Along with technology changed frequently and economic globally, a rapid, volatile, discontinuous change is increasingly emerging in the wider general external environment of an organization. This paper will focus on what is a rapid, volatile, discontinuous change, how it impacts a firm, and how to assess the impacts. At last, a case discussion will be shown to analysis how CEOs should respond this change appropriately.
Turbulence happened in the digital age, which have great impact on an organization. A PESTEL model used in strategic analysis to identify the external environment in order to guide the firm though these uncertainties. Then, CEOs should respond these changes followed four steps. Otherwise, a great loss will pay for this inappropriate action.
The concept of rapid, volatile, discontinuous change
Forced by the economic, technological, political, social elements, turbulence happened in the digital age, which is explained as a rapid, volatile, discontinuous change. “Rapid” describe the change happens frequently while “volatile” means change is not stable, can be small or massive, and come from anywhere. Due to people cannot predict the future change from past, the change also can come at any time, which defines the change is “discontinuous”.
Strategic Management process — Strategic analysis
Strategic management process, which is “the full set of commitments, decisions and actions required for a firm to strategic competitiveness and earn above-average returns” (Hanson, 2011). There are five stages in this process.
The rapid, volatile discontinuous change influences the external environment of firms. Which lead this concept to the first stage of the Strategic management process, strategic analysis. There are two types of information that strategic analysis required to collection and analysis, External environmental information and Internal organizational information. The aim of external environments Strategic analysis is to help identify opportunities and threats faced by a firm, which requires information on both general and specific external environment of a firm. (Hanson, 2011)
The PESTEL model
For analyzing the impacts of the rapid, volatile, discontinuous change, a PESTEL model is be using to identify potential opportunities and threats to a firm currently and in recent future. The beer industry will be analyzed by PESTEL model to assess the effect of rapid, volatile, discontinuous change.
Political factors include areas such as tariffs,tax policy, environmental law, labor law,trade restrictions, and political stability. In practice of beer industry, after China joined the WTO, the tariffs have decreased or canceled. On the side of import, native firms have to face more challenge from foreign brands. But on the other side, good quality resources and foreign advanced equipment can be import in lower price, which help to improve the beer brewing. In addition, there are also conducive to China and beer products to enter the international market.
There are many economic factors that can influence a firm, include levels of employment and unemployment, economic growth rates, interest rates and exchange rates, etc. If the levels of unemployment are going up, the Luxury goods market will be depressed. In contrast, as the cheap product, the beer industry maybe not effect dramatically.
Social factors include lifestyle, demographics, age distribution, level of education, population growth rates, etc. For example, there is an increasing population focus on healthy lifestyle. The beer industry may focus on the more healthy products to follow this change.
Technological factors could influence quality, costs, and lead to innovation, which include the rate of technological change, the rate of new inventions, new methods of manufacture, etc.