Business Environment And Strategic Management Case Study Commerce Essay


Every company is existed in business environment, and the changing environment may bring an extremely complex, competitive and uncertain arena. To protect from the uncertainty and risks brought by the changing business environment, many companies tried to extend their scale because large-scale may bring benefit such as scale economy, greater power in acquisition, wider network, greater influence over government and stakeholder, setting the industrial standard and so on. However, cases show that larger companies may not perform better than smaller ones because large-scale companies are difficult to carry out reform, if the business environment changes greatly, such as decline in demand or technology innovation, large companies who have a lot of outdated production machines will face up with great threat like economic lose even bankruptcy.

Over the last decade, there were numerous mega-mergers and acquisitions, and many companies and industries had changed structure, which gave birth to the ''merger and industry consolidation theory'' (Deans et al., 2003) and the ''Rule of Three'' concept (Sheth and Sisodia, 2002). The former emphasized the importance of scale and growth in surviving the industry concentration process (where all industries consolidate and follow a similar concentration trajectory), the latter predicted a scenario where only three players would dominate the industry at the final stage (other companies will be nice players, or will be "stuck in the middle"between generalists and specialists, a position which offers no long-term viability). However, these theories do not apply to every industry. The business environment and industrial characteristic are far different from each other. What could marketers do to reduce unpredictability and uncertainty is still an important issue.

Definition of Business Environment and Strategic Management

Lady using a tablet
Lady using a tablet


Essay Writers

Lady Using Tablet

Get your grade
or your money back

using our Essay Writing Service!

Essay Writing Service

Business environment is a series of external factors that will have impact on the operation of organization such as production, marketing and outcome. Environmental changes starting small and developing slowly and unpredictably, which is indicative of sensitive dependence on initial conditions (Tedesco Analytics, 2001). Business environment consist of four factors: the legal and political environment, the economic environment, the social environment and the technological environment. The legal and political environment refers to planning, administrative or legal measures that the country, government and community groups adopt to manage public opinion and affect the economy. The economic environment refers to the factors such as consumer income, consumer spending, price levels, consumer credit, household savings, supply of goods of a country or region. The social environment refers to cultural factors and demographic factors. Cultural factors include customs, social habits, religious beliefs, culture and education, values and so on. Demographic factors include the total population, geographic distribution, age structure, sex composition, population quality and many other aspects, people at different ages and different regions will have different consumption. The technological environment refers to the technology that will have influence on the company such as technological progress and technology innovation.

Michael Porter(1996) defined strategy as an plan about achieving competitive advantage through being different- delivering a unique value added to the customer, having a clear and actable view of how to position yourself uniquely in your industry. Strategy designed the goal, direction and scope of an organization in the long-term.

Strategic management is to determine tasks, identify business opportunities and external threats, identify internal strengths and weaknesses, establishing long-term goals, develop alternative strategies, and select a specific strategy them implement it. Strategic planning may include four levels: basic analysis, corporate strategy, business strategy and functional strategies. Fundamental analysis refers to the internal and external environment analysis, business strategy refers to the overall corporate level strategy, business strategy refers to the overall strategy at the operational level, functional strategies refers to the functional management level strategy. These four dimensions are interlinked and form a logical system. Now experts have extended the conception of business environment, they proposed that "environment is not completely determined by external forces, but can also be influenced by the internal forces(Anderson et al, 1994).

Strategy is the basic principle of company operation, strategy formulation and strategy implementation is the core of business strategy management. Strategy formulation is the basis for the implementation of strategic management, while the strategy implementation is the means. Whether or not strategy formulation is right and results of strategy implementation is good directly related to the business success or failure.

Lady using a tablet
Lady using a tablet


Writing Services

Lady Using Tablet

Always on Time

Marked to Standard

Order Now

The principles of strategic management include: adapt to environment; whole process of management, overall optimum; full participation; feedback and correction. Adapt to environment principle refers to that the strategic should match the external and internal environment. The whole process of management principle refers to that strategic management should be dynamic and constant. The Overall optimum principle refers to that when companies encountered contradictions in strategic implementation process, the only goal should be maximizing the overall interests. Full participation principle refers to that the strategic planning and implement should be an activity that all the personnel anticipate. Feedback and correction principle refers to that strategy implementation is not the final link of strategic management, managers should evaluate the results of strategy implementation and feedback, and then make adjustments to the strategic plan to adapt to the new business environment.

Strategic Management

Whole process of management

Adapt to environment



Full participation

Feedback and correction

Fig 1: Principles of Strategic Management

The process of Strategic management is strategic planning, strategy implement and strategy feedback and evaluation. There are five steps to strategic planning. First, prepare the planning team. Second, articulate guiding principles, once the team is organized, it should articulate guiding principles such as vision, mission and values and connect those to the company goals. Third, assess current situation, include the business environment and the resources of the organization. Fourth, develop a strategic framework, figure out the key business and communication issues. Fifth, completing the plan, take the guiding principles, situation assessment and strategic framework and prepare the written plan(Patricia Bayerlein, 2005).

Chapter Two: The Strategic Management of Standard Chartered Bank (China) limited

2.1 Brief Introduction of Standard Chartered Bank (China) limited

The British bank, Standard Chartered Bank, who has a very long history arise from the merger of two British overseas banks. It was establish in 1853, in Queen Victoria's license. Its business areas are mainly concentrated on Asia. Standard Chartered Bank (China) is has the longest history of foreign investment Bank in the Chinese market. In 1858, Standard Chartered Bank set up its first branch in Shanghai, China. Since then, Standard Chartered has never stopped its business in China, which spans three centuries, and created a record in China of 150 years' uninterrupted operating history. After the China's era of reform and opening-up, Standard Chartered Bank took the lead of reconstructing service network in China. At present, the network of Standard Chartered has covered 14 cities throughout China, and become the one of the foreign banks with most extensive network in China. In 2007, Standard Chartered Bank (China) became China's first locally incorporated foreign banking corporation, and was granted to private RMB business \ Private Bank business and bank card business. The number of employees of Standard Chartered Bank in China was more than doubled in this year, and it put a total of more than 100 kinds of new products to personal banking and corporate banking customers, its business outlets expanded from 21 to 38.

2.2 The Business Environment of Standard Chartered (China)

2.2.1 The Legal and Political Environment

First, the international financial regulation was strengthened. Atter financial crisis, countries all over the world decided to strengthen the rating system of international financial regulation. The global financial regulations include strengthening macro supervision, reverse-cycle regulation and supervision of financial innovation, and in particular to strengthen and improve the supervision of financial derivative products.

Second, China implemented a proactive fiscal policy include: (1)Taxes reduction (A decline in the securities transaction tax and abolition of interest tax), expansion of government spending (4 trillion funds to stimulate domestic demand are being implemented), the central and local governments have issued bonds, the local debt. (2)Government uses the funds to develop local infrastructure, while improving social welfare and security, strengthen local backward reconstruction. (3)Trade promotion: import and export industry was the first affected by financial crisis who has a number of employees (according to statistics, over 100 million people). Means to increase export competitiveness is to increase export tax rebate and the devaluation of the RMB. (4)Burden reduction on enterprises: the adjustment of labor law, etc. (5) to strengthen public finances of social security / medical, and other expenses to maintain a stable environment for socio-economic development. (6) Industry Recovery Plan

Lady using a tablet
Lady using a tablet

This Essay is

a Student's Work

Lady Using Tablet

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Examples of our work

Third, moderately easy monetary policies, including cutting interest rates, open up credit lines, automatic or a disguised devaluation of the RMB and the real estate monetary policy.

Fourth, China gradually opened its financial markets. Accordance with the WTO agreement, the Chinese government will cancel the restrictions on the financial sector, region and quantity of finance by the end of 2006, China had open its financial services industry. At present, many foreign banks, brokerages, insurance companies and investment banks had set up branches in China.

2.2.2 The Economic Environment

First, the process of globalization is accelerating, the economic impact of the world economy has greater influence on China and other countries.

Second, the global financial crisis affected many countries in the world. Relatively speaking, China suffered less negative impact.

Third, after the financial crisis, many leading international banks are in huge losses, many banks have cut their business.

Fourth, domestic and international economic growth continued to slow, the capital market downturn

2.2.3 The Social Environment

First, influenced by the financial crisis, there was an increase in China's unemployment, the wages were lower, consumer desire was reduced, and many customers increased their deposits.

Second, residents and businesses strengthened the financial management, and they increased demand for personalized financial products and service.

2.2.4 The Technological Environment

First, there is an endless stream of financial products in developed countries.

Second, Chinese government has increased investment of financial product and service innovation. China's financial innovation will be rapidly developed.

Third, information technology and network are developed in financial institutions so as to improve operational and management level.

2.3 The Strategy Management of Standard Chartered (China)

2.3.1 The Overall Strategy of Standard Chartered (China)

The main strategic framework of Standard Chartered Bank (China) is long-term strategic investment and careful expansion.

As for long-term strategic investment, Standard Chartered Bank (China) increases its strength through the acquisition of Chinese bank. Standard Chartered hopes that long-term investment strategy will achieve win-win situation --- both investment and investment banks will win, so that Chinese customers and consumers will win, too. Standard Chartered believed that foreign banks come to China is not only competitive, but also add perfect financial products to Chinese market.

For careful expansion, the overall corporate culture of Standard Chartered is prudent to operate and not be too risky, it is not a radical bank. Standard Chartered Bank is different form HSBC, Citibank and other foreign firms, even though registered in London, its main business is concentrated on Asia, the Middle East and Africa. For the operation of the Chinese market, Standard Chartered Bank refers to the experience in India, Brazil, Argentina, Malaysia and other emerging markets, and then adjusts it to the Chinese culture and characteristics.

2.3.2 The Operation Polices of Standard Chartered (China)

After the analysis of business environment, Standard Chartered Bank (China) decided to focus its strategy on the private bank business and SME Business. And then, it adjusted its organizational structure.

IT Department

Operation Department


Finance Department

HR Department

Enterprise Affairs Department

International Department

Private Bank Department

Corporate and Financial Customers Department

Risk Control Department

Fig 2: The organizational chats of Standard Chartered (China)

According the strategic planning, Standard Chartered Bank (China) developed its business, having taken the personal banking business, private banking business into business scope, the new business of Standard Chartered (China) include four part: SME business, banking business, private banking business and Corporate banking services to financial institutions. SME business include trade finance, credit services,

funds management services, foreign exchange management services and so on. The personal banking service includes personal finance, deposits, modernist unsecured personal loans, investment services and banking, real estate mortgages and Z-Tone Card. The private banking service is to provide personalized product and service for high-end customers whose liquid financial assets are more than one million U.S. dollars. Corporate banking services to financial institutions include global markets program and trading products and services, the former refers to management services, asset management services, capital markets products and corporate finance services, the latter refers to trade supply of finance, e-banking, securities services.

Personal banking service

Main Business

Private banking




Corporate banking services to financial institutions Fig 3: The main business of Standard Chartered (China)

For SME business, Standard Chartered is committed to provide SMEs with financial products and solutions which are not limited to large corporate customers. Standard Chartered China set up particular R&D department for SMEs and based on its global experience, it did a great deal of analytical work to provide better services. In 2003, Standard Chartered China carried out comprehensive financial services for SMEs, and became the first international banks which provided client managers, and tailor-made products to SMEs in China.

In May 2006, Standard Chartered China launched the "unsecured small loans for SMEs", and launched the pilot in Shanghai, Shenzhen, Beijing and Tianjin. According to the status quo that most SMEs are difficult to provide traditional collateral to the bank or corporate guarantee, it set the maximum loan amount up to 50 million RMB and extended the loan period to 24 months. Standard Chartered China became the first foreign banks which provided such innovative products to SMEs in China. Enterprises only need to provide business license, tax registration certificate, bank statements, financial statements and other information, fill out a simple application form and then apply for load.

Since 2006, by analyzing the needs of Chinese SME business customers, Standard Chartered has also set up special teams to provide professional, efficient finance advice and services to the SMEs in China, including global liquidity management, international trade financing, working capital loans, venture management and business matching services, many of which are with international advanced level. Standard Chartered believes that the situations of SMEs vary widely, to make an accurate market positioning, it can not adopt the standard of large state-owned otherwise they will lose a big market.

At present, the proportion of the SMEs business in Standard Chartered has exceeded 50% in China. The advantage of Standard Chartered lies in its services, which not only covered the various processes of the operation of SMEs, but also introduced the "accounts receivable financing", "Commercial property mortgage" and "unsecured micro-loans" and other innovative products. In addition, compared to other foreign banks that snatching the SME business, Standard Chartered Bank not only has a relatively sophisticated management system and business model, but also has advanced products and technology, strict risk control, corporate governance system, international business network and experienced financial professionals, with a world-class service awareness and service levels. It can make tailor-made and one-stop financial solutions to for SMEs and provide professional personalized service.

Since 2005, personal banking service of Standard Chartered began to start in various places one after another in China, to grasp the opportunity that Chinese have enormous market demand for personal finance products. When personal banking launched, the Standard Chartered Bank mainly provided local residents with foreign currency services and provided foreigners with RMB and foreign currency services, including personal wealth management and a series of investment products designed by investment experts from the Standard Chartered. In order to gain advantages in personal banking, Standard Chartered added two branches in the China in 2006. Moreover, in order to enhance their competitiveness, Standard Chartered was formally approved by the China Banking Regulatory Commission approval to operate QDII (QDII) business by the end of September 2006, which allowed it to operate QDII business and hosting services.

Chapter Three: Conclusion

First, strategic planning should follow the basic principles of adapt to environment; whole process of management, overall optimum; full participation; feedback and correction. Strategy reflects a realistic combination of the organization's own capabilities with the external environment in which opportunities and threats nurtured. It allows for maximum competitive advantage and competitive disadvantage minimized. Strategies should be based on business environment and adjust in accordance with changes in the environment. Strategy aimed at achieving the overall interests of the company, and the goal is to maximize benefit of the whole organization. Strategic planning should be the involvement of staff from all department and levels to make them better understand the organization's goals and strategies, and thus give them greater motivation to perform their work. Though strategy has many advantages, it may bring risk when it can not match to changed business environment. So timely feedback is very important in the strategy implementation process and companies should make adjustments according to feedback to achieve maximization of corporate interests.

Second, strategy should be the basic principle of company. Overall strategy is the company's ultimate goal, to achieve this goal, the company's daily operations should take strategic as the center and adapt to strategy. If strategy changes, the structure of corporate and operational policies should change accordingly, thus ensuring the correct implementation of the new strategy.

Third, strategy period should set according to the reality and not be too long. The business environment is always changing, and companies should keep an eye on the environment and adjust their strategies. Particularly in China, the pace of change is rapid because the country is in the process of political reform and economic restructuring. China has just joined the WTO, various aspects of China policy and economic environment are going through a period of adjustment, so the external environment for enterprises in China is changing rapidly, and so do the strategies. Many companies may need to adjust their strategies every year, the strategic planning today may be far different from its five years later. Therefore, strategy period of the enterprises in China should not be too long.

Chapter Four: Reference

[1]Patricia Bayerlein,2005.FIVE STEPS TO STRATEGY PLANNING.Strategic Communication Management,9(5),pp.6-7.

[2]Colin J. Butler,2005.Changes in industry structure and competition: the use of strategic alliances by UK defence manufacturing firms.Strategic Change,14(1),pp.15-25.

[3]Michael Johnston, Audrey Gilmore&David Carson,2008. Dealing with environmental uncertainty; The value of scenario planning for small to medium-sized entreprises (SMEs).European Journal of Marketing,42(11),pp.1170.

[4]Rober M Grant,2003. Strategic planning in a turbulent environment: Evidence from the oil majors.Strategic Management Journal,24(6),pp.491.

[5]Fuad N Al-Shaikh,2002.Strategic planning process in developing countries: The case of United Arab Emirates business firms.Management Research News,24(12),pp.7-17.

[6]Martin W Wielemaker, Tom Elfring&Henk W Volberda,2000. Strategic renewal in large European firms: Investigating viable trajectories of change.Organization Development Journal,18(4),pp.49-69.

[7]Chittipa Ngamkroeckjoti, Lalit M. Johri.,2000. Management of environmental scanning processes in large companies in Thailand.Business Process Management Journal,6(4),pp.331.

[8]Green, Dianne Wilner.,1997.Using economic data in your strategic plan.Management Accounting,78(7),pp.28-31.

[9]Osland, Gregory E&Yaprak,1995. Learning through strategic alliances: Processes and factors.European Journal of Marketing,29(3),pp.52-67.

[10]Tedesco Analytics. Complexity Science and Consumer Decisions, available

[accessed 1 December 2009]

[11]Deans, G.K., Kroeger, F. and Zeisal, S.,2003.Winning the Merger Endgame., New York: McGraw-Hill.

[12]Saisse, M.C.P. and Wilding, R.D. Short-term Strategic Management in Mass Customized Markets.Logistics Information Management, 1997, 10(5), 1-7.

[13]Michael E. Porter,1996. What is Strategy. Harvard Business Review, 74(6), pp.61-78.

[14]Vorhies, D.W.,1998.An investigation of the factors leading to the development of marketing capabilities and organizational effectiveness. Journal of Strategic Marketing, 20(6),pp.3-23.

[15]Welman, J.C. and Kruger, S.J,1999.Research Methodology for the Business and Administrative Sciences. Cape Town:Oxford University Press,.

[16]White, D.W.,1998.The impact of environmental uncertainty on strategy creation style in a franchise channel setting. Journal of Strategic Marketing, 20(6), pp.273-304.