Chapter 3 Strategy Formulation The External Assessment PDF

STRATEGY FORMULATION :the external assessment Group Members  Alpuerto, Jhon Kenneth Baal, Hazel Mae Bajao, Famy Ruchelle Kyle Salise, Vien Salise, Fritzie SALISE, FRITZIEANNE MAE  types of Stakeholders SALISE, FRITZI...

STRATEGY FORMULATION :the external assessment Group Members  Alpuerto, Jhon Kenneth Baal, Hazel Mae Bajao, Famy Ruchelle Kyle Salise, Vien Salise, Fritzie SALISE, FRITZIEANNE MAE  types of Stakeholders SALISE, FRITZIEANNE MAE Types of stakeholders External stakeholders are those who do not work directly for the  organization but may still be impacted in some manner by it. A. External Stakeholders: Clients Donors Partner organizations Community leaders SALISE, FRITZIEANNE MAE Types of stakeholders Internal stakeholders are people who work directly for the company. Some stakeholders are: B. Internal Stakeholders: Staff Board members Volunteers SALISE, FRITZIEANNE MAE The nature of an external audit  An external audit's goal is to identify a limited number of possibilities that might help a company and identify hazards that should be avoided. SALISE, FRITZIEANNE MAE KEY EXTERNAL FACTORS  Economic forces Social, cultural, demographic, and environmental forces Political, governmental, and legal forces Technical Forces SALISE, FRITZIEANNE MAE Competitive Forces THE PROCESS OF PERFORMING AN  EXTERNAL AUDIT 1 2 3 Compile competitive assessed.. intelligence and details on A final ranking of the most current political, societal, crucial external elements should cultural, environmental, SALISE, FRITZIEANNE MAE be conveyed and extensively legal, and technical After gathering disseminated inside the developments. information, it should company. be analyzed and The Industrial Organization (I/0) View According to the Industrial Organization  (I/0) approach to competitive advantage, a corporation can achieve competitive advantage by focusing more on external (industry) issues than internal ones. SALISE, FRITZIEANNE MAE BAJAO, FAMY VIEN KEY EXTERNAL FACTORS Economic forces Social, cultural, demographic, and natural environment forces Political, governmental, and legal forces Technological Forces Competitive Forces Economic Forces These are factors that influence how a business operates, especially in terms of demand for its products.  BAJAO, FAMY VIEN KEY EXAMPLES: S INTEREST RATE MARKET TRENDS Higher interest rates make loans more expensive, slowing business growth and cutting consumer spending. S PREPARING FOR ECONOMIC CHANGE PREPARING FOR ECONOMIC CHANGES  investment. A strong market boosts spending and Businesses and investors need to understand these forces to make smart decisions and stay ahead of economic changes. BAJAO, FAMY VIEN Some  Economic Forces Disposable Income Price Changes Gross Domestic Products Tax Rates Trends Unemployment Policies Value of the Dollar  BAJAO, FAMY VIEN Social, cultural, demographic, and natural environment forces Businesses are affected by social, cultural, demographic, and environmental changes, which create both opportunities and challenges. As people's lifestyles and behaviors change, businesses must adapt to meet new demands.  BAJAO, FAMY VIEN Key Social, Cultural, Demographic, and Natural Environmental Variables Cultural Factors: Demographic Factors: People's lifestyles, roles in society, education levels, and Birth rates, marriages, deaths, attitudes toward government, immigration, and life expectancy work, and money influence impact population trends and consumer behavior. market needs. Environmental Factors: Social Factors:  and consumer choices. The location of businesses, trust Issues like pollution, in government, and social energy conservation, responsibility are important for and traffic affect market success. business operations BAJAO, FAMY VIEN POLITICAL, GOVERNMENTAL, AND LEGAL POLITICAL, GOVERNMENTAL, AND LEGAL FORCES FORCES Government's Role: Governments can either support or challenge businesses by setting rules, providing funds, or being their customers. How much this matters depends on the business. Political Impact: Companies that depend on government deals need to be aware of changes in laws, taxes, and lobbying, as these can change how they do business. Global Effects: Political decisions in one country can affect businesses worldwide. For example, trade rules or financial support in the EU can impact industries in other regions. BAJAO, FAMY VIEN Some Political, Governmental, and Legal Variables Rules: Fewer rules help businesses; more rules make things harder. Tariffs: Change the price of goods and how businesses compete. Voting: Affects which policies impact businesses. PACs: Groups that influence government decisions for certain industries. Environmental Laws: Tougher rules cost more; easier rules cost less. Hiring Laws: Affect who businesses can hire and workplace diversity. Antitrust: Stops monopolies and encourages competition. Country Relations: Impact trade and security. Defense Spending: Creates jobs and opportunities in defense. Lobbying: Businesses push the government for favorable rules  BAJAO, FAMY VIEN Techonological Forces Technological advancements and discoveries are having a significant influence on organizations.  Alpuerto, Jhon Kenneth R. Alpuerto, Jhon Kenneth R. Technological advances can: suppliers, distributors, markets, rivals, suppliers, and markets. Drastically impact an organization's competitiveness, production methods, marketing strategies, customers, Lower or remove cost barriers between enterprises, shorten production runs,  create a technical knowledge scarcity, services. and alter employee, manager, and consumer attitudes and expectations. Develop new markets, lead to the emergence of fresh and superior Can produce fresh competitive products, alter the industry's relative advantages that are stronger than competitive cost positions, and make current ones. outmoded current goods and Examples of the impact of wireless technology airlines banking health care  education automotive Alpuerto, Jhon Kenneth R. Competitive Forces Finding competing companies and evaluating their strengths, weaknesses, skills, opportunities, threats, objectives, and strategies are crucial components of an external audit. Sources of Extèrnal Information Organizations have access to a wide range of public and unpublished sources of strategic knowledge.  Alpuerto, Jhon Kenneth R. What is Industry Analysis? Industry analysis is a market evaluation tool created to provide a company an understanding of the complexity of a certain sector. it is a way of examining the overall industry or market in which a business operates.  Ruchelle Kyle Baal Why do firms need to do an Industry Analysis? 1. It enables a company to develop a Competitive Strategy to Survive in a market and using the forces in its favor 2. Highlight its advantages,risks, opportunities, and shortcomings (SWOT). 3. Improve its standing within the sector. 4. Identify the areas where strategic improvements will have the biggest impact. 5. Put a focus on areas where market trends suggest there are the most opportunities orrisks. 6. Reduce vulnerabilities and risks by using competitive advantages. Ruchelle Kyle Baal Opportunities Opportunities are possibilities that exist in the external world. Whether a business is willing to take advantage of these chances, or perhaps ignores them because of a lack of resources, depends on the firm.  Ruchelle Kyle Baal Threats Threats are usually bad for the company; nevertheless, a low number of external threats can help the company take advantage of numerous opportunities. The corporation faces a maximum amount of risks, which weakens their influence in the market. External Factor Evaluation (EFE) Matrix The External Factor Evaluation (EFE) Matrix is a strategic management tool that is frequently employed to evaluate the state of the company environment. A useful tool for identifying and ranking the opportunities and dangers that a company is facing is the EFE matrix. The EFE matrix evaluates external elements that are susceptible to the will of external social, economic, political, legal, and other forces. Ruchelle Kyle Baal COMPLEXITY PROFILE MATRIX A tool used to analyze and visualize the complexity of different factors or projects. Particular of strengths and weaknesses. HAZEL MAE SALISE COMPONENTS: 1. Weighting- helps in prioritizing dimensions based on their importance. 2. Score-reflects how well each factor performs or its level of complexity in each dimension. 3. Total Score- it provide an overall measure of complexity for each factor or project. HAZEL MAE SALISE  HAZEL MAE SALISE  Advantages Disadvanta ges CLARITY AND VISUALIZATION OVERSIMPLIFICATION SIMPLIFIED ANALYSIS PRIORITIZATION DECISION SUPPORT HAZEL MAE SALISE SUBJECTIVITY IN SCORING LIMITED DIMENSIONS STATIC REPRESENTATION Than k You