Download Environmental Scanning - Unitec Institute of Technology

Environmental Scanning
General Environment
• Economic conditions – inflation, income levels, unemployment, GDP (The
monetary value of all the finished goods and services produced within a
country's borders, generally calculated yearly
• Social-cultural conditions – social values – human rights, education,
demographic patterns
• Legal-political conditions – philosophy and objective of political parties,
laws and government regulations
• Technological conditions – general state of development and availability,
scientific advancements
• Natural environment – conditions of natural environment, including levels
of public concern
Economic
Interest rates rise impact
Increase/decrease mortgage rates
Oil price change
business, social
house sales
household appliances
industry
transport
manufacturing
hospitality/tourism
shipping
Unemployment
Business closures
country
rural areas
What is happening at the moment?
Economically what is happening at the moment?
What will be the impact on New Zealand?
BRIC: Brazil, Russia, India, China
By 2007 China – world’s second largest economy
India is graduating more English speaking scientists, engineers,
technicians, is a primary location for outsourcing services
Emerging markets – less than 1/3 total gross GDP (but accounts for
more than half GDP growth
Analysis
National, Local Government
Competitors
Political parties
Employees
Business
Firm
Labour Unions
Educational Institutions
Suppliers
Court and legal Institutions
Customers
Stockholders
Public-interest groups
Financial Institutions
Environmental Stakeholders
• Customers – specific consumer or client groups, individuals,
organisations that purchase products or services
• Suppliers – providers of the human, information, and financial
resources and raw materials needed by the organisation to operate
• Competitors – specific organisations that offer the same or similar
goods and services to the same consumer or client groups.
• Regulators – specific government agencies/regulators at local, state
and national levels.
Sustainability
• Sustainability – business, general environment
• Issues that can impact on our way of living – business,
personal, country
• Risks
• Regulatory – reduce carbon dioxide emission
• Supply chain – weather, oil
• Products – reaction by consumers
• Reputation – environmental sustainability
• Physical – impact of rising temperatures and weather
patterns
• Litigation – oil spills
Risks - Challenges
• Organisations need to manage risks and take action
• Become skilled in problem solving
• Learn history, experience – own and others
• Transfer knowledge throughout the organisation:
• Technical skills
• Functional knowledge
• Managerial expertise
It is essential to avoid stagnation
Porter’s Five Competitive Forces
Potential
Entrants
Industry Competitors
Suppliers
Buyers
Rivalry among existing
firms
Bargaining power of suppliers/
Substitutes
Buyers, Threat of new entrant/substitute of products or service
Supplier Power – Factors determining power of suppliers relative to producers
Threat of Entry – capital
requirements; economies
of scale; cost advantages,
product differentiation,
distribution channels,
legal barriers
Industry Rivalry –
concentration, diversity of
competitors, product
differentiation, excess
capacity and exit barriers,
cost conditions
Threat of Substitutes –
Buyer propensity of
substitute, relative
prices and performance
of substitutes
Buyer Power – Price sensitivity: cost of product relative to total cost, product differentiation, competition
between buyers. Bargaining Power – size and concentration of buyers relative to producers, buyers
information, Buyers switching costs.
Events that trigger change
• New Chief Executive Officer
• External intervention
• Threat – change of ownership
• Performance gap
• New technology
• Change in regulatory environment
• Customer values/preferences
Mintzberg’s perspective
• Entrepreneurial mode – opportunities
• Adaptive mode – reactive/proactive
• Planning mode – systematic
• Logical incrementalisation – emergence through debate and
discussion