Corporate environment

Environmental analysis of corporate strategy, that is, the main factors affecting the corporate environment are as follows (very detailed):

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Enterprises are always operated in certain environments, and corporate strategy is also formulated and implemented under the constraints of certain environmental factors. The environment determines the strategy of the enterprise, and the strategy of the enterprise determines the corresponding organizational structure and management style. Recognizing the environment becomes the starting point of environmental analysis, and through the efforts of many strategists, the study of the strategic environment and its constituent elements has been relatively comprehensive.

(I) strategic environmental factors

Generally speaking, the environmental factors of corporate strategy include the external environmental factors and internal environmental factors:

1. The production and operation activities of modern enterprises are increasingly affected by the role and influence of the external environment. To carry out strategic management, enterprises must first comprehensively and objectively analyze and grasp the changes in the external environment, as the basis and starting point for the formulation of the strategic objectives of enterprises and strategies to achieve the strategic objectives. Enterprises and their external objective business conditions, economic organizations and other external business factors are in a dynamic process of interaction, interconnection and constant change. These affect the success or failure of the enterprise, worried about the external factors outside the enterprise but not the enterprise can fully control the formation of the enterprise's external environment. The purpose of these external environment analysis is to find out the external environment for the enterprise can be utilized to provide opportunities for development and the external environment of the threat posed to the development of enterprises, as a starting point for the development of strategic objectives and strategies, based on the limitations of the conditions and restrictions.

The external environment factors have different degrees of influence on an enterprise.

The first category: the industrial environment, which is the enterprise micro external environment.

The second category: the enterprise's macro-external environment, which indirectly or potentially play a role and influence on the enterprise.

Figure 1: Macro-external environment of the enterprise

2, the formulation of strategic objectives and strategic choice of the enterprise not only to know the other side, that is, objectively analyze the external environment of the enterprise, but also to know oneself, that is, the enterprise's own internal conditions and ability to be correctly estimated. The so-called internal environment or conditions of the enterprise refers to the internal factors that the enterprise can control. The internal environment or conditions of the enterprise is the foundation of the enterprise's operation, is the starting point for the formulation of strategy, the basis and conditions, is the competition to win the fundamental. Analysis of the internal environment of the enterprise, the purpose is to grasp the current situation of the enterprise, clear strengths and weaknesses of the enterprise, in order to make the determined strategic objectives can be achieved, and make the selected strategy can give full play to the advantages of the enterprise, the effective use of enterprise resources; at the same time, the weakness of the enterprise, can be avoided or to take a positive attitude to improve.

Generally speaking, the internal environment of an enterprise includes the following aspects: financial condition, product line and competitive position, equipment condition, marketing capability, research and development capability, the quantity and quality of personnel, organizational structure, the enterprise's past defined objectives and the strategies it has ever adopted. The analysis and evaluation of each of these aspects requires the answering of a series of questions. From the answers to these questions, the strengths and weaknesses possessed by the enterprise can be clarified.

The methods of analyzing the internal environment of a company vary according to the company's situation. However, generally speaking, the various methods of analysis can be grouped into two main categories: vertical analysis, which analyzes the history of various aspects (functions) of a company in order to find out which aspects of the company have been developed and strengthened, and which aspects have been weakened. Based on this longitudinal analysis, a forecast of the development trend of each aspect of the enterprise is made on the basis of the historical analysis; the other category is a horizontal comparative analysis of the enterprise's situation with the industry average. Through this analysis, the company can find out the strengths and weaknesses relative to the industry average. This kind of analysis has more practical significance for the operation of the enterprise. For a particular enterprise, comparable industry average indicators are: capital tax rate, sales tax rate, working capital turnover rate, labor productivity, etc..

Techniques for analyzing an enterprise's internal environment include the experience-benefit (or experience curve, as in Figure 2) method and the value chain method.

(II) Dynamic environmental analysis affecting corporate strategy

The actual environment faced by enterprises is far more complex than the above theoretical classifications, and the actual environment in which the enterprise is located is often fuzzy and difficult to distinguish, which requires the enterprise decision-making level to have a correct and unified judgment. At the same time, with the change of time, the enterprise environment may be in constant change, and the most difficult to judge is that when a certain external environmental factors change, by the environmental system itself has the correlation of elements and complexity of the chaotic nature of the decision of the other environmental factors tend to occur along with the degree and direction of the unpredictable changes. These circumstances greatly exacerbate the degree of dynamic changes in the corporate environment and increase the difficulty of environmental management. Obviously, of all the types of environment, complex dynamic environment is the type of environment that best reflects the characteristics of today's market.

Specifically, the dynamic environment of corporate strategy is manifested in the following aspects:

1, business activities are increasingly globalized. The increase in the scale and form of transnational trade in goods and services and international capital flows, and the wide and rapid spread of technology have made the economies of the world more interdependent. The globalization of commercial activities refers to the integration of the world's economies in all areas of production, distribution and consumption. The current situation showed that the process was accelerating, as evidenced by the accelerated formation of a single global market, the deepening globalization of production and the rapid expansion of the globalization of factors of production. In the face of the opportunities and challenges of globalization of business activities, enterprises must first make strategic choices. Different types of industries, different enterprise sizes, different resource endowments, and different enterprise cultures will lead to different enterprise development strategies. But no matter what kind of strategy is adopted, the core issue is to cultivate and enhance the core competitiveness of enterprises according to the external environment and their own conditions.

2, speed is increasingly becoming a key element. The ability to accurately and quickly make complex judgments tests an enterprise's ability to respond, and knowledge management is to provide a system for complex decision-making in a global perspective. Also used to improve the reaction speed of enterprises, standard workflow brings enterprises stronger competitive conditions. At the tactical level of enterprises, this is a proven information system tool, while knowledge management enables enterprises to intelligently win strategic victories. The actual knowledge management system of an organization not only supports strategic decision-making, but also plays a role in many tactical areas such as competitive intelligence, employee training, information exchange, and other parts of the organization that are manifested in intelligent units that require deep intelligence. We can now understand that business information systems that support standard operating processes are like a person's central nervous system, enabling them to respond quickly and accurately to simple stimuli, while knowledge management systems that serve the strategic level of an organization are like a person's brain, enabling them to engage in complex logical reasoning, judgment, and creativity. Therefore, speed is the key, which determines how tightly an enterprise can master new technologies and combine them with existing ones, and also determines the length of the cycle of coordination and adaptation between the enterprise and the environment.

3, the complexity of the strategic environment is greatly deepened, the measurability is greatly reduced. The strategic environment of modern enterprises has become increasingly complex, in which the various factors not only continue to change, and the interaction between them is also changing, forming a chaotic and complex giant system. Complex interactions are taking place between the enterprise and stakeholders such as government, employees, customers, suppliers, etc., as well as between the above factors. With the accelerated pace of technological progress, it is difficult to try to identify the key factors that are critical to the success or failure of an enterprise from the above complex processes. Not only does the industrial environment affect the behavior of enterprises, but enterprises are also able to change the industrial structure and the competitive landscape. In this chaotic system, the relationship between cause and effect is nonlinear.

4. The influence of technology on the strategic environment of enterprises is getting stronger and stronger. The role of science and technology on economic and social development is becoming more and more significant, in today's world, changes in the business environment and the development of science and technology has a very strong relationship, especially in the era of network economy, the link between the two is even closer. In the information and other high-tech industries, the difference in education level is an important factor affecting the demand and user scale, has been mentioned in the development of corporate strategy on the agenda.

The complex dynamic environment reflects the global competition that exists in the current market, especially in the high-tech industry, with accelerated and unpredictable changes in consumer demand, narrow customer niches, shortened product lifecycles, the emergence of new technologies, technological innovations presenting a continuous discontinuity (continuous discontinuity) and resulting in the possibility of a product and a market to appear and disappear very quickly, changes in the rules of competition, mass customization and other disruptions. The rules of competition have changed, mass customization and other uncertainties. They are the complex dynamic environment facing today's enterprises specific performance.

Third, the strategic reconfiguration of enterprises in the dynamic environment

Although different strategic paradigms have different focuses on the study of enterprises and the environment, both the strategy theory and the strategy practice regard the match between enterprises and the environment as the basic assumption. The environment in which today's enterprises are located is characterized by a complex dynamic system with a wide range of changes, rapid speed and uncertain direction. Facing the increasingly complex and dynamic strategic environment, enterprises should adopt a dynamic strategy based on dynamic capabilities and reconfigure their strategies according to the environment and organizational conditions in order to match the environment dynamically.

(I) Inadequacies of traditional strategy concepts of enterprises

In the mainstream strategy theories that take the environment as a perspective, the design school, the planning school, the structural school, and the learning school emphasize that the strategy and the environment should be matched. However, according to our more in-depth and comprehensive exploration of the relationship between the enterprise and the environment, it is not difficult to find that these concepts advocating that strategy should be adapted to the environment have many flaws and cannot fully explain the problems in the practice of enterprise development. As a matter of fact, the mainstream corporate strategy based on adapting to the environment has not played a significant role in guiding corporate management practices. On the contrary, the insistence on corporate strategy to adapt to the environment will only make the enterprise in a passive position, lose the opportunity to transform their own environment, is not conducive to the healthy and sustainable development of enterprises in the modern complex dynamic environment.

(II) The framework of enterprise strategy reconstruction in the complex dynamic environment

On the mode of matching the enterprise and the environment, many different theories have been formed, such as: the early SWOT framework is based on the analysis of the enterprise's internal strengths and weaknesses and the environment's opportunities and threats, which is essentially a model of how the enterprise matches the environment; the Environmental School of Strategy Theory ( The Environmental School in strategy theory emphasizes how an enterprise can survive and develop in a specific environment, and there are two different directions of development. One is the Contingency Theory, which focuses on the expected responses of enterprises under particular environmental conditions and when faced with limited strategic choices. Another is the "Institutional Theory" (Institutional Theory), which emphasizes that enterprises must adapt to the environment, and that the formulation of strategies must take full account of changes in the environment, and understand and master the characteristics of environmental change. In addition, IBM Advanced Enterprise Institute director of strategic research Henkel (Stephan H. Haeckel) and Gareth Morgan respectively proposed adaptive enterprise theory and dynamic company theory.

Analyzing these theories together, we can draw the following conclusions: the concept of strategy as a "concept before action" is inappropriate when the enterprise is facing a complex and dynamic environment. The dynamic nature of strategy should be emphasized, and it should be seen as a process of interaction between the enterprise and its environment, and sometimes even as a natural outcome of the enterprise's business process. Therefore, enterprises should develop a dynamic view of strategy. At the same time, enterprises should emphasize the cultivation of change ability. Change capability is the basic component of enterprise dynamic capability. Zaijac and other scholars have proposed a normative model of strategic change matching environment, which has strong guiding significance for the strategic change of enterprises and how to adjust the matching relationship with enterprises (Figure 3) .

The complex and dynamic strategic environments of enterprises are becoming increasingly unstable and unpredictable, and thus it is necessary to reconstruct a strategic framework for uncertainty-oriented environments. This framework can be summarized as follows: by analyzing the levels of uncertainty in the external environment of the enterprise and their respective characteristics, we can establish a strategic attitude toward the environment, and choose the strategy of shaping the environment, changing the environment, adapting to the environment, or following the environment. The various strategies differ in their judgment of the environment's dynamism, value, risk, and sources of value. Further, environmental uncertainty can often give a certain strategy value in terms of timing due to the uncertainty of the environment and the irreversibility of strategy implementation.

(C) Strategic choices for enterprises in complex and dynamic environments

1. Cultivate a new model of organization for dynamic learning. Not only is the environment in which the enterprise is located constantly changing, but this change will also lead to changes in the relationship between the enterprise and the environment. Whether an organization can dynamically adapt to changes in this relationship is an important indicator of its organizational learning ability. In order to maintain long-term competitiveness and sustainable advantage, enterprises must correctly and comprehensively understand and grasp its relationship with the environment, abandon the traditional pessimistic concept of adaptation theory, and formulate a correct competitive strategy and management mode.

2, establish a new concept of dynamic competition and cooperation. The traditional enterprise pursues a static competition concept, this concept now seems to have been completely inconsistent with reality. The relationship between the enterprise and the environment is not static, but dynamic change. Because of the impact of the relationship between enterprises and the environment of the various factors in constant change, and cooperation and competition between the original is the unity of opposites, can be transformed into each other. The development of cooperation will lead to competition, the development of competition will also lead to cooperation. This cycle of cooperation and competition between the enterprise and the environment will eventually lead to the enterprise and the environment *** with the evolution. Enterprises only a deep understanding of cooperation and competition between the unity of opposites, the dialectical relationship between the mutual transformation, to be able to own invincible.

3, advocating flexible management style. Enterprise flexibility from the enterprise management and organizational design of these two aspects to start. On the one hand, the enterprise flexibility as a management work, its focus is on the quality of the system "control capacity" or the ability to manage; On the other hand, the enterprise flexibility as an organizational design work, its concern is the organization's "controllability". In addition, it is necessary to ensure the diversity of management measures and the rapidity of systematic implementation of control management measures.

4. Implement an innovative strategy for business development that follows and shapes the environment. Under this strategy, companies do not seek immediate changes with the environment, try to avoid making immature decisions, by delaying investment to get better information, or save strength to wait for the environment to stabilize a little before investing heavily in competition. In the meantime, pursue a strategy of shaping the environment to gain a head start in competing in the industry by designing standards, creating or directing new demand, and developing disruptive new technologies.''

Fourth, Conclusion

Overall, in the case of increasingly complex, dynamic and disordered environment, it is difficult for corporate strategy to be as subtle and detailed as it is under stable conditions, and corporate managers have to take into account the dynamic adaptability of the strategy to the complex and changeable environment and its flexible responsiveness, simplicity and effectiveness in implementation, and in the case of the strategic environment has become more uncontrollable, to abstract from the mission goal and the The enterprise strength and the environment to abstract some operating rules to monitor and screen the impact of changes in the strategic environment, and then guide the operation of the enterprise. In short, the enterprise environment and the relationship between the enterprise and the environment is dynamic and complex, therefore, the strategy of enterprise development should also be dynamic.