Page 14 - MCS August Day 1 Suggested Solutions

CIMA AUGUST 2018 – MANAGEMENT CASE STUDY

EXERCISE 2

It is important for MONTEL 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
 Substitutes for bus travel
 Power of customers
 Power of suppliers

Applying these to MONTEL will need to consider the following:

 political influences and events – increased taxation, reduced tariffs, government
legislation re environmental control and charges etc. have all grown in prominence
globally, as has receiving higher government support for low environmental impact or
changes in policy e.g. recent events such as Brexit in the UK. Additionally MONTEL 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 multinational nature of
MONTEL’s business political influence may be of increased future relevance with
further international expansion being undertaken.

 economic influences – MONTEL must be concerned about economic situations in this
context as they will have a direct effect on their future growth plans. Particular areas of
concern might include: changes in employment, changes in interest rates, consumers’
income and expenditure and the inevitable effect on disposable income and foreign
exchange fluctuations. The size of the economy and economic conditions globally,
has a major impact on the profitability of the camera manufacturing industry. This will

58 KAPLAN PUBLISHING