BORGMA Topic 2

• Environmental scanning


  Process of gathering, analyzing, and dispensing information for tactical or strategic purposes
• Environmental scanning entails obtaining both factual and subjective information on the business environments in which a company is operating or considering entering
• Business environment


  Institutions and forces that affect organizational performance
• Elements of the business environment

  • Competitors
  • Vendors
  • Markets
  • Products
  • Industries
  • Customers
• External business environment


  All those conditions and forces which are external to the business and are beyond the individual business unit, but it operates within it
• External environment


  Environment that has an indirect influence on the business, factors are uncontrollable by the business
• Types of external business environment

  • Macro
  • Micro
• Micro external business environment


  • Customers
  • Suppliers
  • Employees
  • Shareholders
  • Media
  • Competitors
• Customers


  The major task of a business is to create and sustain customers, a business exists only because of its customers
• Employees


  Employing staff with relevant skills and experience is essential, this process begins at recruitment stage and continues throughout an employee's employment via ongoing training and promotion opportunities
• Suppliers


  An important force in the micro environment of a company, those who supply the inputs like raw materials and components to the company
• Shareholders


  As organizations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership
• Media


  Positive media attention can "make" an organization (or its products) and negative media attention can "break" an organization, organizations need to manage the media
• Competitors


  Competition is a basic feature of an open market economy, no business organization can ignore its competitors and their business strategy
• Macro external business environment

  • Political
  • Economic
  • Technological
  • Social
  • Environmental
  • Legal
• Political


  How changes in government policy might affect the business
• Economic


  How the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and global economic factors
• Social


  How consumers, households and communities behave and their beliefs
• Technological


  How the rapid pace of change in production processes and product innovation affect a business
• Legal


  The way in which legislation in society affects the business
• Environmental


  Growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones
• Elements of the business environment

  • External
  • Internal
• Internal business environment


  Composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior
• Mission statement


  Describes what the organization stands for and why it exists, explains the overall purpose of the organization and includes the attributes that distinguish it from other organizations of its type
• Products


  The item offered for sale, can be a service or goods
• Machinery


  Specific machines or machines in general that business uses to produce products or in making business operations
• Organizational structure


  The formal structure of an organization is the hierarchical arrangement of tasks and people, determines how information flows, which departments are responsible for which activities, and where the decision-making power rests
• Organizational culture


  An organization's personality, distinguishes it from others and shapes the actions of its members