Environmental Scanning (External) PDF

ENVIRONMENTAL SCANNING (EXTERNAL) 01/12/2025 1 ENVIRONMENTAL SCANNING is the study and interpretation of the forces existing in the external and internal environments. The external environment includes social, economic, political, technological, and environmental forces tha...

ENVIRONMENTAL SCANNING (EXTERNAL) 01/12/2025 1 ENVIRONMENTAL SCANNING is the study and interpretation of the forces existing in the external and internal environments. The external environment includes social, economic, political, technological, and environmental forces that may influence an organization, an industry, or any entity.  Sources of Strategic Information Strategic information consists of the facts and data used by organizations to assist them in achieving their vision, mission, and goals. Strategic information can be drawn from both external and competitive environments. 01/12/2025 3 Mode of Environmental Scanning Undirected Viewing. The individual is exposed to information with no specific information need in mind. The sources of information are wide-ranging and large chunk of information are quickly dropped from individual’s attention. Conditioned Viewing. The individual directs viewing of information to specific facts and data to be able to assess their general impact on the organization. It is not an active search but a mere viewing of information. Informal Search. The individual actively looks for information to increase knowledge of a particular issue. It essentially involves a relatively unstructured effort where the objective is to gather information to expound on the issue, thus, determining whether a strategic move is needed by the organization. Formal Search. The effort exerted by the individual is deliberate and planned. The search is both focused and structured and the research methodology is clearly enumerated and followed. 01/12/2025 4  The external environment today is highly External complex. This fundamental paradigm Environmen conspicuously characterizes the global t scenario. Nations possess different levels of growth and development. For example, power relationships have become dynamic, volatile, uncertain, complex, and threatening. Specifically, the external environment' presents varying forces that influence organizational direction and strategic decision-making. 01/12/2025 5  Social Social forces refer to important issues that are characteristics of global and local societies. Society Forces consists of individuals, families, and communities, including their beliefs, aspirations, traditions, and practices. Some of the significant societal factors are: Aging Sophisticated Changing Social Cross-cultural Population/Demand Lifestyles of Structures. Diversity. for Health Services. People. ThePhoto by PhotoAuthor is licensed 01/12/2025 6 under CCYYSA. Political There are crucial concerns confronting nations today. Geopolitical issues have Forces become the focus of major political powers. Some of these significant politicial issues are: Political Terrorism/Suicide Chemical and Nuclear Independence/Changin Global Alliances. Bombings. Threats. g Governments. 01/12/2025 7  Economic realities have concomitantly come to Economic the forefront. Economic issues greatly affect the growth and development of a nation. Nations Forces are strategizing to maintain a continuum of financial stability. Some of the significant economic factors are: Fall of Economic Competitors Financially Increasing Oil Emerging Globalization. Trade Rise of China. and Suppliers. Stable Prices. Markets. Agreements. Organizations. 01/12/2025 8 Technologic We live in a digital world. Another catalyst al Forces​ of competition is technology. Some of the significant technological issues are: Computer- Communicatio Digital integrated E-banking. E-learning. E-security. n Technology. Medicine. Business. 01/12/2025 9 Environment Environmental responsibility is the urgent call of the global neighborhood. Ecological damage is al Forces happening everywhere. There seems to be an utter disregard or seeming indifference about the environment. Some of the significant environmental factors are: Climate Environmental Preservation of Change/Use of Waste Rainforests and Biodegradable Management. Marine Life. Materials. 01/12/2025 10 ORGANIZATIONAL VISION & MISSION STATEMENT 01/12/2025 11 ORGANIZATIONAL VISION & MISSION STATEMENT To help organizations achieve strategic direction, they need to articulate and have a commonality in vision, mission, and goals. The interrelationships between and among these three variables are essential in organization’s thrust of achieving competitiveness. 01/12/2025 12  The organizational vision is an inspirational ORGANIZATION statement of what the organization hope to AL VISION achieve at some point in the future, it is the image of what an organization desires to achieve. “What do we want to become?” A clear vision statement provides foundation for comprehensive mission statement. Vision statement is developed first. Short – preferably one sentence Broad management involvement 01/12/2025 13  Examples: ORGANIZATION To be the first choice in the printed AL VISION communications business. The first choice is the best choice, and being the best is what Atlanta Web pledges to work hard at being - every day! - Atlanta Web Printers, Inc. The Bellevue Hospital is the LEADER in providing resources necessary to realize the community’s highest level of HEALTH throughout life. - -The Bellevue Hospital 01/12/2025 14  MISSION STATEMENT The mission statement differs from the organizational vision. The mission statement defines the current purpose of the organization. It answers what the organization does, for whom it is done, and how it does what it does. “What is our business?” o Enduring statement of purpose o Distinguishes one organization from another in similar enterprises o Declaration of an organization’s “reason for being” 01/12/2025 15 MISSION STATEMENT Mission Components Customers Who are the firm’s customers? Products or services What are the firm’s major products or services? Markets Geographically, where does the firm compete? Technology Is the firm technologically current? Survival, growth and profitability Is the firm committed to growth and financial soundness? Philosophy What are the basic beliefs, values, aspirations, and ethical priorities of the firm? Self-concept What is the firm’s distinctive competence or major competitive advantage? Concern for public image Is the firm responsive to social, community, and environmental concerns? Concern for employees Are employees a valuable asset of the firm? 01/12/2025 16  Mission Statement Examples: PepsiCo’s mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls, and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity. 01/12/2025 17  Mission Statement Examples: Ben & Jerry’s mission is to make, distribute and sell the finest quality all-natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national and international. 01/12/2025 18  ORAGANIZATIONAL GOALS AND OBJECTIVES To operationalize the mission statement, organizational goals and objectives are defined. All organizations have set goals. These are referred to as organizational goals. Organizational goals are pursued to make the specified strategies to succeed. They are vary are essentially depend on their on their respective purpose and 01/12/2025 19 direction. ORAGANIZATIONAL By their very nature, goals have the following GOALS AND properties: OBJECTIVES 1.Goals provide organizations focus and direction. They neatly converge toward the purpose of any firm, thus, streamlining all unnecessary and redundant considerations. 2.Goals move organizations to action. Because goals have to be attained, organizations are motivated to function and perform toward their vision. 3.Goals develop in organizations the trait of persistence. Thus, organizations continue to persevere until they achieve their desired success. 01/12/2025 20 ORAGANIZATIONA Objectives are different from goals, in that they are L GOALS AND micro and specific in perspective. They should OBJECTIVES possess the following characteristics: Objectives need to be clearly defined and formulated, carefully chosen, specific, and definite. Objectives may be immediate or short-term. They need to be prioritized into a hierarchy of objectives. Objectives need to be realistic and attainable. They need to be flexible, consistent, and strategic. Objectives need to be measurable over time. 01/12/2025 21 ORGANIZATIONAL GOALS AND OBJECTIVES Objective Objective 1 1 ORGANIZATIONAL GOALS Objective 2 Figure 4 Relationship between Organizational Goal and Objectives 01/12/2025 22  Figure 5 Relationship of the Vision-Mission-Goals of an Organization 01/12/2025 23 THE FIVE FORCES MODEL 01/12/2025 24  THE FIVE FORCES MODEL The competitive forces in the industry environment can be evaluated using the forces of competition model, otherwise known as the five forces of competition. It was popularized by Michael Porter, a prominent figure in competitive strategy formulation. The industry environment is a competitive environment and a company cannot do anything else but to compete in it. 01/12/2025 25 01/12/2025 26 Potential Entry of New Entrants Firms must always be on watch with possible new entrants in the the industry as it will affect their market share and at the same time their profitability. The threat of new entrant could be avoided with the following strategies: o Economies of Scale o Product Differentiation o Capital Requirements o Access to Distribution Channel o Government Regulations 01/12/2025 27  Bargaining Power of Suppliers The suppliers of material inputs in the production of goods are determinants of quality products. The power of the supplier is powerful under the following: o When it is dominated by few large companies. o When they are more concentrated than the industry it sells. o When there is no substitute available. o When the industry is not a significant customer for the supplier. o When the suppliers' goods are critical to the firm's success. o When it poses threat to integrate forward into the ThePhoto by PhotoAuthor is licensed under CCYYSA. buyers' industry. 01/12/2025 28  Bargaining Power of Consumers The firm's objective is to maximize returns on their invested capital as business operates for the desired profit. On the other hand, buyers would like to maximize the value of their hard earned money by bargaining for the lowest price possible. To maintain the equitable balance, the firm has to adjust to the buyers’ bargaining power and satisfy customer needs as substitute products could be available in the market. The consumer group has the bargaining power under the following: o When they purchase a large volume of the firms output. o When there is available substitute of a similar quality. o When the sales are a significant portion of the firm’s sales volume. o When the buyer or dealer can be threat for backward integration. 01/12/2025 29  Threat of Substitute Products The industrial world is full of innovations and firms seek new opportunities. There are many firms looking for new products to make business by studying substitutes to existing products in the market. Firm that do not innovate will lose their market as innovation is the byword of the industry. Consumers are looking for new and innovative products and their level of satisfaction is limitless. The threat for product substitutes is based on the following: o When the substitute product is priced lower. o When the quality is better than the existing product. o When the product is immediately available in the market. o When service is available. 01/12/2025 30  Rivalry Among Competitors The actions taken by one company invite counter reaction by the other firm. firm. Competitive response is an active reaction that forces the company to make innovations. Factors that intensify the power competition: o The presence of balance competitors. o The slow industrial growth in some sectors. o Higher fixed cost of some firms. o High storage cost of some products. o Low product differentiation and switching cost. 01/12/2025 31  Analysis Of The Industry Competition The competitors' environment is the final stage in the analysis as it directly affects the firm's position in the industry. The firm must be able to seek the following information: 1. he competitors' future objectives. 2.The competitors' current strategic actions. 3.The competitors' assumptions about the industry. 4. The competitors' strength and capabilities or their weaknesses. 5.The government policy for the global market. 01/12/2025 32