There are many aspects of the market that must be taken into
consideration in order to look into the possible effects of these market
aspects in an organization. An illustration of this is the external
environment. The contemplation on the behavior of the external environment is
considered a maxim by firms. The business press is replete with stories of
firms that are successful because they are flexible in responding to the
changes that buffet them. Marketing researchers coined the term "market
orientation" to throw more light on the nexus between a firm and its
environment, and their findings added empirical evidence to the truism
mentioned above. However, much of the work on market orientation has examined
this phenomenon in manufacturing contexts, and most studies seem to be to
relate the magnitude of a firm's market orientation to performance. It is
possible that firms, facing the repeatedly incompatible demands from
stakeholders, may emphasize one aspect of market orientation more than others.
Influences such as economic restructuring, intensified competition,
government regulations, and technological advances have resulted in heightened
environmental turbulence and uncertainty for business firms. As noted by Covin
and Slevin (1989), businesses are particularly susceptible to environmental
influences due to limited resources and the devastating consequences of poor
managerial decisions. According to the authors, an environmental dimension that
serves as a threat to firm viability and performance is hostility. Hostile
environments are characterized by precarious industry settings, intense
competition, harsh, overwhelming business climates and the relative lack of
exploitable opportunities. Non-hostile or benign environments provide a safe
setting for business operations due to their overall level of munificence and
richness in investment and marketing opportunities (p. 75).
Porter (1980) contends that the business environment differs by
industry. Ireland et al. (1987) predict that firms in different industry
segments will apply different strengths to gain competitive advantage. In a
study investigating effective strategies in hostile environments for
manufacturing firms, Covin and Slevin (1989) found that business practices and
organizational responses to the environment differed. Other research has shown
that environments can affect a firm's strategies (McArthur and Nystrom 1991;
White and Hammermesh 1981) and a characteristic of the industry in which the
firm competes is a factor in firm profitability (Hansen and Wernerfelt 1989).
Each organization hinge on connection with its
environment to obtain the human, financial, technical and material resources it
needs. In order to be able to strategically plan future measures, one has to be
familiar with the factors in the external environment that are likely to affect
your organization. To do this, it is important that you distinguish between two
levels of environment: the macroenvironment and the microenvironment.
The latter pertains to the external
stakeholders that are in direct contact with your organization: partners,
funders or donors, regulators and all those who are after the same dollar.
These players influence the actions of an organization. Some have a positive
effect, either by creating demand or supplying resources, while others may have
a negative impact by imposing constraints upon you or by being detrimental to
your development. Unlike the macro-environment, the micro-environment can be
influenced by your organization.
Moreover, this study will focus on the former. All the major sectors of
activity in a society: politics, economics, sociopolitical aspects, technology
and sociocultural life are referred to as the macroenvironment. For this study,
we shall use the term external environment to pertain the principles involved
in the macroenvironment. The study assumes that the macro-environment does not
have a direct impact on the organization, nevertheless specific measures may
manipulate the manner in which the organization changes in due course. The organization
has little or no possibility of influencing these factors.
may develop in the macro-environment. It is therefore necessary to know how to
identify them, either to take advantage of them or to try to counter them.
Similarly, the discussions on the external environment shall be applied in the
discussion of the relationship of the world trade organization and
automobile industry.
The organization's external environmental context is thus
made up of all the conditions and factors external to the organization that can
positively or negatively affect the life, orientations, structures, development
and, in a word, the future of your organization. The research on an
organization’s market orientation would also be helpful in the study.
understanding the construct and examining its relationship to performance. Two
important studies sought to define and operationalize market orientation. Based
on an extensive review of the literature on sustainable competitive advantage
and marketing strategy, Narver and Slater (1990) operationalized market
orientation as consisting of three dimensions: customer orientation, competitor
orientation, and inter-functional coordination. Using both a literature review
and field interviews of managers, Kohli and Jaworski (1990) operationalized the
market orientation construct as consisting of three basic components:
intelligence generation, intelligence dissemination, and responsiveness.
Intelligence generation extends beyond collecting information about customer
needs and preferences to include information about the entire task environment
confronting an organization. To be market-oriented, an organization has to
communicate, disseminate, and often "sell" market intelligence to
relevant departments and individuals in the organization. (Kumar, Subramanian,
& Yauger, 1998). And finally, the market-oriented organization responds to
or acts on the market intelligence gathered and disseminated.
The two approaches to defining the market orientation construct are
similar in their emphasis on behavioral issues (Greenley, 1995). Both groups of
researchers identify the construct as consisting of collecting information
about the task environment, disseminating the information to all organizational
units, and readying the organization to act on the information to provide value
to the customer. Both approaches are similar also in operationalizing the
market orientation construct as a multi-dimensional concept, where each
dimension measures a different feature of market orientation. Finally, both
studies view an organization's magnitude of market orientation as the sum total
of its relative emphasis on the different components of market orientation.
It is conceivable that a given magnitude of market orientation may be
highly skewed to either customer emphasis or competitor emphasis. The
literature on sustainable competitive advantage supports this notion. While
some authors (Peters & Austin, 1985) suggest that customer emphasis is the
most important component, others (Jaworski & Kohli, 1993) contend that a
high magnitude of market orientation will yield superior performance only when
swift managerial responses follow, regardless of the focus. However, little
empirical evidence exists on the performance of organizations that may have
market orientations of similar magnitude but different emphasis.
One could argue that given the pressures and the demands of various
stakeholders, firms may be forced to choose one emphasis over the other as they
attempt to become market oriented. Although there is often a compelling need
for managers to focus on both efficiency and effectiveness to satisfy the
demands of myriad stakeholders (Fottler, 1987), the pressure could vary
considerably depending on the form of ownership.
The succeeding chapters of this study shall be discussing
macroenvironment in general and how it is conducted while chapter three shall
be converse about the world trade organization and the automobile industry of
two consists of seven parts. The first part is an introduction of the chapter
preceding a discussion on the process of environmental analysis. It shall
discuss specific activities such as scanning, monitoring, forecasting, and
assessing. The succeeding portion shall discuss the function of external
analysis. It shall converse about analyzing tools such as the
analysis and the Porter’s Five Forces Model. The ensuing portions of the
chapter shall provide an in-depth discussion of the two tools for analysis.
Chapter three on the other hand shall be divided into two parts. The
first part shall discuss the profile of
shall include a history of the Chinese automobile industry and the contemporary
developments in it. Similarly, it shall also include a discussion on the
fundamental trends in the automobile industry, with particular consideration in
It shall discuss the industry’s consolidation, international investment,
technology gap, and its purchasing power. The second part of the chapter shall
discuss the impacts of the WTO accession on
automobile industry. This portion shall recapitulate the process wherein the
WTO won
trust to acquire membership in the organization.
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