SM Lecture 6 Part Three PDF

S.M. Lecture 6 Part three The External Assessment  Tools and concepts needed to conduct external audit/ check (Environmental scanning) The purpose of E.A.: to develop a finite list of opportunities that could benefit the org. and threats that should be avoided....

S.M. Lecture 6 Part three The External Assessment  Tools and concepts needed to conduct external audit/ check (Environmental scanning) The purpose of E.A.: to develop a finite list of opportunities that could benefit the org. and threats that should be avoided. Org.s respond either offensively (action) or defensively (reaction) to external to external factors. What are the external forces Economic forces Social forces, Cultural forces, Demographic sources, Environmental forces Political and legal forces Technological forces And competitive forces External forces affect, consumers, suppliers and distributers; therefore, identifying external opportunities enables the Org. to develop a clear mission, to design long-term objectives and develop policies that achieve annual objectives.  The process of performing an E.A Key Principle: must involve as many managers as possible Steps: - Org. must gather information about all external forces - Monitoring different sources of information such as magazines and trade journals and newspapers - Submit periodical scanning reports to a committee of managers charged with performing E.A.  Continue - Collecting more information from internet resources. - Collecting more information from suppliers, distributors, salespersons, customers…. - Assimilating and evaluating all the information above - Identifying priorities of opportunities and threats facing the org. through a meeting or series of meetings of managers - Listing the key Os or Ths. On a chart or chalkboard - Prioritizing the listed factors from 1 (very important O./Th) to 20 (less important)  Characteristics of information How important they are to achieving long-term and annual objectives. Measurable Applicable to all competing Orgs Hierarchical in the sense that will pertain to the overall organization and the divisional areas.  The Industrial Organization (I/O) The I/O approach assumes that the external factors are more important than the internal ones. Key theorist is Michael Peter. However, effective integration and understanding of both external and internal factors is the key securing and keeping a competitive advantages.  Economic Forces Example: when interest rates rise, funds needed for capital expansion become more costly or unavailable. See table page 111 about more economic variables to be monitored.  Social, cultural, demographic and environmental forces The high level of poverty in any society affects the governments ability to cover social programs. Consumers shopping and eating habits affects marketing. EG fast food restaurants. Environmental movements affects industries. The increasing number of population might means new markets for producers but a big problem for seeking more resources and food See table in page 112-113  Political, Governmental and legal forces Legislations, such as bio- political (assisted suicide, abortion, genetic engineering, cloning stem-cell research. Laws that encourage investments Tax laws and legislatives Political stability and economic stability International treaties and agreements. Such as Kyoto Protocol, Paris agreement against Palestinians economy. EU tax legislatives such as tax harmonization “The EU efforts to end competitive tax breaks in EU members”. This is to stabilize tax breaks. More about EU policies in page 114  Technological forces Technological changes are revolutionary and challenging all nations. The internet is acting like a national and global engine for distribution, marketing and sales The internet is shifting companies sales from direct system into self-service system. The internet is changing the nature of opportunities by: -altering the life cycle - Increasing the speed of distribution - Creating new products and services - Erasing limitations of traditional geographic markets - Changing entry barriers - Redefining the relationship between industries and suppliers, customers and competitors.  Capitalizing e-commerce Chief information officer Chief technology officer They both work together to make sure that information needed for Strategic management needed for formulation, implementation and evaluation are available on time. CIO is more a manager that manages the Org.’s external audit process. The CTO is more a technician focusing on technical issues such as data availability and data processing, soft ware and hard ware acquisition and decision - support system.  Competitive forces What do we want to know about competitors? - Their strengths - Their weaknesses - Their capabilities - Their opportunities - Their threats - Their objectives - Their strategies  Characteristics of competitive ORGs See page 119 the 7 characteristics.