesses do not operate in a vacuum but they rather govern in a dynamic
environment which has a great impact on the manner in which the firm tends to operate and also
acts as a deciding factor of whether the organization will be able to achieve long term success or
not. The various factors which generally govern the exterior environment can be contributed to

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have various factors like the Party-political, Social, Economic, Legal, Technological and
demographic factors. Each of these factors has been known to have a very strong effect on the
various procedures of the firm (Hitt and Duane Ireland 2017).
Figure 1: The external environment of the business
(Source: Lasserre 2017)

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Economic Influences
These influences are one of the most integral influences whereby a business is generally
able to be affected by the business cycles and the various individuals. The interest rates and the
inflation rates are other areas which tend to affect the economic activity of the business. The
government attempts to be able to control the overall economic activities of the business so that
it is able to set various aspects like taxes and other interest rates which will ensure that, the flow
of supply and demand can be managed well.
Political and Legal Influences
The political environment of a country where the firm functions also has an impact on the
daily business operations (Quinlan et al. 2019). The laws of the country, the various aspects like
the laws of the firm and other such associations also have an impact on the way in which the firm
tends to perform in the long run. Hence, it is vital to understand that a politically stable
environment calls for a comprehensive political climate and better business operations.
Demographic Factors
According to Trigeorgis and Reuer (2017), the demographic factors which affect the
operations of the business can be understood to be the factors like the location of the individual,
the market, and the vital statistics regarding their age and related aspects like location as well.
Social Factors
Another set of factors which affect firm can be understood to be the social factors
whereby the attitudes, values and the ethics as well as the lifestyle have a strong impact on the
manner in which the firm can be understood to have a broad range of interests which comprise of
various aspects like the changing roles of the business, the development of the family incomes,

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the renewed emphasis, the ethical behavior of the different participants which will assist in
ensuring that the renewed emphasis can be maintained on the ethical behavior within all levels of
the organization (Morschett, Schramm-Klein and Zentes 2015).
Technology
The technological factors can be considered to be another set of factors which generally
has a critical impact on the business operations. This technology has the capability to impact the
application of science as well as the engineering problems which have a very strong impact on
the productivity. The productivity can be considered to have a very strong impact on the
organizational performance and has the overall ability to maintain the performance of the
company at large (Frynas and Mellahi 2015).

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Research Methodology
Research Outline
The research needs to be carried out in a comprehensive manner which will help in
ensuring that, the organization is able to determine the impact of the external forces on its
strategic capability and in line of this, SMART Communications is able to come up with various
avenues which will help the firm and see to it that the firm is successfully able to device various
policies which can assist it in the long run (Mackey and Gass 2015).
Research Philosophy
The research philosophy is the overall assumptions and beliefs based on which the
research is carried out (Kumar 2019). It determines the overall role of the researcher and ensures
that the study is successfully able to attain the overall objectives which it has set out for itself. In
line with this, it can be mentioned that the research philosophy which has been adopted for the
study is the Positivist philosophy whereby the data will be analyzed and collected using a mixed
approach.
Research Design
The research design can be understood as the overall layout which is generally used for
the study and it is based on this layout, the research findings are generally presented. The
research design of this study is the descriptive design whereby the study will aim to present the
findings of the research in a descriptive manner and the manner in which the external forces
impact the operations of the Smart communications.

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Research Approach
The research approach can be stated to be the manner in which the research is undertaken
(Flick 2015). The deductive research design has been followed for the paper as it will assist in
deducing the information from the details which have been collected for the research and will be
aligned with the objectives which have been laid out for the paper (Silverman 2016).
Research Strategy
The research strategy is the process which has been adopted for the Data collection and
the Data analysis. In line of this, it can be understood that the Mixed approach strategy has been
adopted whereby the data will be collected using both the primary and the secondary sources of
information and along with this, the case study approach related to the Smart communications
will be met with.
Data collection
The data collection method which is being adopted for the research is the mixed method.
In this method, the data for the dissertation will be collected using both the primary and
secondary method of the data collection (Alvesson and Sköldberg 2017). The primary method
will be using interviews of industry experts for the analysis and the secondary method will make
use of the Literature review which will be used to examine the strategic framework available.
Data analysis
The data analysis method which will be adopted for the analysis is the Case study
approach. Here all the findings will be analyzed in regard to the case of the Smart
communications.

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Ethical considerations
The ethical considerations can be referred to the various aspects which a researcher needs
to consider while carrying out the entire research. In line of this, it can be rightfully mentioned
that, the interviews for the research must be undertaken with consent and no unethical acts
should be undertaken.

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Findings and Analysis
The section of the paper will examine the ways in which the business tends to perform
and will also analyze the manner in which Smart Communications can benefit from the analysis
undertaken with the aim of finding the impact of the external forces of the strategic capabilities.
Findings from the Literature Review
From the review of Literature, it can be examined that:
1. The business environment is governed by a large number of forces which do not lie
within the control of the firm. These forces can be taken to be the Political, Demographic,
Social, Technical and the Legal forces. This has a vital impact on the overall decision
making of the organization.
2. It was also understood that the internal environment capabilities are in control of the
management of the firm and therefore, it becomes essential to understand that, the firm is
successfully being able to manage these capabilities by preparing and planning in
advance against these different forces are present in the peripheral environment of the
firm (Zhao et al. 2016)
3. Moreover, it also focuses on the strategic planning tools in the external environment of
the firm which contributes towards understanding g the manner in which the firm will
value in the long run.
Findings from the Primary data collection
For the primary data collection, the interviews of various industry experts were collected
which assisted in understanding the manner in which the industry in Philippines has been

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performing and how has the firm been performing with respect to this. The findings of the
Interview are as follows:
Factors affecting telecommunications industry
For the industry, there are a set of different factors which tend to have an impact on the
overall operations of the firm and these can be understood to be as follows. The first respondent
mentioned that ` The different factors according to me which affects the operations of the firm
can be understood to the technological factors which affects the overall advancements of the
business. Moreover, factors like the social factors also have an impact on the operations. `
Whereas the second respondent mentioned that, `` The different factors affecting the operations
of the business can be stated to be the Demographic and the Political factors. This is because I
believe that any change in the demographic needs of the customers affects the purchase.
Additionally, the legislative regulations affect the business operations as well. `` Hence, from
this, it can be rightfully mentioned that the telecommunications industry would be required to
undertake relative initiatives in order to ensure long term success.
Advise to the industry and to the firm
The various experts were asked about the advice which they would like to provide to the
industry. The first respondent mentioned d that, `` I would advise the various businesses as
present in the industry to ensure that they are successfully being able to plan in advance and
manage these forces. `` On the other hand, the second respondent mentioned that, ``The advice
which can be given to the different firms can be understood to be the fact that, the firms would
be required to undertake measures like advanced planning and take decisions carefully so as
to ensure long term success.``. Therefore, it can be stated that if the firm follows these advises,

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it will be able to be sure success in the long run. Some experts also mentioned that, `` Therefore,
utilization of general strategic frameworks and tools needs to be undertaken so as to ensure
that, the firm is being able to combat against the various forces which are governing the
business.``
Capability of SMART communications
The different industrial experts were also questioned about the capability of the Smart as
a business to which the responded positively. The first respondent mentioned that, `` Although
Smart is being able to perform well, however, there does exist times when they are not being
able to extend their strategic capabilities as they are hindered.`` and the third respondent
mentioned that, `` The Smart communications is making use of extensive social media and
related research techniques which is then assisting the firms to ensure that, the organization
is successful in future.``
Implications for the firm
Hence, from the analysis, it can be implied that for SMART it is important to ensure that
it will successfully be able to engage in strategic planning which will enable the organization
have the capability to impact the overall operations of the firm as well. In line of this, the
business would be required to understand that it needs to keep a look out for the factors like
Demographic, Political, Technological and the social factors which are most likely to impact the
overall performance of the firm.

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Conclusions and Recommendations
Hence, from this, it can be understood that the business atmosphere can be stated to be
extremely dynamic and hence, the different firms which are present in the business environment
need to take essential steps for their successful operations. The report focused on the Smart
Communications in Philippines and the manner in which the external operations of the firm
affect the operations of the business. A brief introduction, Literature review as well as thw
research methodology along with the findings has been provided for the company. The next
section will provide certain suggestions which can be adopted by the firm:
Recommendations:
1. The legal regulations and laws will be required to be abided by the firm so as to see to it
that, it is able to carry out the operations in a safe manner and build the brand image
(Morden 2016).
2. The SMART would also be required to build on the internal capabilities of the firm so as
to ensure that it is able to meet the demands of the different customers and be able to deal
with the various external forces.

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References
Alvesson, M. and Sköldberg, K., 2017. Reflexive methodology: New vistas for qualitative
research. Sage.
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2018. Implanting
strategic management. Springer.
Bryce, H.J., 2017. Financial and strategic management for nonprofit organizations. Walter de
Gruyter GmbH & Co KG.
Engert, S., Rauter, R. and Baumgartner, R.J., 2016. Exploring the integration of corporate
sustainability into strategic management: a literature review. Journal of cleaner production, 112,
pp.2833-2850.
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management: Concepts and
cases: Competitiveness and globalization. Cengage Learning.
Kumar, R., 2019. Research methodology: A step-by-step guide for beginners. Sage Publications
Limited.

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Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Mackey, A. and Gass, S.M., 2015. Second language research: Methodology and design.
Routledge.
Morden, T., 2016. Principles of strategic management. Routledge.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp.
978-3658078836). Springer.
Quinlan, C., Babin, B., Carr, J. and Griffin, M., 2019. Business research methods. South Western
Cengage.
Silverman, D. ed., 2016. Qualitative research. Sage.
Steiss, A.W., 2019. Strategic management for public and nonprofit organizations. Routledge.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal, 38(1), pp.42-63.
Zhao, E.Y., Fisher, G., Lounsbury, M. and Miller, D., 2017. Optimal distinctiveness: Broadening
the interface between institutional theory and strategic management. Strategic Management
Journal, 38(1), pp.93-113.

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Appendix
Interview Script
Person 1: XYZ
Questions Responses
According to you, which factors affect the
telecommunications business?
The different factors according to me which
affects the operations of the firm can be
understood to the technological factors which
affect the overall advancements of the
business. Moreover, factors like the social
factors also have an impact on the operations.
What advice would you like to give to these
businesses?
I would advise the various businesses as
present in the industry to ensure that they are
successfully being able to plan in advance and
manage these forces.
How is the Smart coping up with the
environment?
Although Smart is being able to perform well,
however, there does exist times when they are
not being able to extend their strategic
capabilities as they are hindered.
What policies need to be designed by the firm? Therefore, utilization of general strategic
frameworks and tools needs to be undertaken
so as to ensure that, the firm is being able to
combat against the various forces which are
governing the business.
Person 2: ABC
Questions Responses
According to you, which factors affect the tele
communications business?
The different factors affecting the operations of
the business can be stated to be the
Demographic and the Political factors. This is
because I believe that any change in the
demographic needs of the customers affects the
purchase. Additionally, the legislative
regulations affect the business operations as
well.
What advice would you like to give to these
businesses?
The advice which can be given to the different
firms can be understood to be the fact that, the
firms would be required to undertake measures
like advanced planning and take decisions

22RESEARCH REPORT
carefully so as to ensure long term success.
How is the Smart coping up with the
environment?
SMART is undertaking initiatives like strategic
planning, employee engagement and other
related techniques which will affect the future
decisions.
What policies need to be designed by the firm? The different policies which the firm needs to
design can be stated to be inclusion of
employees and long term strategic planning.
Person 3: DEF
Questions Responses
According to you, which factors affect the
telecommunications business?
I strongly believe that the demographic and the
social factors are the main factors which have
an overall impact on the manner in which the
different business tend to perform in the
business environment.
What advice would you like to give to these
businesses?
The advice which can be given to the
telecommunication industry is to keep an eye
on the changing trends with the help of the
social media which will enable it to perform
well in the long run.
How is the Smart coping up with the
environment?
The Smart communications is making use of
extensive social media and related research
techniques which is then assisting the firms to
ensure that, the organization is successful in
future.
What policies need to be designed by the firm? The different policies which need to be
designed can be stated to be advanced research
and strategic preparation which will help in
securing a better position in the market.