Chapter 4

Chapter 4 - Chapter 4 Environmental Scanning and Industry...

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Chapter 4 – Environmental Scanning and Industry Analysis Environmental Scanning is the monitoring, evaluation and dissemination of information from the internal and external environments to key people within the corporation. Identifying External Environmental Variables There are three variables: 1. Natural Environment 2. Societal Environment 3. Task Environment Natural Environment includes physical resources, wildlife and climate that are an inherent part of existence on Earth. Societal Environment is mankind’s social system that includes general forces that do not directly touch on the short-run activities of the organization than can and often do, influence its long-run decisions. These factors are: Economic Forces that regulate the exchange of materials, money, energy and information. Technological Forces that generate problem-solving inventions. Political-Legal Forces that allocate power and provide constraining and protecting laws and regulations. Sociocultural Forces that regulate the values, mores and customs of society. Task Environment includes those elements or groups that are directly affect a corporation and in turn, are affected by it. These elements are: Government Local Communities Suppliers Competitors Customers Creditors Employees/Labor Unions Special-Interest Groups Trade Associations Industry Analysis refers to an in-depth examination of key factors within the corporation’s task environment. The natural, societal and task environments must be monitored to detect the strategic factors that are likely in the future to have a strong impact on corporate success or failure. Changes in the natural environment usually affect a business corporation first through its impact on the societal environment in terms of resource availability and costs and the upon the task environment in terms of the growth or decline of particular industries. STEEP Analysis means monitoring trends is societal and natural environments. It scans: Sociocultural Environmental Forces (Lifestyle Changes, Career Expectations, Consumer Activism, Rate Of Family Formation, Growth Rate Of Population, Age Distribution Of Population, Life Expectancies, Birthrates, Pension Plans, Health Care and etc) Technological Environmental Forces (Total Government Spending For R&D, Total Industry Spending For R&D, Patent Protection, Internet Availability, Telecommunication Infrastructure, Computer Hacking Activity and etc)
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Economical Environmental Forces (GDP Trends, Interest Rates, Money Supply, Inflation Rates, Unemployment Levels, Wage/Price Controls, Currency Markets and etc) Ecological Environmental Forces Political-Legal Environmental Forces (Antitrust Regulations, Environmental Protection Laws, Global Warming Legislation, Immigration Laws, Tax Laws, Foreign Trade Regulations, Attitudes Toward Foreign Companies, Stability Of Government and etc) Trends in the Economic Part of societal environment can have an obvious impact on business
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This note was uploaded on 03/29/2012 for the course NINO nino taught by Professor Nino during the Spring '12 term at UCSB.

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Chapter 4 - Chapter 4 Environmental Scanning and Industry...

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