LESSON 2: The Physical Environment Analysis Flashcards
(61 cards)
1
Q
• consists of all factors outside an organization that affect its operations and decision-making processes. These
factors are often classified into macro and micro environments
A
External environment
2
Q
•Includes broad external
conditions such as economic
trends, social dynamics,
technological advancements,
political and legal regulations,
and environmental factors.
A
Macro Environment
3
Q
Includes entities and forces
directly affecting the
organization, such as
customers, suppliers,
competitors, and stakeholders.
A
Micro environment
4
Q
– Identifying key external
forces that impact the organization
A
Scanning
5
Q
– Observing changes and
trends in the external environment.
A
Monitoring
6
Q
– Predicting potential impacts
of external factors.
A
Forecasting
7
Q
collecting, analyzing, and interpreting information
about business competitors
A
Competitive intelligence
8
Q
External Environment
Analysis Process
A
Scanning
Monitoring
Forecasting
Competitive Intelligence
9
Q
Environmental scanning steps
A
- Setting up an environmental scanning
system or program - Collecting and analyzing secondary data
- Collecting and analyzing primary data
- Identifying issues that consistently surface
- Interpreting results and preparing a report
10
Q
Environmental Monitoring Purposes
A
- Building sufficient and reliable data to determine the
emerging trend - Validating collected data so that they become precise and reliable
11
Q
Environmental Monitoring Steps
A
- Identifying emerging issues
- Evaluating the time frame
of emerging issues - Deciding on the action to
be taken
12
Q
Competitive Intelligence Steps
A
- Identify the sources of information
- Validate collected information
- Analyze the information
- Make a projection
- Define the action to be taken
13
Q
refers to the natural surroundings in which a business
operates
A
physical environment
14
Q
: Location, climate, and accessibility.
A
Geographical factors
15
Q
Availability of essential
raw materials.
A
Natural resources
16
Q
: Impact of business operations on nature.
A
Environmental sustainability
17
Q
Transportation, utilities, and
public services.
A
Infrastructure
18
Q
Conducting a Physical Environment
Analysis
A
- List the forces from the physical environment that are currently affecting the company. water and raw materials. These forces include climatic conditions, temperature, sea level, and availability of fresh water and raw materials.
- Gather information, preferably quantitative, from reliable sources.
- Evaluate the level or impact of the effects of these forces on the company (e.g.,very strong, strong, moderate, and negligible).
- Determine the frequency of occurrences and the level of weather-related events such as storms, floods, and droughts.
- Assess if the company is vulnerable to climate-related effects, such as regional shifts in the availability of energy and water, the reliability of infrastructure and
supply chains, and the prevalence of infectious diseases. - Group the identified climate change effects into six risk categories: regulatory,
supply chain, product and technology, litigation, reputational, and physical.
18
Q
The physical or natural environment of a company includes
A
physical resources, wildlife, and climate
19
Q
Group the identified climate change effects into six risk categories:
A
regulatory
supply chain
product and technology
litigation
reputational
physical
20
Q
P.E. Concerns
A
- Changes in the natural environment have a direct impact on the societal environment that affects companies in terms of resource availability and cost.
- Changes in the natural environment have an indirect impact on the task or industry environment that affects a company’s growth in a particular industry.
- Availability of raw materials used in production, including fresh water and clean air
- Unpredictable weather conditions,
increase in sea level, and erratic
climate change because of global
warming - Increasing greenhouse gas
emissions because of the carbon
footprints of industrial factories
21
Q
consists of socio-cultural, economic, technological, political, and legal forces that influence
business activities
A
societal environment
22
Q
Societal Environment includes
A
Demographics
Cultural Norms
Political and Legal Environment:
23
Q
: Population growth, age
distribution, and income levels.
A
Demographics
24
: Values, traditions, and
consumer behavior.
Cultural Norms
25
Government policies, regulations, and international relations
Political and Legal Environment
26
Innovations that impact industry operations
Technological Trends
27
PESTEL
political
economic
social
technological
environmental
legal
28
include elements such as tax policies, changes in trade restrictions and tariffs, and the stability of governments
Political factors
29
include elements such as interest rates, inflation rates, gross domestic product, unemployment rates, levels of disposable income, and the general growth or decline of the economy
Economic factors
30
include trends in demographics such as population size, age, and ethnic mix, as well as cultural trends such as attitudes toward obesity and consumer activism.
Social factors
31
include, for example, natural disasters and weather patterns
Environmental factors
32
include, for example, changes in the rate of new product development, increases in automation, and advancements in service industry delivery
Technological factors
33
include laws involving issues such as employment, health and safety, discrimination, and antitrust
Legal factors
34
STEEPLE
SOCIAL
TECHNOLOGICAL
ECONOMICAL
ENVIRONMENTAL
POLITICAL
LEGAL
ETHICAL
35
- Technology incentives
Level of innovation
* Automation
- R&D activity
- Tech. Change
- Tech. Awareness
technological
36
- Population growth rate
- Age distribution
- Career attitudes
- Safety emphasis
- Health consciousness
- Lifestyle attitudes
- Cultural barriers
SOCIAL
37
- Economic growth
- Exchange rates
- Interest rates
- Inflation rates
- Disposable income
- Unemployment rate
economical
37
- weather
- Climate change
- Environmental policies
- Climate change
- Pressures from NGOS
environmental
38
- Government policy
- Political stability
- Corruption
- Foreign trade
- Tax policy
- Labor law
- Trade restrictions
political
38
- Bribery
- Intellectual property
- Reputation
- Business ethics
- Confidentiality
ethical
39
-Discrimination laws
- Antitrust laws
- Employment laws
- Consumer protection laws
- Copyright and patent laws
- Health and safety laws
legal
40
Conducting a Societal Environment
Analysis
1. List down the most important elements or variables that are applicable to the company under each environmental force. The number of variables varies from
company to company and from industry to industry.
2. Evaluate the current trend of the listed elements, either locally or globally, by gathering historical data. Make sure that all information comes from reliable sources.
3. Project the possible future trend of the variables using the historical trend as the basis. A quantitative or qualitative approach or both may be adopted when making projected trends.
4. Adjust the projected trend based on the possible effects of other environmental forces.
5. Quantify the possible effects on the company.
6. Draw strategic actions to minimize the effects of the identified environmental
forces.
41
consists of factors and forces that
influence competition and
business strategies within a
particular sector.
industry environment
42
is a group of companies
offering similar or closely related
products or services that satisfy the
same needs of consumers.
industry
43
industry environment Factors
Competitive Landscape
Market Demand and Supply
Barriers to Entry
Substitutes and Complementary Products
44
: Market structure, industry
players, and rivalry intensity.
Competitive Landscape
45
: Customer needs and
industry capacity.
Market Demand and Supply
46
Factors restricting new competitors from entering the market.
Barriers to Entry:
47
: Availability of alternative goods and services.
Substitutes and Complementary Products
48
Players in Industry Environment
1. Customers
2. Suppliers
3. Creditors
4. Employees
5. Government
6. Competitors
49
Factors in Industry Analysis
1. The industry itself
2. The competitors
3. The business itself
50
Conducting a Industry Environment
Analysis
1. Define the industry and the boundaries of a company.
2. Gather information about the relevant economic features of the industry.
3. Identify competitors and evaluate the competitive forces.
4. Evaluate the pattern and impact of competition.
5. Position the entire company in the industry.
51
FIVE STAGES IN THE EVOLUTION OF
INDUSTRY
1. Embryonic industry
2. Growth industry
3. Shakeout industry
4. Mature industry
5. Decline industry
52
is characterized by slow
growth, high prices, innovative efforts, distribution channels.
When the demand for a product or service starts to increase.
embryonic or new industry
53
This industry is characterized by growing customer demand,
falling prices because of the economies of scale, new
competitors entering the market, developed infrastructure
facilities, and improved distribution channels.
Growth industry
54
Once the demand and growth begin to slow down, the
industry moves to the shakeout industry where competition is
intense, companies have excess production, and prices are
cut down to attract customers.
Shakeout industry
55
is characterized by a saturated market, slow growth, and limited demand. Companies at this stage
tend to consolidate to reduce intense rivalry and allow a
higher profitability level
mature industry
56
characterized mainly by negative growth.
decline industry
57
Entities in micro environment
Suppliers
Stakeholders
Customers
Competitors
58
Climate change effects in 6 categories
Regulatory
Supply chain
Product and technology
Litigation
Reputational
Physical
