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Environmental Analysis
Scanning
Monitoring Forecasting Assessment
Scanning
General surveillance of all environmental factors
To identify early signals
Detect change
Make sense of vague, ambiguous and unconnected data It is an ill structured and ambiguous environmental analysis
Monitoring
Tracking trends
Sequence of events
continued
Outcomes of monitoring
- Will give a specific description of environmental trends and data - Helps in identification of trends - Identification of areas for further assessment
Forecasting
The need for forecasting is to use outcome of scanning and monitoring It is concerned with developing future projections of the direction, scope and intensity of environmental change
Forecasting is more focused and is deductive and complex activity
Assessment
Scanning , monitoring, forecasting are not end in itself
The strength interpreting the information and its implications for the organization. It is about assessing how and why current and projected environmental changes affect strategic management of organization
Types of Forecast
Economic Forecast
Social Forecast Political Forecast Technological Forecast
Delphi Method
Strategic Issue Analysis
Contd.
The environment provides the threat and the opportunity for organizations to exploit .The factors are : Natural and Technological The systematic application of scientific knowledge to tasks Economic : The forces which have an economic impact on business. Political : Influence by legislature,executive and judiciary
Global : Companies are forced to view business from a global perspective Social and Cultural : Such factors like people attitude towards work and culture role of family etc .
Knowing Environment
The environment factors described above will provide a mass of information, to make relevance of this mass of information, we need to narrow down on factors that influence our specific business, the following three would help us do that.
3 concept on Environment
Enacted Environment: An organization create its own environment out of the total external environment. This environment is called enacted environment,by scoping and narrowing and scanning the external environment, it creats an environemnt to which it reacts. Not all fcators influence its business.
Example: Exchange rate may not influence a company that has no international dealings
Domain and Domain consensus: It is a part of enacted environment which organization carve out for itself. This means identifying itw own territory with products offered, population served and services rendered.
Ex Luxury goods manufacturer bothered about changing lifestyle and preferences of HIG rather than anyone else.
Task Environment : The specific range of products offered, the technology to be adopted and productive strategy to be adopted for specific product.
Example : Paper manufacturer being bothered about specific technological advancements in his production process
Environmental analysis and diagnosis give strategist the time to anticipate opportunities and to plan to take optional responses to these opportunities. It develops strategist to develop an early warning system Without environmental analysis managers may give an inadequate response to environmental changes The extent to which these factors can be predicted , the managerial decision are likely to be better.
Strategic management
The determination of basic long term goals and objectives of an enterprise and the adoption of course of action and allocation of resources necessary to carry out these goals.
Strategic management involves decision making which have 1) wider ramifications, 2)Have long term perspective 3) Use critical resources towards perceived opportunities or threats in environment
SWOT Analysis
Swot are cornerstone of business policy formulation Environment may provide opportunity but company should have the stregth to take it and vice versa. The liberalization has expanded the scope of business by removing restrictions, companies have entered segments which were earlier restricted. We now talk about international product lifecycle, what companies used to manufacture themselves are being imported.
The Environmental opportunities and therats will have to be viewed by companies in light of their strength and weakness of internal factors comprising finance, technonolgy, production ,marketing etc.
This is the reason perhaps fro HUL being a leader in Indian market, despite the fact that Pand G is the leader in other markets.
The general success of Japanese car makers and electronic goods is attributed to right choice of products and market, based on proper understanding of environment and their internal strengths.
Implementation
There are three levels at which strategy can be implemented:
Corporate level: To achieve overall objectives of firm SBU Level: To achieve specific objectives of unit. Functional level: To achieve objectives of individual department like Rand D etc
Conclusion
The key to success is most effective utilization of companys resources not only existing but those that can be mobilized and this involves evaluation of S and W in light of environmental challenges and take appropriate measures to harness them.