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Chapter 2 - Org.&Mgt
Transcript of Chapter 2 - Org.&Mgt
A firm is a business organization, such as a corporation, limited liability company or partnership, that sells goods or services to make a profit. While most firms have just one location, a single firm can consist of one or more establishments, as long as they fall under the same ownership and, typically utilize the same Employer Identification Number (EIN).
The internal business environment includes factors within the organization that impact the approach and success of your operations. The external environment consists of a variety of factors outside your company doors that you typically don't have much control over. Managing the strengths of your internal operations and recognizing potential opportunities and threats outside of your operations are keys to business success.
THE FIRM AND ITS ENVIRONMENT
There are analysis methods that allow for a more holistic approach towards determining trends and then setting strategies. From a strategic management’s perspective, there are certain tools that permit the knowledge of the market and the surrounding environment in depth, but the most famous ones are
is a process of
gathering, analyzing, and dispensing
tactical or strategic
purposes. The environmental scanning process entails obtaining both
factual and subjective information
on the business
in which a company is operating or considering entering.
can be thought of as a form of
that lets managers look into the future.
It accounts for all the
may have upon the business environment, including
economy at large and individual
Tax reforms, fiscal policies
form part of this analysis. When conducting this step, ask questions like “What kind of government leadership is impacting decisions of the firm?”
This analyzes the
as a whole and its
owing to global trends and long term effects that may be evident.
Inflation rates, interest rates, economic growth, demand and supply trends
are all analyzed under this head.
This charts the analysis of
cultural trends, demographical determinants, age distribution
etc. Countries vary from each other. Every country has a
. These attitudes have an impact on the businesses. The
might ultimately affect the sales of products and services.
This analyzes the
of the business environment. It accounts for the rate at which the
are occurring and how directly and indirectly they’re
the business you’re in. Firms should integrate when needed. Technological factors will help the company know how the consumers react to various trends.
Legislative changes take place from time to time. Many of these changes affect the business environment. If a regulatory body sets up a regulation for industries, for example, that law would impact industries and business in that economy. So, businesses should also analyze the legal developments in respective environments.
The location influences business trades. Changes in climatic changes can affect the trade. The consumer reactions to particular offering can also be an issue. This most often affects agri-businesses. Major environmental factors are geographical location, climate and weather, waste disposal laws, and energy consumption regulation.
analysis, which many refer to as a deeper approach into the marketing environment consists of
Political, Economic, Social and Technological
features of a market. A more prolonged form of this analysis is called
E, which incorporates the aspect of
Legal and Environmental
factors affecting the marketplace.
is a detailed view of the environment a business is situated in. It can be rightly called a bird’s eye view where a company or an individual tries to ascertain specific trends of the market from a macroeconomic perspective.
Strengths, Weaknesses, Opportunities and Threats
that are associated with a situation by considering all the internal and external aspects of the business and market. This way, business managers can understand whether a situation has enough aspects in its favor and ultimately worth being pursued.
PESTLE can be rightly called a thorough view on the
in which an organization is operating in. On the contrary though,
is the analysis on the
of the company based on its products etc. SWOT tends to be more
as an individual or an entity conducts this analysis based on that product/service.
It analyzes the company’s strengths in line with the product/service and counts the USP (unique selling propositions) that it has. Strengths of a company or a product make it
comparison with their competitors.
It accounts for all the current weaknesses that the company may have or may be facing and how the product features them. It gives the company the view from an external standpoint where they can understand what their
areas of lacking
and then work upon them to
them from their internal environment.
These opportunities are for the company to
derive benefits from
. Usually, weaknesses are reflected here with a strategy to encounter them as opportunities where the company can work upon itself or the product/service.
This take into account the threats that
able and potential competitors pose
for the company and its products/services. These also analyze the barriers to entry and how
can be tackled effectively.
Kinds of Environmental Scanning
Short term, infrequent examinations
Usually initiated by a crisis
Studies done on a regular schedule (e.g. once a year)
Continuous structured data collection and processing on a broad range of environmental factors