pom handout 2

• Environmental scanning


  An in-depth examination of key factors that influence the business operations of a firm
• Environmental scanning involves carefully studying a firm’s external environment to predict environmental changes and detect changes already underway
• Critical trends and events signal an alert before they develop a discernible pattern and competitors recognize them
• Macro environment


  Refers to the "external factors" that greatly impact the area, industry, and market in which the enterprise operates
• Factors included in the macro environment

  • Economic conditions
  • Technological advancements
  • Political and legal regulations
  • Social and cultural trends
  • Environmental factors
• Understanding the macro environment is important for businesses as it helps them identify opportunities and threats that may impact their operations
• PESTEL Analysis


  Assess the macro environment and make informed decisions to stay competitive and successful
• PESTEL analysis is a tool to identify the external forces that may affect an organization positively and negatively
• Political factors


  Analyze the influence of political forces on an organization's operations, decision-making, and strategic planning
• Political factors


  • Emergency declaration of a nation
  • International disputes
  • Infrastructure policy
  • Government incentives and spending
  • Government regulations and policies
  • Immigration and Labor Law
  • Political leadership
  • Political corruption and bribery
  • Political unrest or conflicts
  • Political stability or instability
  • Tax policies and rates
  • Trade policies and barriers
• Economic factors


  External conditions and forces that affect a country's economy, organization, or industry
• Social factors


  Determine the impact of the social environment and emerging trends on the business profitability of an organization
• Technological factors


  The influence of technology on business and the external environment
• This analysis helps organizations understand how technological advancements affect their operations and strategies to remain competitive in a fast-paced environment
• Technological factors


  Influence of technology on business and the external environment
• Technological advancements affect operations and strategies to remain competitive in a fast-paced and ever-changing technological landscape
• Technological factors


  • Rampant use of artificial Intelligence
  • Automation and robotics
  • Cybersecurity and data protection
  • Level of innovation and digitalization
  • Adaption of remote work
  • Rise of e-commerce
• Environmental factors


  Environmental issues or concerns that can impact the organization
• Organizations assess environmental trends to adapt their strategies and practices and benefit from new opportunities
• Environmental factors


  • Supply of natural resources
  • Pollution control measures
  • Extreme climate change
  • Urbanization and land development
  • Deforestation leading to loss of biodiversity
  • Disrupted marine ecosystem
  • Improper waste management
  • Increasing carbon emission
• Legal factors


  Laws, regulations, and frameworks that influence the organization's strategy, decision-making, and overall business operations
• The organization needs to follow legal factors and manage any legal risks that may arise
• Legal factors


  • Employment laws
  • Health and safety regulations
  • Environmental regulations
  • Corporate tax rates
  • Regulations on import and export
  • Intellectual property laws
  • Consumer protection and product liability laws
  • Regulations governing business agreements
  • Regulatory requirements specific to the industry
  • Anti-trust laws to prevent unfair business practices
  • Data protection and privacy laws
• Micro environment includes factors close to the company that impact its ability to serve customers
• Micro environment comprises customers, suppliers, competitors, and other stakeholders
• Micro environment directly influences the organization and is crucial for businesses to adapt to market fluctuations and cater to the demands of stakeholders
• Micro environment is a controllable domain that directly influences the organization's operations and performance, empowering them to be proactive and responsive
• Micro-environment involves Porter's Five Forces framework for assessing and evaluating a business organization's competitive strength and position
• Threat of new entrants


  Determines how easy or difficult it is to enter a particular industry
• Buyer power


  Analyses how buyers can easily influence price decreases
• With barriers to entry, rivalry intensifies


  When more organizations compete for the same market share, profits fall
• Existing organizations need to create high barriers to entry

  To deter new entrants
• Buyer power


  • Buyers can easily influence price decreases based on the number of buyers in the market, the importance of each buyer to the organization, and the cost to the buyer of switching suppliers
• Buyer power


  • A few powerful business buyers can often dictate terms
• Threat of substitution


  • Buyers can easily find substitute products with better quality or attractive prices and can switch from products or services with little cost
• Threat of substitution


  • Switching from coffee to tea costs nothing, unlike switching from a car to a bicycle
• Supplier power


  • Suppliers can easily influence price increases based on the number of suppliers of each essential input, the uniqueness of their product or service, the supplier’s relative size, and the cost of switching suppliers
• Competitive rivalry


  • Examines the intensity of competition in the marketplace based on the number and capability of competitors in the market
• Competitive rivalry


  • Rivalry competition is high when few businesses are equally selling a product or service, when the industry is growing, and when consumers can easily switch to a competitor's product for a cheaper cost
• When rivalry among competitors is intense

  Advertising and price wars can increase, negatively impacting the business in the long run