Elements of the external environment which a strategic manager would consider in

strategic analysis.

The major challenge of the organisation’s external environment is that the organisation
cannot fully influence it, however the management can adapt to the external environment
effectively using to the advantage of the organisation. The external environmental factors
can influence the organisation’s success of a proper strategy is adopted in relation to the
occurrences in the environment. Most theorists refer to PESTEL when referencing the
external environment of the organisation. Assuming the writer to be the strategic
manager of Mhinduro Holdings, an imaging life insurance and funeral cover entity the
current paper seeks to discuss the elements of the external environment one would
consider in the organisation’s strategic analysis.

In general, strategic analysis can be defined as a process of researching the

organisation’s business environment in order to come up with an efficient business
strategy; it is the most important part of business planning as it influences the entire
business strategy. Morden (2017) defined strategic analysis as a process of researching
an organisation and its working environment to formulate a strategy. Roper (2018) also
defined strategic analysis as an approach to analysing, researching and mapping the
organisations internal and external environment for the sake of building a strategic plan.
Strategic analysis is a process consisting of investigation made on the current situation
of the general and industrial environmental elements Elenkov (2016) defined the external
environment of the organisation as comprised of all factors that exists outside of the entity,
but has the capacity to influence the organisation. Thus, the external environment is those
outside factors that may affect the organisation directly or indirectly. Morden (2017)
identifies PESTEL; political, economic, social, technological, environmental and legal
factors as the major elements of the external environment that should be considered in
strategic analysis. These factors remain important across authorities despite given
varying names and different orders. The main purpose of strategic analysis is to learn any
change occurring in the environment of organization by collecting information on these
changes and to develop cultural or structural competency which enables adaptation.
One of the ever-changing factors that any organisation would need to remain in
connection with is technology. Technology is understood as the systematic application of
scientific or other organized knowledge to practical tasks, (Liao, Chang and Wu, 2010).
Understanding and adapting effectively to the technological environment of a given
society will put an organisation at a vantage point against its competitors while failure may
render the organisation incompetent. According to Roper (2018) technology changes fast
and to keep pace with it, businessmen should be ever alert to adopt changed technology
in their businesses. In that respect, given the technological standpoint of the Zimbabwean
society Mhinduro Holdings will require to have the latest technology in terms of customer
communication, advertising, payment and customer feedback. For example, the
organisation will have to make its presence on social media while ensuring that it updates
to the latest payment systems such as EcoCash, Swipe and online bill payments rather
than depending on back transfers and cash payments only. In that respect keeping
connected with customers through different platforms such as Sasai, WhatsApp, Email
and basic text can be a game changer in keeping customers on the loop as well as
delivering the best and convenient services.

In the same vein, the economic environment is also critical in determining the strategic
plan a business can assume. According to Elenkov (2016) economic factors such as
Interest rates, inflation, unemployment levels, energy availability, and disposable income
play an important role in influencing the success of any given organisation. As noted by
Morden (2017) for a business to be financially successful it has to adapt well to the
economic environment of the society it is located. Given the current economic situation in
Zimbabwe one can generally perceive that Mhinduro holdings would need to understand
the general income of the population its life insurance cover and other polices would wish
to cover or otherwise the organisation would run short of customers if it charges higher
amounts, while very law amounts may also render the organisation to earn profits leading
to the same fate as charging higher amounts. Thus, the economic environment analysis
plays an important role in helping the organisation to strike a balance between what it can
actually offer to its customers and earn their satisfaction and what the organisation is
willing to risk. Costa (2005) also postulated that the economic environmental analysis also
plays an important role as it determines whether the organisation aim for expansion or to
wait until a difficult economic phase passes. Thus, the economic environment is also vital
and should be considered in strategic analysis.

In addition, until recently the impact of the political environment to domestic organisations
has been underestimated; most authorities assumed that political stability plays a central
role in influencing organisations. According to Roper (2018) the political environment now
plays a critical role in determining the success and financial status of organisation.
Morden (2017) revealed that the country’s politics determines the levels of certainty in
business; a key determinant of the economy and monetary value. In that respect, while
political stability determines the easiness of conducting business by creating inherent
standards ideal for business, it now determines levels of certainty or uncertainty in
certainty kinds of business. Business or economic certainty is can be perceived through
what the politicians talk about, the measures they intent to implement, the perceived
character and interest towards certain businesses. The emergence of a new leader and
what he spoke about upon his placement created a time of business certainty whereby
most investors and organisations in Zimbabwe and beyond became motivated to
increasing their performances. However, with time and following the speeches and the
leadership’s behaviour towards business and investment there is uncertainty and it can
be a serious time to start a bigger business venture. Thus, it can be a difficult environment
for Mhinduro Holdings to open several branches at a time, instead the organisation would
rather open one branch at a time as the risky influenced by political changes is
unanticipated. A stable and dynamic political environment is indispensable for business
growth. The political environment can also be considered in strategic analysis.

In the same vein the social and cultural environment also plays a central role in
determining the success of a business venture. According to Grigsby (2011) the social
and cultural environment refers to people’s attitude to work and wealth; goods and
services, role of family, marriage, religion and education; ethical issues and social
responsiveness of business. In that respect, through the social and cultural environment
analysis one will be able to understand Mhinduro Holding’s sources of employees and
their beliefs as well as how the population or would be customers regard the services the
organisation has to offer and that can influence the resources needed for advertising and
other customer relations strategies. In this case, assuming that while the Zimbabwean
population have knowledge about funeral cover there are still more people who do not
believe in it and they will need to be convinced that funeral cover is vital. Adema and
Roehl (2010) postulated that social and cultural environmental analysis plays and
important role in helping the management understand the norms and values of the society
they operate in.

In addition, it is highly important the organisation stays connected with the legal
framework that governs business operations in the land. As noted by Costa (2005) legal
frameworks determines ways of doing business and they cover such things as
employment, leave, remuneration, selling hours business contracts among others.
Remaining updated with the legislation-governing one’s business saves a lot of time and
costs in serving court orders. In that respect, it would be helpful to understand legal
frameworks that govern Mhinduro holdings as a financial entity in funeral cover and life
insurance services. Thus, one can also consider the legal framework of the land when
conducting strategic analysis.

In the same vein, while it is possible to enjoy business monopoly the most common
situation is whereby there is competition amongst several organisations in the same
industry and there is need to understand the levels of competition if any. According to
Elenkov (2016) most organisations operate in what can be considered a red ocean where
there is stiff competition and death, a situation which can be defined by the phrase survival
of the fittest. Thus, as a strategic manager at Mhinduro Holdings one would conduct a
competition strategic analysis whereby a review of competitors in the same business
industry is conducted to determine their strengths, weakness, the possibility of entering
the market with high hopes for survival and the need to eliminate the competition
altogether. As noted by Grigsby (2011) a robust analysis on the organisation’s
competition will help in making strategic decision and building a sound strategic planning
that increase business survivability. Therefore, it is critical for a strategic manager to
consider competition when conducting strategic analysis.

All in all, one can be obliged to argue that while it cannot be effective to entirely influence
the external environment, an effective analysis of the economic, political, competition,
social, technological environment among other external factors can help the management
to utilise the entire external environment to organisation’s benefit and success.
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scanning”, International Journal of Contemporary Hospitality Management, 7(7),

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institutional influences on scanning behaviour”, Strategic Management Journal, 18(4),

Grigsby, D. W. (2011), “Strategic Management Total Quality and Global Competition”,

Blackwell Business Publisher,

Liao, S.H., Chang, W. J. and Wu, C. C. (2010), “An integrated model for learning
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Morden, T. (2017), “Business Strategy and Planning”, Mc-Graw-Hill Book Company,

England.

Roper, A. (2018), “Research in strategic management in the hospitality industry”,

Hospitality Management, 17,