Environmental Scanning

							                                                  2-1


         Environmental Analysis
 Managers must understand how the
  environment affects their organization
 It is difficult to predict how certain events
  will affect both the environment and the
  organization which creates uncertainty
                                                         2-2


         Environmental Scanning
 Searching and sorting through information about the
  environment
 Commonly asked questions
   Who are our current competitors
   Are there few or many entry barriers to our
    industry?
   What substitutes exist for our product or service?
   Is the company too dependent on powerful
    suppliers?
   Is the company too dependent on powerful
    customers?
                                    2-3


      The Competitive Environment
 A smaller environment
  that includes the
  specific organizations
  with which the
  organization interacts
 Includes:
   rivalry among current
      competitors
     threat of new entrants
     threat of substitutes
     power of suppliers
     power of customers
                                    2-4


Rivalry Among Current Competitors
 Step one: Identify the
  competition
    Small domestic firms
    Strong regional
     competitors
    Companies exploring
     new markets
    Overseas firms
    New entries to the
     market
 Step two: How do they
  compete?
                        Return
                                 2-5


                 RTE Breakfast
 Price
 Different outlets
   Mass Merchandisers
   WalMart
   Costco
   Sams Club
                                                    2-6


          Threat of New Entrants
 New entrants into an industry compete with
  established companies
 By creating barriers to entry (conditions that
  prevent new companies from entering an
  industry) the threat of new entrants is less
  serious
    Barriers to entry include government policy,
     capital requirements, brand identification, cost
     disadvantages, and distribution channels


                       Return
                                                 2-7


          RTE: Barriers to Entry
 Brand identification
 Product proliferation
 Shelf space based upon historic sales volume
                                2-8


Threat of Substitute Products




             Return
                                                      2-9


             Power of Suppliers
 Suppliers provide the resources needed for
  production
 Organization are at a disadvantage if they
  become overly dependent on any powerful
  supplier
    Switching costs are fixed costs buyers face if
     they change suppliers
    Supply chain management is the process of
     managing the entire network of facilities and
     people that obtain raw materials from outside
     the organization, transform them into
     products, and distribute them to customers
                       Return
                                                     2-10


          Power of Customers

 Customers purchase the products or services
  an organization offers
    Final consumers are those individuals that
     purchase products in their finished form
    Intermediate consumers are individuals who
     purchase raw materials or wholesale products
     before selling them to final customers
 Customers can demand lower prices, higher
  quality, unique product specifications, or
  better service
 Customers are powerful if they make large
  purchases or if they can easily find alternative
  places to buy           Return
                         2-11


Environmental Scanning
                                         2-12


Environmental Uncertainty
                    Managers do not
                    have enough
                    information about
                    the environment
                    to understand or
                    predict the future




          Return
                     2-13


Independent Action




       Return
                     2-14


Cooperative Action




      Return
                  2-15


Strong Cultures




    Return