Management of Contractors
In recent times, there has been a marked movement towards outsourcing positions within the organization to vendors who would supply resources for the said jobs. These positions and roles are deemed to be those that can be done by resources from outside. And it is here that the contractors step in to do the job […]
7 Personal Finance Mistakes to Avoid
In this entire module on personal finance, we have written several articles on steps that need to be taken to ensure that a person has a good future. However, in the field of personal finance, it is almost as important to not do certain things as it is to do certain others. Financial mistakes can […]
Managerial Communication – Meaning and Important Concepts
Why do individuals need to communicate with each other ? Information if not shared is of no use. Communication plays a pivotal role in information sharing. Individuals working together in the same organization need to speak to each other to keep themselves abreast with the latest developments in the organization. It is practically not possible […]
Cryptocurrencies: A Primer
Cryptocurrencies have taken the world by storm. In the past few years, the cryptocurrency market has transformed into a mainstream financial market. Cryptocurrencies have come a long way from the time when they were used only by individuals who were digitally aware, valued their privacy, and were not comfortable with the central bank’s control over […]
Organizations Gain from Embracing Business Process Improvements
Business in present times is very challenging and dynamic. The nature of markets, life cycle of products and services as well as the Customers and their expectations have changed. So has competition. No business can survive this change unless and until they re-invent themselves and equip themselves to face competition. While some Organizations build their […]
Organizational environment consists of both external and internal factors. Environment must be scanned so as to determine development and forecasts of factors that will influence organizational success.
Environmental scanning refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment.
It helps the managers to decide the future path of the organization. Scanning must identify the threats and opportunities existing in the environment.
During strategy formulation, an organization must take advantage of the opportunities and minimize the threats. A threat for one organization may be an opportunity for another.
Internal analysis of the environment is the first step of environment scanning. Organizations should observe the internal organizational environment.
This includes employee interaction with other employees, employee interaction with management, manager interaction with other managers, and management interaction with shareholders, access to natural resources, brand awareness, organizational structure, main staff, operational potential, etc. Also, discussions, interviews, and surveys can be used to assess the internal environment.
Analysis of internal environment helps in identifying strengths and weaknesses of an organization.
As business becomes more competitive, and there are rapid changes in the external environment, information from external environment adds crucial elements to the effectiveness of long-term plans.
As environment is dynamic, it becomes essential to identify competitors’ moves and actions. Organizations have also to update the core competencies and internal environment as per external environment.
Environmental factors are infinite, hence, organization should be agile and vigile to accept and adjust to the environmental changes.
For instance - Monitoring might indicate that an original forecast of the prices of the raw materials that are involved in the product are no more credible, which could imply the requirement for more focused scanning, forecasting and analysis to create a more trustworthy prediction about the input costs. In a similar manner, there can be changes in factors such as competitor’s activities, technology, market tastes and preferences.
While in external analysis, three correlated environment should be studied and analyzed —
Examining the industry environment needs an appraisal of the competitive structure of the organization’s industry, including the competitive position of a particular organization and it’s main rivals. Also, an assessment of the nature, stage, dynamics and history of the industry is essential. It also implies evaluating the effect of globalization on competition within the industry.
Analyzing the national environment needs an appraisal of whether the national framework helps in achieving competitive advantage in the globalized environment.
Analysis of macro-environment includes exploring macro-economic, social, government, legal, technological and international factors that may influence the environment. The analysis of organization’s external environment reveals opportunities and threats for an organization.
Strategic managers must not only recognize the present state of the environment and their industry but also be able to predict its future positions.
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