Organizational Environments and Analysis

• Organizations exist within environments that influence them.
• Organizations must analyze their environments to identify opportunities and potential risks.
• Analyzing the global environment (macro) and the specific market (micro) helps organizations achieve success.
• A strategic diagnosis enables the identification of environmental opportunities and threats.

Identifying Micro-Environmental Factors

• Strategic monitoring helps identify potential threats to an organization's sustainability, such as economic crises or new competitors.
• Identifying uncertainties can mitigate threats.
• The environment can also offer opportunities for positive developments that should be identified.
• Strategic monitoring enables organizations to identify and analyze information about their environment utilizing computer tools.
• Companies gather information on societal changes, economic agent behavior, competition, legal aspects, and technology.
• Analyzing the environment facilitates external diagnosis, enabling organizations to identify opportunities and avoid threats.

The Micro-Environment

• Micro-environment analysis aims to identify the expectations of various stakeholders.
• Analysis at the business activity sector (DAS) level focuses on competitors.
• Michael Porter uses the term strategic group to describe competing organizations within a DAS.
• Porter's competitive environment consists of various pressure fields on the company.
• Rivalry among direct competitors: Companies like Easyjet and Ryanair operate in the same market segment.
• Substitutes: Companies in the same market offering different products.
• Potential Entrants: Companies that possess technology that could disrupt the competitive landscape like Free, which disrupted the mobile phone market.
• Supplier Negotiation Power: An organization's relationship with its suppliers determines its negotiation power.
• Customer Negotiation Power: Customers can mobilize and denounce business practices and can exert their power. This was seen when there was a boycott of BP stations after the Gulf of Mexico oil spill in 2010.

Components of Micro-Environment

• Competitors: Rivalry in a sector, entrants changing competition and substitution products which intensify competition.
• Customers: Customer influence increases with their expenditure, and studying behaviors determines dependency.
• Suppliers: Takes into account suppliers providing raw materials, capital, or labor.
• Distributors: Distributors can impose conditions regarding price, quality, and and production/delivery times.

Identifying Macro-Environment Factors

• Macro-environment analysis is the broadest level, covering demographic, economic, political, social, technological, and cultural trends.
• Elements influencing organization activity, such as political, economic, legal, and demographic aspects.
• Environmental Factors can be complex & unstable because of the difficulty in understanding and constant changes.
• Internationalization, markets, and innovation lead to instability as well as demanding clients.
• The PESTEL method is used to categorize aspects to realize a diagnosis.

Components of Macro-Environment

• Political: Government stability, monetary and fiscal policies, trade regulations.
• Economic: National/international economic conditions impact competitiveness, consumer spending power.
• Sociocultural: Societal changes, demographics, and cultural shifts influence organizational behaviour.
• Technological: Innovation drives competitiveness, with new advancements and tech impacting organizational performance.
• Ecological: Increasing public environmental awareness drives organizations to develop green technologies.
• Legal/Judicial: Legal rules frame what organizations operate by.

Key Success Factors (CSF)

• Key success factors are essential elements that drive competitiveness.
• Identifying CSFs requires studying the environment, expectations, and customers needs.
• Analyzing the best practices of competitors can reveal the reasons for their success.
• Unique expertise leads an organization to stand out against its competition.

Conclusion

• Organizations analyze their strengths and weaknesses related to resources.
• A strategic diagnosis guides the organization's strategic thinking.
• Market opportunities, success factors, and environmental threats are presented by understanding.