ENVIRONMENTAL SCANNING

 Involves the seeking for and sorting through

data about the organization’s environment. It
is a process of gathering, analyzing, and
dispensing information for tactical or strategic
purpose.
 ENVIRONMENTAL SCANNING
COMPONENTS OF
ENVIRONMENTAL SCANNING
• Competitive mind-set
• Considering the future business scenario
• Business prediction, and benchmarking
 ENVIRONMENTAL SCANNING
COMPONENTS OF
ENVIRONMENTAL SCANNING
• BENCHMARKING
 is the process of measuring or comparing
one’s own products, services, and practices
with those of the recognized industry leaders
in order to identify areas for improvement.
 What is a PEST analysis?

 A PEST analysis is a strategic business tool used by

organizations to discover, evaluate, organize, and track
macro-economic factors which can impact on their
business now and in the future. The framework
examines opportunities and threats due to Political,
Economic, Social, and Technological forces
 Why do a PEST analysis?

 Helps to evaluate how your strategy fits into the broader

environment and encourages strategic thinking
 Provides an overview of all the crucial external
influences on the organization
 Supports more decisive and knowledgeable decision
making
 Assists planning, marketing, organizational change
initiatives, business and product development, project
management, and research papers
 Who should use a PEST analysis?

 A PEST analysis is useful for any organization that

needs to gauge current and future markets. The
significance of each area in PEST Analysis will vary for
different industry sectors. For example, there is likely to
be a different emphasis on the technology element for IT
organizations compared with those involved in health,
tourism, mining, defense, and banking.
 PEST

A. POLITICAL
 Political forces in the environment pertain to
legal regulations, political orientations,
government policies, and compliance
procedures of government bodies that affect
or control the operations of the firm
SAMPLE QUESTION TO ASK:

• What government policies or political groups could be

beneficial or detrimental to our success?
• Is the political environment stable or likely to change?
POLITICAL
• Tax
policies
• Labor
policies
• Environme
ntal
policies
 PEST

B. ECONOMIC
 Economic forces that affect firms pertain to
economic conditions relevant to the
business. These economic factors include
employment rates, income levels, inflation
rates, saving, investments rates, insurance
rates, and monetary policies
SAMPLE QUESTION TO ASK:

• What economic factors will affect us moving

forward?
• How does the performance of the economy affect
us at the moment?
• How are our pricing, revenues, and costs
impacted by each economic factor?
POLITICAL ECONOMIC
• Tax • Inflation
policies rates
• Labor • Interest
policies rates
• Environme • Current
ntal
policies economic
climate
 PEST

C. SOCIAL
 Sociocultural forces are people’s
characteristics and lifestyles that impinge on
the operations of the firm.
SAMPLE QUESTION TO ASK:

• How do our customer’s beliefs and values

influence their buying habits?
• How do cultural trends and human behavior play
a role in our business?
POLITICAL ECONOMIC SOCIAL
• Tax • Inflation • Age
policies rates demograph
• Labor • Interest ic
policies rates • Lifestyle
• Environme • Current choices
ntal
policies economic • Population
climate grwth rate
 PEST

D. TECHNOLOGICAL
 Recent advancements in technology have
led to great strides n product innovations,
process improvements, and integrated
systems in the manufacturing and service
sectors.
SAMPLE QUESTION TO ASK:

• What technological advancements and

innovations are available or on the horizon?
• How will this technology impact on our
operations?
POLITICAL ECONOMIC SOCIAL TECHNOLOGI
CAL
• Tax • Inflation • Age • Research and
policies rates demograph development
• Labor • Speed of data
• Interest ic transfer
policies rates • Lifestyle • Threats from
• Environme • Current choices competing
ntal technologies
policies economic • Population
climate grwth rate
 SWOT analysis

is a framework used to evaluate a company's

competitive position and to develop strategic
planning. SWOT analysis assesses internal and
external factors, as well as current and future
potential..
 SWOT analysis

A. STRENGTHS
 Strengths describe what an organization excels
at and what separates it from the competition:
a strong brand, loyal customer base, a strong
balance sheet, unique technology, and so on.
SAMPLE QUESTION TO ASK:

• What business processes are successful?

• What assets do you have in your team, such as knowledge,
education, network, skills, and reputation?
• What physical assets do you have, such as customers,
equipment, technology, cash, and patents?
• What competitive advantages do you have over your
competition?
 SWOT analysis

B. OPPORTUNITIES
 Opportunities refer to favorable external
factors that could give an organization a
competitive advantage.
SAMPLE QUESTION TO ASK:

• Is your market growing and are there trends that will

encourage people to buy more of what you are selling?
• Are there upcoming events that your company may be able to
take advantage of to grow the business?
• Are there upcoming changes to regulations that might impact
your company positively?
• If your business is up and running, do customers think highly
of you
 SWOT analysis

C. THREATS
 Threats refer to factors that have the potential
to harm an organization.
SAMPLE QUESTION TO ASK:

• Do you have potential competitors who may enter your

market?
• Will suppliers always be able to supply the raw
materials you need at the prices you need?
• Could future developments in technology change how
you do business?
• Is consumer behavior changing in a way that could
negatively impact your business?
• Are there market trends that could become a threat?
 INTERNAL
Strengths Weaknesses
• Advantage of your company
over the other. • Limited resources available in
business area.
POSITIVE

NEGATIVE
Opportunities Threats
• Chances for development, • Circumstances or situation which
advances or expansions. you cannot control

EXTERNAL
 THE LOCAL AND INTERNATIONAL
BUSINESS ENVIRONMENT OF THE FIRM
 THE LOCAL AND INTERNATIONAL BUSINESS ENVIRONMENT OF
THE FIRM

 DEFINITION OF TERMS:
• Competitive Advantage
 – pertains to the distinguishing features or characteristics of a business
organization that enable it to perform better than competitors.
• Environmental uncertainty
 – pertains to the lack of complete information about the current and future
environment of the firm.
• Environmental complexity
 – the presence of numerous factors prevailing in the environment that change
over time. These factors pertain to the PEST conditions.
 THE LOCAL AND INTERNATIONAL BUSINESS ENVIRONMENT OF
THE FIRM

• Local Business Environment

 – pertains to the specific industry to which the company belongs and directly
deals with. It comprises the customers, suppliers, competitors, regulators, and
employees.
• International Business Environment
 – pertains to the business activities performed by companies operating in foreign
locations
UNDERSTANDING THE LOCAL
ENVIRONMENT
 UNDERSTANDING THE LOCAL ENVIRONMENT

Porter's Five Forces is a model that identifies and analyzes

five competitive forces that shape every industry and helps
determine an industry's weaknesses and strengths.
PORTER'S FIVE FORCES ARE:

 1.Competitive Rivalry
 2.Threat of new entrants
 3.Bargaining Power of suppliers
 4.Bargaining Power of customers
 5.Threat of substitute products
1. COMPETITIVE RIVALRY
 The first of the five forces refers to the number of competitors and
their ability to undercut a company. The larger the number of
competitors, along with the number of equivalent products and
services they offer, the lesser the power of a company.
2. THREAT OF NEW ENTRANTS
 A company's power is also affected by the force of new entrants into
its market.
3. BARGAINING POWER OF SUPPLIERS
 The next factor addresses how easily suppliers can drive up the cost of
inputs. It is affected by the number of suppliers of key inputs of a
good or service, how unique these inputs are, and how much it would
cost a company to switch to another supplier.
4. BARGAINING POWER OF CUSTOMERS
 The ability that customers have to drive prices lower or their level of
power is one of the five forces.
5. THREAT OF SUBSTITUTES
 Substitute goods or services that can be used in place of a company's
products or services pose a threat.
UNDERSTANDING THE INTERNATIONAL ENVIRONMENT
THROUGH GLOBAL MANAGEMENT

• GLOBAL MANAGEMENT
 according to Schermerhorn (2011), it refers to the mangement of
businesses and organizations with operations in more than one
country.
• GLOBAL BUSINESS
 pertains to a business environment that poses challenges in
adaptations to the cultures and business conduct in foreign countries.
• GLOBALIZATION
 pertains to the growing interdependence among people around the
world.