Page 13 - CIMA MCS Workbook February 2019 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

EXERCISE 2

It is important for CROWNCARE to regularly scan the business’s external environment which may
present threats or opportunities to its future success. These threats will be in addition to those
presented by the increasing competition. This requires an appraisal to be undertaken by
management of factors relevant to the organisation’s current and future activities.

Two useful frameworks which can assist in this process:

PEST(EL) framework, which helps in the analysis of the macro or general environment, and divides
the business environment into six main areas:

 Political

 Economic

 Social (and cultural)

 Technical/technological

 Ecological/environmental

 Legal

Porter’s Five Forces which examines the attractiveness and profitability of industries by analysing
and understanding the nature of the competitive environment by examining:

 New entrants into a market or industry
 Rivalry amongst existing and new competitors
 The threat of substitute products
 Power of customers
 Power of suppliers

Applying these to CROWNCARE will need to consider the following:

 political influences – CROWNCARE has to consider healthcare laws, legislation, code of
practices, treatment guidelines and increased regulation while delivering dental services to
ensure protection of rights of the patients. In addition they will need to ensure the quality
of personnel employed and therefore service delivered is maintained. The focus on future
Government legislation in this context has grown in prominence influenced e.g. by recent
events such as Brexit in the UK. Regulation dictates that practices must provide information
of their services and costs involved to the customer. Additionally CROWNCARE will also
need to be aware of world‐wide austerity measures which will directly affect one of the key
constraints of unpredictable consumer numbers and therefore selection of the most
appropriate and profitable products. Given the nature of CROWNCARE’s business vision,
political influence may be of increased future relevance particularly if any international
expansion is considered.

 economic influences – CROWNCARE must be concerned about economic conditions in their
catchment area, as they will have a direct effect on any future growth plans. Particular
areas of concern might include: changes in employment, changes in interest rates,

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