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13 management strategic management environmental

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13ManagementStrategic ManagementEnvironmental Scanning and ApproachesThe final results of an analysis could be listed in the matrix in given belowThe SWOT MatrixFACTORSPOSITIVENEGATIVEINTERNALFACTORSStrengthsPatentsStrong brand namesGood ReputationCost advantages from proprietaryknow howExclusive access to high gradenatural resourcesFavourable access to distributionnetworksWeaknessesLack of potent protectionA weak brand namePoorreputationamongcustomersHigh cost structureLack of access to the bestnatural resourcesLackofaccesstokeydistribution channelsEXTERNALFACTORSOpportunitiesAn unfulfilled customer needArrival of new technologiesLoosening of regulationsRemoval of international tradebarriersThreatsShifts in consumer tastes awayfrom the firm’s productsEmergenceofsubstituteproductsNew regulationsIncreased trade businessROLE AND IMPORTANCE OF SWOT ANALYSISA.Identify strengthsThe internal environment analysis identifies the strengths of anorganisation. The internal environment includes the resources of the organisation - physical,
14ManagementStrategic ManagementEnvironmental Scanning and Approachesfinancial and human resources for instancewhen a company has superior technology incomparison to its counterparts, it becomes strength for the company.B.Identify weaknessesSWOT analysis also identifies the areas where a company needsimprovement and which puts it at a disadvantage in comparison to its competitors. The analysishelps a company to spot such weaknesses and take corrective actions, for instancehavinglesser financial resources can be a weakness and in order to work on this issue the company mayhave to explore for avenues to raise additional funds.C.Identify opportunitiesThe external environment may have to offer many newopportunities for businesses and SWOT analysis helps a company in recognising them.D.Identify threatsWith many opportunities, the external environment also leads acompany to various threats from competitors, govt. policies, etc. Early identification of suchthreats helps a company to counter them in future. For instance, the govt. may change thetaxation policies which may further affect the costing for the firms; therefore, business firm musttake necessary steps to reduce the effect of such changes.E.Effective planningEnvironmental analysis also helps a firm in planning its futureactions and facilitates quick decision-making. The planning exercise must take into account theinternal and external environment and the SWOT analysisenables a firm to make well definedplans.F.Facilitates Organising ResourcesEnvironmental analysis helps an organisation topredict the future demand of their products which enables it to organise its resourcesaccordingly. The organisation can plan the requirement of resources to handle the activities ofthe market.

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