BUSI770 DB3 Jool

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DB3: External Environment, Power/Weakness and Decision Models School of Doctor of Business Administration-Human Resources, Liberty University Author Note I have no known conflict of interest to disclose. Correspondence concerning this article should be addressed to

Introduction In this week's discussion, I will assess the external environment of an organization because the external environments are important to the development of an organization's strategy. Some of the key points of this week's discussion are (1) understanding the key sources of power and/or weakness(es) that exist and (2) evaluating key decision models that impact an organization's strategy. There are seven questions to consider when evaluating an organization's industry and its competition. My discussion this week will focus on the driving forces of the industry. Process: Business Strategy Development Previously, we learned about how an organization forms its strategy. Strategy begins when an organization assesses its current situation (Gamble et al., 2017). Leadership must have a clear vision for its organization in order to direct the organization in the direction to accomplish its strategy. First, it sets the foundation by having defined goals (short and long-term). Then having quantifiable measures to ensure the organization is hitting those targets. There are two components to consider when assessing a current organization's situation: (1) its external environment, the organization's competition in its respective industry, and (2) its internal environment, including its resources and capabilities (Gamble et al., 2017). After identifying short- and long-term goals, an organization's leadership must analyze the company's industry and competitive environment to understand its internal and external threats. Gamble (2017) gives us seven questions to answer in order to receive clear answers on our internal and external environments. This post will focus on question Gamble's (2017) three, “What is the Industry’s driving force of change, and what impact will they have?" Technology is

rapidly changing business environments. For example, technology has made it tremendously competitive and challenging for a single organization to be a leader in any specific industry. On the other hand, technology makes it easy for new businesses to penetrate markets. Therefore, technology is a driving force because it is a major underlying change in the industry that causes competitiveness, according to Gamble et al. (2017). Driving forces have three steps (1) identifying what the driving forces are, (2) assessing whether the drivers of change are individually or collectively acting to make the industry more or less attractive, and (3) determining what strategy changes are needed to prepare for the impact of the driving forces (Gamble et al., 2017). Strategic Thinking: Key Source of Power When evaluating the external environment of an organization, this week’s post is going to focus on Gamble’s (2017) question, "What kinds of competitive forces are industry members facing, and how strong is each force?" The competitive forces vary from industry to industry, forcing an organization to understand its current situation (Gamble et al., 2017). Driving forces shake up the industry intentionally and unintentionally. The pandemic has forever changed multiple industries since it first hit. This is because the pandemic affected so many categories of how driving forces affect an industry. Gamble et al. (2017) state that up to three or four true drivers can exist simultaneously, and an organization must be careful to label only some changes as a force of change. Understanding how these driving forces will impact the industry and the organization is key. However, no matter how much an organization conducts an assessment of its competition, there are those outliers such as COVID-19 to disrupt the industry. Rumelt (2011) states that Warren Buffett evaluates his companies based on sustainability, but

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what is sustainability, and how does one measure sustainability? As changes occur, what was sustainable in one economy may be outside another. Decision Model The five forces model of competition is the most popular tool to assess an industry's competitive forces (Gamble et al., 2017). The five forces model is a deep dive into the competitive forces affecting the industry’s attractiveness (Gamble et al., 2017). Porter’s Five Forces Framework was published in 1979 to help organizations understand the five competitive forces: (1) the threat of new entrants, (2) the bargaining power of buyers, (3) the bargaining power of suppliers, (4) the threat of substitute products of services, and (5) the among rivalry existing competitors (Isabelle et al., 2020). In recent research, Researchers have identified four additional forces that organizations should consider when assessing organizations operating in the 21 st century that experiences more interconnectivity and complexity (Isabelle et al., 2020). Over the years, the most significant change since Michael E. Porter published the initial five forces framework in 1979 is globalization (Isabelle et al., 2020). Since the development of globalization, Researchers have identified weaknesses in Porter's Five Forces framework. For example, the initial five factors do not capture technological innovation demands and competitiveness in companies and industries (Isabelle et al., 2020). In addition, the need for more understanding of Porter's Five Forces framework leads to complete, accurate, and helpful analysis that leads to good decision-making (Dobbs, 2012). Conclusion In summary, driving forces are just a small aspect of what creates competition. Forces will continue to evolve and change as globalization increases and technology continues to advance. Although Porter's framework influenced the competitive analysis, Researchers are

moving in the right direction by reassessing its accuracy and relevance of it to today's decision- makers. Outdated tools can lead to bad decisions that cause an organization to be nonexistent.

REFERENCES 45. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: A set of industry analysis templates. Competitiveness Review , 24 (1), 32–45. https://doi.org/10.1108/cr-06- 2013-0059  Summary of Key Points This journal was intended to assist with the challenges of analysts understanding how to use Porter's framework when making the decision to prevent bad decision-making that has been recently associated with using the tool when conducting competitive advantage analysis. The author understood how influential Porter's "five forces" were to all industries and the competitiveness of those industries. He wanted to share with others the tools that helped him with being able to utilize the tool despite its flaws. The author included visuals such as templates and instructions on properly using them.  Evaluation of the Quality of the Publication The publication was outdated; however, the key points aligned with recent research. Current research identifies the gaps same gap and challenges of Porter's framework. Porter himself has identified these issues of other Researchers with his work.  Evaluation of the Quality of the Author(s) The author’s writing was easy to follow and identify the point he was trying to convey about the lack of understanding and the misuse of Porter’s Framework. In addition, the author is very detailed because he structured the templates for decision-makers to better understand Porter's work.  Where this fits into the discussion

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This journal discusses the challenges of utilizing Porter's Five Forces Framework. Since this is the recommended tool for assessing an industry, it is appropriate to understand the tool's weaknesses before using it. Gamble, J., Peteraf, M. A., & Thompson, A. A. (2017). Essentials of strategic management: The quest for competitive advantage (5th ed.). McGraw Hill LLC. Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. (2020). Is Porter's five forces framework still relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review , 10 (6), 28–41. https://doi.org/10.22215/timreview/1366  Summary of Key Points The journal gives you the history of Porter's framework and what they are, and their impact on industries and decision-makers. Then the journal highlights the complexity of the business industry. Then, they go into detail about the changes needed to be considered based on today's industries with the rapid expansion of technology and globalization.  Evaluation of the Quality of the Publication The publication was updated, and more recent research. This publication was released after the pandemic, so it was able to share a more up-to-date perspective on how internal and external factors influenced competition. In addition, the authors used a lot of supporting research in their journals.  Evaluation of the Quality of the Author(s The authors all had very diverse and different backgrounds from one another; therefore, they were able to bring a lot of different perspectives to the journal. The link between the authors was Carleton University.

 Where this fits into the discussion This journal highlights the weaknesses of the initial five forces. After more recent research and industry changes, four additional factors should be added to Porter's framework. Those four factors align with the growth of technology and globalization. Rumelt, R. P. (2011). Good strategy, bad strategy: The difference and why it matters . Profile Books.

BUSI770 DB3 Jool

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