Essay Instructions: Instructions - Answer the following 5 questions
Think about the approach your firm uses to assess the environment it competes in and undertake environmental scanning.
How does your firm evaluate its remote, industry, and operating business environments?
What are your firm?s strengths and weaknesses?
What opportunities, threats, and trends is your firm facing?
What is your firm?s competitive position in its industry today and in the future?
Evaluating the impact of the economy on your firm in the future is, as you have seen, an important component of this process.
What data and forecasts are readily available to you, and how would you acquire this data if it is not available?
Environmental Scanning: Remote and Industry
INTRODUCTION
You are responsible for developing a strategic plan for your firm. Firms, including yours, face a tough competitive environment. Planning for the future by completing detailed environmental assessments leads to smart decision making, often allowing the firm to seize a dominant position in the market because it has a better understanding of the future than its competitors. Examples of this type of detailed assessment leading to competitive advantages include the automaker who, by studying the economy and demographic trends, developed the minivan and as a result gained a significant advantage in that market. Another example is the developer that anticipated the recent strength of the housing market and demographic trends pointing towards the aging of the baby boomers and acquired a developer that is well known for the development of master-planned, age-restricted communities.
Effective environmental scanning positively influences business decision making because the evaluation of the remote, industry, and operating business environments provides a framework for successful planning. This form of assessment allows the firm to accurately evaluate its own strengths and weaknesses and assess the overall viability of its industry and its competitive position within the industry. In order to plan for the future, the firm will also have to evaluate the strength of the economy in the future and what it means for the firm.
AN EXAMPLE OF HOW AN ORGANIZATION HAS ACTUALLY USED THIS WEEK?S LEARNING OBJECTIVES
The developer identified previously purchased over 10,000 acres of land north of a large metropolitan area in the western part of the United States in the middle of the 1990s as part of a plan to prepare for an anticipated strong housing market in the first years of the new century. How did the firm arrive at this decision? First, the firm recognized its strength: the planning and development of large master-planned communities. A weakness the firm was confronting was the need to acquire large parcels of land to undertake the development of large master-planned communities. A real threat that the firm was facing was missing what it perceived would be the opportunity to successfully undertake large development projects. Finally, key opportunities and trends were apparent to it because of the results of its assessment of the remote environment.
It is this assessment of the remote environment that paved the way for this firm to succeed. The firm carefully analyzed population and demographic trends, economic forecasts related to the overall strength of the national and local economies, and interest rates. The firm, using the analyses of its staff and consultants, and data and forecasts readily available online (see the Implications for E-Business section) concluded that the time was right for this significant investment. The local and national economies were expected to be relatively strong during the next 10 to 15 years. Interest rates were expected to be relatively low. Population forecasts and demographic trends were positive, indicating expected population increases in the western part of the United States. This type of detailed analysis allowed the firm and this development to succeed in the future.
HINTS FOR A READING STRATEGY OF THE ASSIGNED MATERIALS
One again, as you start your reading assignment and learn about a new application of economics, part of your task is to become acclimated to the terminology and key concepts. The reading assignment this week helps you with that. As you read the material, you will find opportunities to apply your learning in this class to your workplace. The analysis of the impact of cultural diversity, demographic trends, supply and demand, macroeconomics, and international trade on your firm will facilitate the completion of an environmental scan that assists your firm with its strategic planning. Practically, what you will see with environmental scanning is the opportunity to apply your learning of economics to the analysis of a real-world problem, namely successfully planning for your business.
As you complete the reading and participate in the classroom discussions, think about how your firm completes its environmental scans to formulate sound business decisions. Identify areas for improvement and your participation in the planning process. The process of environmental scanning is important for all firms, small or large. The accurate assessment of the remote, industry, and business environments facilitates the decisions restaurateurs make regarding where they should open a restaurant, the developer discussed previously determining to purchase and develop a large parcel, and the multinational firm?s decisions regarding entering new markets.
IMPLICATIONS FOR THE GLOBAL ENVIRONMENT
Environmental scanning facilitates making sound business decisions in a global economy. Today, due to increasingly open economies and the resulting increases in global competition and opportunities, firms must consider foreign and domestic opportunities, threats, and trends as they plan. For example, firms that recognize the growing economies in countries like China, India, and Russia can identify opportunities to expand into these new markets. New suppliers are available. Opportunities to lower costs are possibly available. At the same time, new competition emerges. The small firm?for example, the restaurant?will recognize these trends as fruits, vegetables, and other ingredients increasingly come from abroad. The manufacturer will be able to identify opportunities to sell its product in new markets or explore sourcing opportunities abroad. These opportunities also lead to threats from firms abroad. Clearly, the firm today does not compete in a vacuum and the accurate assessment of this reality leads to smarter business decisions.
IMPLICATIONS FOR E-BUSINESS
Undertaking environmental scans requires the collection of data, a process facilitated by the Internet due to the ready availability of economic data and forecasts online. The United States Census Bureau is an excellent source of data related to population growth and demographic trends. The Federal Reserve contains a large database of historical economic data and economic forecasts. Another excellent source of historical economic data is the United States Department of Commerce?s Bureau of Economic Analysis, especially data related to GDP and other more industry-specific data. At the Web site for the Bureau of Labor Statistics, you will find comprehensive databases related to prices, including consumer prices, retail prices, and producer prices, that help to assess the costs of doing business. Labor market data, including employment, the unemployment rate, and wages, also is available at the Bureau of Labor Statistics. Economics forecasts for a series of economic indicators are available at the Web sites of the Board of Governors of the Federal Reserve System and other Federal Reserve Web sites, the Congressional Budget Office, the Mortgage Bankers Association of America, and the National Association of Homebuilders. The University Library also includes a series of resources that are valuable to students learning this material, including EIU Country Intelligence and EIU Data Services, which are good sources of economic data and forecasts.
IMPLICATIONS FOR ETHICS
Undertaking environmental scanning facilitates strategic business decision making. An important component of this process should include an assessment of the culture and demographics of the markets the firm competes in or will potentially compete in. Given this fact, it is important to understand the ethical and cultural characteristics of the customers in these markets, an issue that can require great sensitivity in foreign markets or as new customers in domestic markets emerge. In addition, careful planning can easily be undermined if the firm experiences ethical lapses, as the public will reevaluate the firm and its products with this in mind.
SUMMARY TO GET YOU STARTED ON THE LEARNING PATH
You have learned how effective environmental scanning positively influences business decision making. Planning for the future requires the firm to accurately assess its operating, industry, and remote business environments. The example of the developer presented previously illustrates this. Once you have read this Read Me First and the chapters in the text and have participated in your class discussions, you will have learned to identify opportunities for you to assist your firm with its planning.
