UNIT 3: THE FIRM AND ITS ENVIRONMENT (LESSON 1) Flashcards
MAJOR PROBLEMS FACED BY BUSINESS
- UNCERTAINTY
- GLOBALIZATION
- INNOVATION
- GOVERNMENT POLICY
- TECHNOLOGY
- DIVERSITY
- COMPLEXITY
- INFORMATION OVERLOAD
Consists of elements that have a direct impact on the business operations.
INTERNAL ENVIRONMENT
Also known as the “OPERATING ENVIRONMENT”
MICROENVIRONMENT
-General environment of the firm
MACROENVIRONMENT
INTERNAL ENVIRONMENT CONSISTS OF?
-Employees
-Board of directors
-Managers
Consists of factors that have indirect but significant influence on the operations of the business
EXTERNAL ENVIRONMENT
Two Types of External Environment
Microenvironment
Macroenvironment
MICROENVIRONMENT CONSISTS OF?
Customers
Suppliers
Regulatory agencies
Competitors
MACROENVIRONMENT CONSISTS OF?
Economic
Political
Social
Legal
Technical
Is the actual monitoring and evaluation of information from the external and internal environment of a business organization
ENVIRONMENTAL SCANNING
Three Modes of Environmental Scanning
- Ad hoc environmental scanning
- Regular scanning
- Continuous scanning
is not often done and is usually applicable only during a crisis situation
Ad hoc environmental scanning
is usually done at least once a year or at regular intervals
Regular scanning
refers to the continuous collection of data on a board range of environmental factors
Continuous scanning
Is a technique that identifies the STRENGTHS and WEAKNESS of a company, as well as OPPRTUNITIES and THREATS if faces.
swot analysis
– what does your company do better than others?
STRENGTHS
– what aspects of your company need to be improved?
WEAKNESSES
– what trends/conditions can positively impact your company?
OPPORTUNITIES
– what trends/conditions can negatively impact your company?
THREATS
Things your company does well
Qualities that separate you from your competitors
Internal resources such as skilled, knowledgeable staff
Tangible assets such as intellectual property, capital, proprietary technologies etc.
strengths
Things your company lacks
Things your competitors do better than you
Resource limitations
Unclear unique selling proposition
weaknesses
Underserved markets for specific products
Few competitors in your area
Emerging need for your products or services
Press/media coverage of your company
opportunities
Emerging competitors
Changing regulatory environment
Negative press/media coverage
Changing customer attitudes toward your company
threats
Link between SWOT and PEST
OPPORTUNITIES AND THREATS ARE
POLITICAL
ECONOMICAL
SOCIOLOGICAL
TECHNOLOGICAL
LEGAL
ENVIRONMENTAL
Is a method used in analyzing the POLITICAL, ECONOMIC, SOCIAL, and TECHNOLOGICAL forces affecting the company.
PEST ANALYSIS
PEST?
POLITICAL, ECONOMIC, SOCIAL, and TECHNOLOGICAL
- war
- dictatorship
- facilities for starting a business
- waste reduction policy
- high taxes
political
- high gdp
- price inflation
- saturated markets
- high loan rates for companies
economic
- purchasing habits
- budget for households
- trends and cultural influence in the country
social
- the country’s technical and logistical resources
- the level of expertise
- the latest development
technological
- law to preserve animal and plant life
- suitable environment to launch the activity
environmental
- Target middle and high income populations with better purchasing power.
- Target developing countries with higher par capital
economic factor
- employment laws of the country
- laws related to the activity
- permits, authorization and other requirements
legal
- Target health conscious population.
- Develop Social Campaigns to attract younger generation.
social factor
- Installation of modern technologies to improve efficient manufacturing.
- Modern technologies improve research and development.
Technological Factor
- Strict Adherence to safety rules and Regulations
- Strict guidelines on enforcing copyright regulations on imitation companies
legal factor
- Research and use of sustainable raw materials.
- Planning and conducting environment awareness campaigns.
environmental factor
