chap 3' challenges in the internal environment Flashcards
there are existing unique and interrelated variables that directly affect any organization/business.
internal environment
Understanding these variables is essential to conduct the organization successfully.
internal environment
These areas are government, culture, the stakeholders, competitors, suppliers, customers, and the community.
internal environment
government:
the business caretaker
is the sole legitimate Institution tasked with overseeing organizational operations in the country.
government
Creates an atmosphere of fair and robust competition among industry and company players, monitors and regulates monopolies and oligopolles, and eliminates unfair and illegitimate practices.
government
Formulates business policies, implements business operating guidelines, regulates the conduct of business activities such as payment of taxes, health and safety practices in food, manufacturing, construction, and other service Industries, ensures quality of products and services, and mandates minimum wages of employees, and their fair and just treatment.
government
culture:
a communal convergence
is the communal aggregation and convergence of the country’s philosophy, bellefs, traditions, values, attitudes, aspirations, and practices that have historically evolved since a nation’s inception.
culture
• Through many years of national growth and development, this culture has been shaped by _ happening within and outside the country, and until today, continues to change, mature, and transform.
environmental variables
stakeholders:
the business investors
Organizations exist because there are individuals who are willing to take risks, invest their capital, and engage in business activities in exchange for a return called profit.
STAKEHOLDERS: THE BUSINESS INVESTORS
Some are actively involved in the conduct of their business while others prefer to be
silent investors
are an asset to the country. They provide opportunities for exchange of products and services. They initiate business operations and compete among themselves.
Stakeholders
They boost and energize economic activity. provide employment to the community, and help government by paying business taxes.
• While owners of businesses are the direct stakeholders, others are indirect stakeholders. These are individuals or entities that stand to benefit from the investments of the owners. They are the employees, the government, and the community.
Stakeholders
While owners of businesses are the direct stakeholders, others are indirect stakeholders. These are individuals or entities that stand to benefit from the investments of the owners. They are the
employees, the government, and the community.
COMPETITORS:
THE BUSINESS THREAT
is an economic scenario where nations, communities, organizations. companies and individuals offer and sell their products and services.
Competition
continuously strive to outplay and outsmart each other, hoping to get a larger share of the target market.
Competitors
They are companies who sell exactly the same products or offer the same services. They are direct competitors. Examples are Unilever and Procter & Gamble. Both are engaged In the same line of business and they sell the same products.
Same Products
They are companies who sell similar products. Tea and coffee are similar products,
Similar Products.
For example, the competitors, of marketplaces are fast-food centers who sell primarily cooked food, and secondly, convenience. Instead of going to the market to buy meat, fish, and vegetables, they now go to fast-food centers for their meals
Substitute Products
Still, there are companies who sell different products but market to the same market segments.
Different Products.
Some companies appear to compete with themselves. For capturing a larger market, they produce the same products, use different brand names, and target different market segments. An example is a real estate company that sells low-cost housing to target markets, classes C and D, and average-cost housing to middle-income class familles.
Complementary Competition.
Similarly, there are companies whose relationships among each other are strategic and cooperative. Examples are the oil companies in the country. They are in a “friendly” competition.
Collaborative Competition
some companies produce “fake” products. They compete with legitimate businesses by boldly and unethically transgressing the intellectual property rights of other companies through plagiarism, duplication, and false branding. They produce and sell these products at low prices.
Corrupted Competition.
in the products and services offered, the specific technologies applied, and the strategies employed, whether marketing, financial, and managerial.
Determining similarity in characteristics
by observing and studying consumers in terms of demographic variables: sex, civil status, age, educational attainment, monthly income, employment, and psychographic variables like needs, wants, attitudes, perceptions, purchase patterns, and buying behavior.
Studying consumers
by identifying company data: capitalization outlay, number of customers, distribution outlets, employees, financial strength, number of years in operation, and company growth.
Researching company data
by studying their sales volume and amount of sales, market leadership, and goodwill.
Considering corporate success
CUSTOMERS:
THE BUSINESS CHALLENGE
Competitors continuously compete to capture a bigger share of the market.
customers
make the market. They are the very reason why companies pursue new product developments and differentiate their existing products and services.
Customers
are the focus of companies’ business plans and programs and the thrust of their strategies. Without them, companies have no reason to exist.
Customers
SUPPLIERS:
THE BUSINESS PARTNERS
These refer to individuals and companies engaged in the delivery of raw materials, machinery. technology, labor, expertise, skills, and other forms of services
SUPPLIERS
They are essentially business partners. Without them, certain products cannot be produced and some services cannot be rendered.
suppliers
It is responsible for the quality of the products produced and the services rendered. If they are not managed well, it may result in the delivery and sale of substandard raw materials, low quality equipment and machinery, diluted admixtures of metals and chemicals, decrease in the number of delivered items, and deficiency in weight, size, and number of units of delivered items.
supplier
it affects continuity in operational processes like production, scheduling, and delivery. Delays in delivery schedules may cause inventory problems like stock-outs, work stoppages, and workforce displacement.
supplier
COMMUNITY:
THE BUSINESS CONCERN
is the intermixture of people coming from all walks of life, with different “provincial or city cultures,” different values, attitudes, aspirations, traditional bellefs, standards of living, family backgrounds, religions. and educational attainments.
The community
It is essentially heterogeneous but characteristically homogeneous in its end goal of attaining quality life.
The community
As such, the community, in principle, is the rationale of the
business framework.”
it is the very reason why stakeholders invest their capital and venture into business.
community
It provides opportunities for businesses to thrive. It is “customers, suppliers, and competitors” all bundled as one. It is the primary concern of the government.
community
One of the more popular ways of strategizing an organization to attain profitability and market share is to scan the competitive environment.
PORTER’S FIVE FORCES MODEL
competitive environment is best described and Illustrated by
Michael Porter’s Five Forces Model of Industry Competition. Porter spelled out one by one when is each of these five forces high and proposed ways of reducing these situations.
are sources of input needed to produce goods and services.
Suppliers
The bargaining power of suppliers is high when:
a. few large suppliers dominate the market where they form a powerful oligopolistic bloc:
b. there are no substitutes for the specified input:
e. switching costs from one supplier to another are high; and
d. customers of suppliers are not united but fragmented. bnot united but have no choice
To deal with this situation, strategies may Include buying out, collaborating, and providing training on supply chain management.
The bargaining power of customers is high when
a. customers buy in large volumes:
b. their products are not unique, such that they can be replaced or customers can produce those products themselves:
c. suppliers are fragmented and few; and
d. product switching is easy.
To deal with this situation, firms can collaborate, reach out, create loyalty, and increase value- added incentives in customers, improve on supply chain management, and work hard to move purchase decision from price.
are present when complementary, alternative, and similar products are in existence and sold at lower prices.
Threats of substitutes
