BME 4004 - Chapter 2, The Physical Environment Analysis

true

true or false

• a company operates in an environment surrounded by different external and internal forces. these forces determine its profitability, competitiveness, growth, and direction

physical/natural, general/societal, industry/tax

the external environment has three layers, namely, the _____ environment, _____ environment, and _____ environment

physical and societal environment

• the macro environment of a firm

industry environment

• the micro environment

external environment analysis

• a continuous process

• strategic managers will be able to detect major changes happening in the environment

environmental scanning, environmental monitoring, competitive intelligence

an external environment analysis follows a systematic process. it involves three major processes which are _____, _____. and _____

environmental scanning

external environment analysis process

• the critical surveillance and evaluation of events happening in the external environment that may influence the current position and future plans of a company

environmental scanning

external environment analysis process

• identifies key forces existing in the environment that may change or affect the future of a company

• gathering information on series of events as input for making an in-depth analysis and evaluation

• provides information on series of events that are constantly surfacing

environmental scanning

external environment analysis process

• aims to achieve the following:

  • gain a deeper understanding of the nature and trend of changes in the environment surrounding a company

  • identify opportunities and threats that will possible confront a company

steep/pestel analysis

external environment analysis process

• commonly used tool when conducting an environmental scanning

environmental scanning

external environment analysis process

• steps to _____:

  • setting up an environmental scanning system or program

  • collecting and analyzing secondary data

  • collecting and analyzing primary data

  • identifying issues that consistently surface

  • interpreting results and preparing a report

scanning system/program

environmental scanning

• the _____ must consider the following factors:

  • scanning team

  • time frame of the scanning process

  • responsibilities and expectations

  • expected output and the types and formats of the report

scanning team

environmental scanning

• the _____ must:

  • be composed of diverse individuals who represent the important units of a company

  • have the ability to make an effective environmental scanning

secondary data

environmental scanning

• data collected by others for their own purpose but have been considered useful by others

• focus: what the company needs

primary data

environmental scanning

• data collected by conducting interviews and focus group discussions

• provides a better perspective about the priority concerns and issues of stakeholders without compromising ethical issues and considerations to protect and value their privacy and interest

identifying issues that consistently surface

environmental scanning

• involves the critical evaluation of the different forces surrounding a company

• issues that consistently appear indicate the current trend and priority issues of major stakeholders

top priority issues

environmental scanning

• urgent

• must be addressed immediately

consistent priorities

environmental scanning

• signal the emerging issues of the future wherein their potential impacts can hardly be determined

interpreting results and preparing a report

environmental scanning

• the results of an environmental scanning must provide the following information:

  • trend of past events and probability of the forecast

  • probable time frame of the trend

  • impact on the company

  • required reaction or response of the company

environmental monitoring

external environment analysis process

• process of tracking the environmental trends/sequence of events determined during an environmental scanning

environmental monitoring

external environment analysis process

• companies usually conduct an _____ after the environmental scanning to:

  • build sufficient and reliable data to determine the emerging trend

  • validated collected data so that they become precise and reliable

trend analysis

environmental monitoring

• commonly used strategic management tool when practicing environmental monitoring

• detects a pattern and uses it to predict

environmental monitoring

external environment analysis process

• steps to _____:

  • identifying emerging issues

  • evaluating the time frame of emerging issues

  • deciding on the action to be taken

environmental monitoring

external environment analysis process

• out of the surfacing events, _____ identifies top emerging issues that must be evaluated and addressed immediately

• it determines what really happens in the environment and what might happen in the future

beginning

environmental monitoring

• emerging issues at the _____ usually involve innovative organizations and early adopted firms

18-36

environmental monitoring

• “time horizon of a trend from the times issues emerge into the mainstream of events varies from _____”

deciding on the actions to be taken

environmental monitoring

• deciding what appropriate action a company must take to deal with emerging issues

• a company may exploit the opportunities of emerging events/avoid them with enough mechanism to minimize their impact

competitive intelligence

external environment analysis process

• a systematic process of collecting, analyzing, and interpreting information about business competitors

competitive intelligence

external environment analysis process

• monitor the probable moves of competitors

  • entirely different from business espionage

• conducted to understand the different forces in the market and develop the most appropriate marketing strategy

five forces of competition model

competitive intelligence

• commonly used strategic management tool when conducting competitive intelligence

sensitivity analysis

competitive intelligence

• complements the five forces of competition model

• identifies the various forces affecting the competition in the marketplace

competitive intelligence

external environment analysis process

• steps to _____:

  • identify the sources of information

  • validate collected information

  • analyze the information

  • make a projection

  • define the action to be taken

good

competitive intelligence

• _____ sources of information: annual reports, websites, mission and vision statements, newspapers and magazines, financial statements, and publications of research offices

true

true or false

• only information that can provide valuable and strategic insights must be validated

false

true or false

• instead of analyzing the information, the strategic manager should make assumptions and projections

comparative analysis, horizontal analysis, mix ratio analysis

competitive intelligence

• gathered information must be analyzed using tools such as _____, _____, _____, and other qualitative techniques

projections

competitive intelligence

• based on past performance of competitors

  • determine the possible strengths and weaknesses of competitors

  • identify new products to be launched

  • define strategies to be adopted

sensitivity analysis

competitive intelligence

• plays a significant role in making a projection

physical/natural environment

• physical resources, wildlife, and climate

• inherent and beyond the control of a company

false

true or false

• the physical environment can be controlled by the company

physical environment

it is to conduct a _____ analysis to determine possible strategic factors for the following reasons:

• changes in the natural environment have a direct impact on the societal environment that affects companies

• changes in the natural environment have an indirect impact on the task/industry environment that affects a company’s growth

physical environment

an analysis of the _____ of a company includes concerns on the following:

• availability of raw materials used in production

• unpredictable weather conditions, increase in sea level, and erratic climate change

• increasing greenhouse gas emissions

true

true or false

• there is a positive correlation between the operating performance and sustainability of a company and its concern with the issues affecting the natural environment

environmental scanning, environmental monitoring

changes in the physical/natural environment are analyzed and evaluated through _____ / _____, with focus on the availability of raw materials, weather condition, and climate change

physical environment analysis

• initially uses environmental scanning

• supplemented with environmental monitoring

physical environment analysis

• focuses on environmental sustainability whose primary objective is to reduce the impact of the changes in the physical environment of a company

• this can be easily achieved if the strategic factors of the physical environment that pose opportunities and threats are clearly identified

physical environment analysis

steps to _____:

• list the forces from the physical environment that are currently affecting the company

• gather information (preferably quantitative) from reliable sources

• evaluate the level/impact of the effects of these forces on the company

• determine the frequency of occurrences and the level of weather-related events

• assess if the company is vulnerable to climate-related effects

• group the identified climate change effects into six categories