Business Strategy: External Macro Factors Impacting Business Operations

This project examines the external macro factors that impact business operations either favourably or unfavourably. It analyses the internal environment and capabilities of business with appropriate frameworks. Additionally, it elaborates the Porter’s Five Force model for identifying the competitive strategies of business.

Unit – 32
Business
Strategy

Table of Contents
INTRODUCTION.................................................................................................................... 3
TASK 1................................................................................................................................... 3
P1. Examine the external macro factors that impact business operations..........................3
M1. Analyse the macro environment for developing strategic management decisions.......6
D1. Interpret data and information for environmental and competitive analysis for
developing strategic decisions, objectives and tactical actions...........................................6
TASK 2................................................................................................................................... 6
P2. Analyse the internal environment and capabilities of business with appropriate
frameworks......................................................................................................................... 6
M2. Examine the strength and weakness of internal environment with its capabilities,
structure and skills.............................................................................................................. 8
TASK 3................................................................................................................................... 9
P3: Porter’s five forces........................................................................................................9
M3: Choosing right strategy for gaining competitive edge.................................................10
TASK 4................................................................................................................................. 11
P4 & M4: Application of range of theories, concepts and models and devising of a
strategic management plan...............................................................................................11
CONCLUSION..................................................................................................................... 15
REFERENCES..................................................................................................................... 16

INTRODUCTION
The managers of an organisation develop innovative idea through strategic decision-
making procedure for competing with rivalries is called as business strategy. This is most
important for business to identify its strength and opportunity for minimising controllable and
uncontrollable. As per the given case study, this project is based upon Nissan as being
Japanese automobile company which was founded on 28th December, 1993. This project
examines the external macro factors that impact business operations either favourably or
unfavourably (Ango and Plé, 2015). It analyses the internal environment and capabilities of
business with appropriate frameworks. Additionally, it elaborates the Porter’s Five Force
model for identifying the competitive strategies of business. This project demonstrates the
various theories and models that are applicable in devising strategic plan.
TASK 1
P1. Examine the external macro factors that impact business operations
Business Strategy:- It refers as the process through which managers of company
aims to develop various strategies to sustain in global market. These strategies are further
classified as stability, expansion, retrenchment and combination strategy that builds power
and ability of organisation to compete with rivalries. It is essential to understand the current
position of company with its available rivalries that might create threat for business
operational activities. Managers of Nissan implement these business strategies for
determining the future direction through predicting vision and mission that has to be
achieved in particular duration.
Nissan:- This is Japanese automobile company which was founded on 28th
December, 1993. It is headquartered in city of Nishi-Ku, Yokohama, Japan. This
organisation is automotive industry with its ISIN number is JP3672400005. The Chairperson
is Yasushi Kimura and Chief Executive Officer is Makoto Uchida (Brands, 2014). Its products
include automobiles, luxury vehicles and commercial means of transport, outboard motors
and forklift trucks. The production output is 5,556,241 units in 2016 with 138,910 numbers of
employees in FY 2017. It has variety of divisions that are Nissan, Infiniti, Nismo and Datsun
with its website at www.nissan-global.com/EN.html.
 Vision:- The vision of Nissan is to build trust of employees, customers and
shareholders for supplying qualitative products to enlarge their target market for
increasing sales and profits.

 Mission:- The mission of Nissan is to develop unique and creative automated
vehicles at superior measurements which have the capability to increase its value
and goodwill.
 Objectives:- The main motive of Nissan is to diversify their products from rivalries to
enlarge customers with clean and safe driving experience for customers.
PESTLE Analysis:- This technique refers as the process through which managers
analyse macro-environmental factors that impact business operations. It is most important
for organisation to build its competitive strategies effectively that develops opportunity for
minimising threats through precautionary steps (Braun, Latham and Porschitz, 2016).
Managers of Nissan implement this as to monitor and respond changes in macro-
environment for being stable in global market.
 Political:- This includes rules and regulations imposed by government of Japan,
political stability or instability, foreign trade policy, labour and environmental laws, tax
policies, etc. Managers of Nissan are favourably affected as they build close relations
among government of United Kingdom and Japan that leads to play major role in
exchange of goods and services. The government of political leader is stable that
that creates opportunity for company to follow same policies and procedures. The
managers of Nissan may also face negative impact from political factor through trade
restriction which results in high cost of their products by not being able to purchase at
least price (Cox, 2014).
 Economical:- It involves economic growth, interest rate, disposable income of
consumers, etc. Managers of Nissan are positively impacted as Japan is the third
largest economic sector in world with its total GDP rate of $4.9 trillion at November,
2017. The managers of Nissan are negatively impacted by least disposable income
of customers as buyers aim to save their earnings during inflation by postponing their
plan for future.
 Social:- The social factor consists of population growth, age and income distribution,
health and safety measurements, etc. The managers of Nissan are favourably
affected as they create job opportunity for the unemployed rate of population to
survive their lifestyle effectively. It develops customers support and loyalty through
providing them qualitative products and services at least cost (Grix and Houlihan,
2014). The managers of Nissan are unfavourably affected as increase in population
growth keeps on changing their demands which affects the business activities.
 Technological:- This factor includes technology and communication infrastructure,
automation and innovative ideas. Managers of Nissan adopt various technological
equipments for developing and designing their models of vehicles as to attract large

number of customers. It is favourably affected by developing variety of cars, trucks,
etc., at least price that encourage buyers to purchase it. The managers of Nissan are
unfavourably affected as the adoption of new technology leads high expenditure for
company in present and become obsolete in future.
 Legal:- The legal factors consists of legal and lawful obligations of government by
claiming the business actions must be performed in favour of employment and
customers. It includes consumer rights, employment legislations, product labelling
and packaging. Managers of Nissan are negatively impacted as they are bound to
pay minimum wages to its workers whether they are active performer or not as well
as productive labours must be benefited with bonus and incentives.
 Environmental:- This element involves the surrounding of environment which are
tourism, farming, weather, climate, pollution, natural disasters, geographical location,
waste disposal, etc. Managers of Nissan are unfavourably affected as their
automobile industry is not highly capable in restricting environmental pollution that
impact population health adversely (Harmon, 2019).
Stakeholder Analysis:- This framework is described as management tool for
managers to determining the essential actions that has to be implemented in business for
attaining goals and objectives in future. Managers of Nissan implement this framework for
analysing the power, interest, influence and impact towards business.
 High power and Low interest:- The managers of Nissan analyse that sponsors
have high power while manufacturing products and services for supplying it to
customers where these have low interest in order to satisfy their needs.
 High power and high interest:- Managers of Nissan identify the high power of
executive, BA and SME for supplying qualitative products and services whereas PM
of country does not have interest towards company as its main aim is to identify the
policies are followed or not.
 Low interest and low power:- The managers of Nissan analyse that employees
have low power and low interest towards company goal as their main aim is to
achieve target efficiently.
 High interest and low power:- Managers of Nissan focus on high interest of
supplier, internal users and developer to meet the requirement of customers whereas
tester and trainer have low interest towards goal as their aim to complete their
individual task.

M1. Analyse the macro environment for developing strategic management decisions
The strategic decision-making procedure is mostly affected by the external
environment. Managers of Nissan are positively impacted by all the factors except legal
factors that create opportunity for business to sustain in global market. The company is
negatively impacted by legal factors that adversely affect business operations by imposing
new legislations that have to be followed by managers to achieve success.
D1. Interpret data and information for environmental and competitive analysis for
developing strategic decisions, objectives and tactical actions
The managers of Nissan emphasize on environmental analysis for company to
sustain in global market by identifying its opportunities and threats that creates delay in goal
accomplishment. It is essential for company to implement the PESTLE analysis that analyse
the external macro environmental factors which positively or negatively impact business
operations. The main objective for managers of Nissan is to analyse the uncontrollable risk
and take precautionary steps to minimise it for restricting negative impact upon business
stability (Hoang, 2015).
TASK 2
P2. Analyse the internal environment and capabilities of business with
appropriate frameworks
Internal Environment:- This is defined as the internal surroundings of business
which mostly includes employees mix, capabilities, resources, management values,
stakeholder goals, strategy excess and corporate culture. The managers of Nissan analyse
this intrinsic environment as it develops strength and weakness for company. It is essential
for organisation to build good employee relations that leads to engage and involve among
one another for completing the target at specified date.
VRIO Model:- It is referred as business model for analysing the internal resources
and capabilities that have to be fully and effectively utilised by company to sustain in global
market. This analysis plays major role for identifying the capability of resources as compared
to its competitors which are scarce and has to be implemented in organisation to achieve
success efficiently. Managers of Nissan execute this model as it creates opportunity for
analysing the valuable, rareness, imitable and organised resources of company that might
create threat for rivals (Kapferer, 2015).
Resources Valuable Rareness Imitable Organized
Brand Image Yes No No No
Design Yes Yes No No

Technology Yes Yes Yes No
Consumer
satisfaction
Yes Yes Yes Yes
 Valuable:- The managers of Nissan focus on building their brand image by supplying
qualitative products and services that leads to develop trust and faith among its
customers. The company is further beneficial in developing good support and loyalty
of customers by developing good relations that leads to identify the change in taste
and preferences.
 Rareness:- The main purpose for managers of Nissan is to develop their design of
model with innovative idea to attract large number of customers. It enlarges
customers by motivating them to purchase cars that lead to increase sales and
profits (Labusch, Aier and Winter, 2014).
 Imitable:- Managers of Nissan aims to adopt new technology for manufacturing
specialised structure of vehicle that leads to complete task on specified date. It is
most important for company that capital labour market leads to perform actions
smoothly and ease for maintaining their quality.
 Organized:- The managers of Nissan are highly profitable by meeting the
requirements of its customers through developing good relations by providing them
qualitative products at least price. It creates opportunity for growth and stability of
business to sustain in global market.
McKinsey 7’S model:- This framework was introduced by great philosophers that
are Robert H. Waterman, Jr. and Tom Peters at 1980. It plays major role in business for
monitoring changes in the internal situation of an organisation. Managers of Nissan
implement this model for motivating workers to perform their task effectively in order to
achieve success efficiently.
 Strategy:- The managers of Nissan mainly focus on developing various strategies
that leads company to sustain in global market by competing with rivalries
(Loebbecke and Picot, 2015). It further creates opportunity for business to enlarge
customers by supplying them qualitative products at low cost for increasing sales and
profits.
 Structure:- Managers of Nissan aims to manufacture model of their vehicle with
diversification for attracting large number of customers through its unique design,

structure, shape, size and colour. It emphasizes buyers to purchase this model for
building and increasing their reputation.
 System:- Nissan managers focus on building system of good employee relations that
restricts conflicts, jealousy and partiality. It results in developing strength of company
by motivating team morale for performing their actions collectively to achieve
individual and organisational goals.
 Style:- The managers of Nissan identify its leadership style by managing and running
business effectively for meeting the requirements of its customers effectively through
providing them high level of satisfaction. The company majorly emphasize on
producing qualitative products that is capable in fully satisfying the needs and wants
of clients (Magnani and Zucchella, 2019).
 Staff:- Managers of Nissan focus on its employee performance by monitoring and
controlling their actions for identifying errors that might delay in goal accomplishment.
The company further takes necessary steps to minimise these mistakes through
developing innovative idea of corrective measures.
 Skills:- Nissan managers analyse the skills and capabilities of individuals, teams and
organisation that leads company to sustain in global market. The company majorly
aims to provide training and development programs that improve and update the
skills, knowledge and behaviour of workers for building specialisation that leads to
complete target at particular duration.
 Shared Values:- The managers of Nissan are highly beneficial as the managers,
leaders and workers collaborate with one another for achieving vision and mission of
company. It further leads managers to understand emotions and feelings of workers
for analysing their circumstances. This result in sharing views and information among
each other by building trust and faith between them.
M2. Examine the strength and weakness of internal environment with its capabilities,
structure and skills
The strength and weakness of internal environment with its capabilities, structure and
skills are as follows:-
 VRIO model:- This model is useful for managers of Nissan in analysing their scarce
resources for utilising it effectively. The strength of this model is it creates strength
and capability by focusing on sources for developing competitive strategies through
effective utilisation that leads to sustain in global market. The weakness of this
model is that managers are not able to utilise resource as workers are inactive and
unproductive and lacks in performing tasks effectively.

 Mckinsey’s 7s Model:- The strength of this framework is it focus on strategy,
structure, systems, skills, staffs, style and share values that leads managers of
Nissan to monitor and control the actions for restricting errors. Its weakness is large
time consumption in managing the business operations which delay in
accomplishment of success (Omeike, 2015).
TASK 3
P3: Porter’s five forces
Porter’s five forces is a framework which is used very broadly for the purpose of
evaluation of market situation for an organization. Nissan can use it so that it can identify the
situation which is prevailing within the market.
The five forces are explained as follows-
Competition in the industry- It is a force which involves the level of competition
which is prevailing within the market. In the context of Nissan, this force has a very high
power and therefore the company needs to make a prior strategy for the level of competition
which is there within the market. Also the company is required to frame the right techniques.
This is so because the automobile industry has a very high competition.
Potential of new entrants- The new entrants can make an impact on the market as
they enter the market with significantly lower prices and therefore this can lead to changes in
the plans of the existing players within the market. For Nissan, this force holds a very high
power because the company operates in the automobile industry and thus there are plenty
of new entrants who take entry in it. Thus there is a requirement of devising a right strategy
so that a competitive edge can be gained (Ozer and Anderson, 2015).
Power of suppliers- The suppliers have a hold in the market and can influence the
prices of the various inputs without facing any kind of problems and issues. In the context of
Nissan, this force holds a low power because there are many suppliers present in the
automobile market for the required inputs and the price also is very negotiable.
Power of customers- The customers also hold a power in the market because their
needs and requirements have to be taken into account by the organizations. In the context
of Nissan, this force has a very high power because the automobile industry’s sales are
totally dependent upon the customers and therefore there is a requirement for the company
to make sure that it is able to satisfy the customers with its products.

Threat of substitutes- The customers prefers certain substitute products which
provide the same satisfaction as the original products. This poses a threat for the companies
who manufacture the original products. Therefore, in the context of Nissan this force has a
low power because its cars are branded and have a premium quality and are preferred by
the customers who do not look for any other products of other manufacturers.
Evaluation- 3 out of 5 forces has a high power. 2 out of 5 forces have a low power.
Therefore, it can be said that Nissan needs to frame the right strategy for the market in order
to gain strategic advantage over its various competitors operating within the market.
Competitor analysis- Competitor analysis is performed so that the analysis can be
done for the competitors present in the market and a right strategy can be framed for getting
a competitive edge (Rajaeifar and et.al., 2019).
Basis Nissan Kia
Style of cars Nissan’s cars have an eye-
catching look which can get
the attention of the
customers.
The cars of Kia also have an
attractive look but they are
behind Nissan in terms of
styling the cars.
Fuel economy The fuel economy of
Nissan’s cars is better than
that of Kia.
The fuel economy of cars of
Kia is somewhat low which
does not attract certain
customers.
New technology In terms of new technology
Nissan is much ahead of its
competitors as it implements
new features in its cars faster
than the others (Wong,
Wong and Boon-Itt, 2015).
In terms of new technology,
Kia is behind Nissan as it
needs to add certain more
features to its cars.
Racing heritage In terms of racing heritage,
Nissan’s cars fare better than
the others.
Kia is lacking in this point as
compared to Nissan.
M3: Choosing right strategy for gaining competitive edge
For gaining competitive edge, it is a requirement that the firms analyze Porter’s
generic strategies. These are explained as follows-

Cost Leadership Strategy- In this strategy, the costs are reduced by the company
so that prices are decreased to gain competitive edge. This can be adopted by Nissan by
reducing prices of cars.
Differentiation Strategy- In this strategy, the companies can focus on differentiating
their products so that they can appear different from that of the other competitors. This can
be adopted by Nissan so that they can focus on getting their products differentiated to gain
strategic edge.
Cost Focus Strategy- In it, the companies can make their focus on reducing costs
in particular markets so that they can improve their overall efficiency. Nissan can adopt this
strategy by reducing costs in certain markets (Vasanji, 2015).
Differentiation Focus Strategy- In it, the companies can gain strategic edge by
differentiating their products in certain markets. Therefore, Nissan can make use of this
strategy so that they are able to differentiate their products in a particular market.
Justification- Nissan should choose differentiation strategy because through it can
aim to attract new customer towards it and can therefore earn higher profits.
TASK 4
P4 & M4: Application of range of theories, concepts and models and devising
of a strategic management plan
Different theories, concepts and models can be applied by a company for gaining strategic
edge in the market over the competitors.
Bowman’s strategic clock-
Bowman’ strategic clock is a model which is used for the purpose of strategic
positioning. It identifies the strategy which a firm can adopt for gaining the competitive edge
within the market. Its explanation is as follows-
Low Price and Low Value Added (Position 1) - In this position, the firms keep a
low price for the product and it does not provide much value for the companies (Zhang and
Liu, 2018). Nissan can adopt it by keeping low prices and providing low value.
Low Price (Position 2) - In this position, the companies are required to keep a lower
price than their competitors to gain a competitive edge. Nissan can adopt this strategy for
obtaining a strategic edge.

Hybrid (Position 3) - In this position, low price is kept for the products and also there
is some differentiation which is done. This can be adopted by Nissan for making sure that
they are able to get a competitive edge.
Differentiation (Position 4) - In this position, the companies offer the customers the
highest perceived value for products through differentiation. This can be used by Nissan for
the purpose of creating an impression in front of customers and obtaining a strategic edge.
Focused Differentiation (Position 5) - In this position, the firms should keep their
focus on pricing their products higher because of the luxury features which they offer. This
can be adopted by Nissan for gaining strategic edge.
Risky High Margins (Position 6) – In this position, the firms keep their prices very
high without adding perceived value for the customers. This should not be adopted by
Nissan for its products.
Monopoly Pricing (Position 7) - In this position, the companies have a monopoly in
the market and can set any price which they want. This is not applicable for Nissan as it has
many competitors in the market.
Loss of Market Share (Position 8) - In this position, the firms set a middle-range
price for the product without offering something substantial. This will lead to a loss of market
share. This must not be adopted by Nissan.
Justification- Nissan should adopt hybrid strategy because by adopting it the
company can keep lower prices and will also differentiate its products. In this way, it can
easily obtain a strategic edge in the market.
Porter’s generic strategies- Porter’s generic strategies can be used by an
organization to find out the ways through which it can use the right strategy for getting
competitive advantage in the market without problems and issues. The strategies which it can
use are as follows-
Cost Leadership- This can help a company in gaining leadership in the market by
reducing its costs effectively. This can help Nissan as it will lead towards more market share.
Differentiation- In it, a company can practice differentiation by making its products
look different to that of the competitors. In this way, Nissan can gain competitive edge in the
market.

Cost Focus- In it, a company can focus on costs and therefore can make sure that it
targets a specific market for reducing its costs. Nissan can use this strategy for gaining a
strategic edge.
Differentiation Focus- In it, a company can make sure that it focuses on
differentiation by concentrating on specific markets. Nissan an use this strategy so that it can
focus on specific markets for differentiating its products.
Justification- Nissan should make use of Cost Leadership strategy as by using it can
make sure that it is able to reduce the costs effectively and is able to get the desired benefits
in the market by obtaining a strategic edge.
Strategic Plan- A strategic plan can be framed by the organizations for devising the
right strategies for gaining competitive edge. The strategic plan in the context of Nissan is as
follows-
Particulars Details
Background Nissan is a multinational company which is
headquartered in Japan. It specializes in
making cars according to the needs and
requirements of people.
Organizational Structure Nissan makes use of a hierarchical
organizational structure in which top-level
management, middle-level management and
lower-level management is present.
Vision The vision of Nissan is “enriching people’s
lives”. It aims to provide quality products so
that it can bring the improvements in the lives
of people.
Mission To provide superior products to its customers
for the price which they are paying for them.
Objectives  Less-Polluting vehicles- The
objectives of Nissan are to provide
less-polluting vehicles so that the
environment can be conserved.
 Safety of cars- Nissan aims to

provide safer cars which ensure the
safety of the people who buy them.
 Equality- Nissan aims to create a
society where everyone is given
equal opportunities and thus this will
lead to a much more satisfied society.
Marketing Mix  Product- The products sold by Nissan
are cars.
 Price- The price of the products sold
by Nissan is within a competitive
range.
 Place- Nissan has stores all over the
world.
 Promotion- Nissan uses traditional as
well as digital marketing strategies.
Goals for the future  To aim for gaining higher share in
market in the future by leaving behind
competitors.
 To aim for maximization of its profits.
 To innovate in its products.
 To make its vehicles less pollution-
emitting.
Strategies to be adopted  Nissan will reduce its prices to gain
more market share.
 Nissan will make sure that it is able to
increase its profits steadily in the
future for realizing its goal of
maximization of profits.
 Nissan will invest more in R&D
facilities to make sure that it is able to
innovate in its products according to
the needs and demands of the
market.
 Nissan will try and produce eco-
friendly vehicles so that it is able to
reduce the level of pollution which is

emitted by its vehicles in the future to
be compliant with the future
environmental rules, regulations and
norms.
Implementation The strategies formulated can be
implemented by using a right approach and
by bringing the required changes in the
management if required.
Evaluation The strategies formulated are required to be
evaluated from time to time to make sure that
the desired results can be achieved within the
company.
CONCLUSION
From the above discussion it have been concluded that managers plays major role in
developing effective business strategy by manufacturing specialised and qualitative products
and services. This creates opportunity for growth and stability of business to sustain in global
market by encompassing differentiated strategies that leads to compete in perfect
competition market. This project examines the external macro factors that impact business
operations either favourably or unfavourably with the implication of PESTLE analysis. It
analyses the internal environment and capabilities of business with appropriate frameworks
of VRIO Model and Mckinsey’s 7s model. Apartly, it elaborates the Porter’s Five Force
model for identifying the competitive strategies of business. This project demonstrates the
various theories and models that are applicable in devising strategic management plan for
achieving its vision and mission.

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