Sustaining High Performance in Business: Systems, Resources, and Stakeholders by Jeffrey S. Harrison

Author:Jeffrey S. Harrison
Language: eng
Format: epub
Publisher: Business Expert Press
Published: 2020-07-15T00:00:00+00:00

CHAPTER 5

Strategic Analysis of the Value Creation System: Environmental Influences

The last chapter focused on the firm’s value creation system from the inside out. This chapter will discuss stakeholders and environmental forces that have an influence on that system—from the outside in. It is probably prudent at this point to repeat that the boundaries of the firm are not rigid, especially from a systems perspective. For example, customers and suppliers are often considered a part of the external environment because they are outside of the legal boundaries of the firm. However, as soon as the firm engages in transactions with them, they become a part of the firm’s value chain, central to its value creation system. Similarly, communities in which the firm operates are primary stakeholders because they are a direct part of the firm’s value creation system. Nonetheless, they are most often analyzed as a part of the external environment because their influence is similar to and often treated the same way as political and sociocultural forces.

As another example of the permeable nature of firm boundaries, although secondary stakeholders such as a nongovernmental organization (NGO) or an activist typically play an influencer role as a part of the external environment of a firm, sometimes a firm might engage directly with them, as in a situation in which an environmental group (i.e., the Sierra Club) cooperates with a land development company to select a location for a new plant. Another example would be when a representative of a consumer protection group is invited to become part of a firm’s research and development project. These types of interactions defy what are thought of as traditional firm boundaries. Nonetheless, a more typical case is that the stakeholders and forces discussed in this chapter are treated as a part of the external environment. The chapter begins with a discussion of industry competition and economic forces.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.