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					      CHAPTER 4
Environmental Scanning
Identifying Forces Driving Change




     By Anil Bilgihan for Dr. DeMicco
                                 Student Learning Objectives

On completion of this chapter, you will be able to;

   Identify the environmental scanning process.
   Develop an appreciation to scan the business environment effectively.
   Describe the effective environmental scanning system.
   Identify the unique elements business domain.
   Identify and define the sources of information and give at least 1 hospitality
    related example for each of them.
   Identify the timing information.
   Achieve a more practical understanding of forces that drive change in hospitality.
    (Case Study)
   Comprehend the feedback and evaluation systems.
                                   Objectives


Upon completion of this chapter, you will:

 1. Understand the skills necessary to scan the business environment effectively.
 2. Develop and maintain an effective environmental scanning system.
             Key Concepts of the Chapter

•   Environmental scanning
•   The business domain
•   Setting up a structure for scanning
•   Determining information needs
•   Determining information mediums
•   Timing information
•   Identifying sources of information
•   Choosing scanning activities
•   Analyzing and synthesizing information
•   Information sharing
•   Information feedback and evaluation systems
                                         Objectives

1. Develop the skills necessary to scan the business environment effectively.

       Please read pages 91 through 112 in the text book for further information.
                      Strategic Management Model
                             Domain Definition                                          Long-term Objectives
                          Geographic Market Area                                           Perf ormance Measure
                          Segment                                                          Action Plan
                          Primary Competition                                              Resources Needed
                          Target Market                                                    Evaluation Timetable
                                                                                            Responsibility
                                                                                            Accountability
 Environmental Events                                                                       Rational
                            Competitive Methods
                                                          Strengths and
                                                         Weakness Analysis
Remote                             P1     S1
                                                        Functional Analysis
Task                                                    Financial Position
  Industry                         P2     S2            Structural Analysis
                                                        Physical Assets                Short-term Objectives
    Firm                                                Labor Force
                                   P3      S3           Risk
         Functional                                     Competitiveness




                              Mission Statement
                           Nature of Business
                           Target Customer
                           Products/Services
                           Standard Desired                                   Evaluation
                           Means to Accomplish Above
Scanning the Business Environment
        Identifying the Forces Driving Change

•   The goal of any environmental scanning process is to successfully identify the
    key forces driving change within the contextual environment of the organization.

•   To achieve that goal, managers must set up personal and organizational
    scanning systems to be sure that the widest perceptional view of the
    environment is achieved. This scanning system should;
       Identify each force, the variables, and their interdependencies with other variables.
       Suggest cause-and-effect relationships.
       Determine the history and timing associated with the development of the forces.
       Assist the manager estimating the impact of forces driving change on the firm.



            Please read pages 91 through 94 in the text book for further information.
                          Identifying Events in the Environment

 Industry Structure


All firms in the sector
have invested in the CM




                             Ideal Scanning Window
Leading firms adopt and
invest in the new CM




 Innovator/Entrepreneur
 creates a new CM




                           Fads      Innovations          Major Trend           Fact of Life

                                                   Innovation / CM Life Cycle
      Establishing an Environmental Scanning
                                     System
•   Establish domain definition
•   Organizational structure issues
•   Determine information needs – quantitative and qualitative
•   Determine information mediums
•   Assess timing of information
•   Identify sources
•   Choose scanning activities – regular and irregular
•   Determine analysis and synthesis processes
•   Determine information sharing
•   Establish information feedback and evaluation systems
                                                                   Domain Definition

• The task of domain definition is the first step in
    establishing an effective environmental scanning
    system.
•   The domain of an organization refers to the context
    in which it exists and functions.

         Please read page 94 in the text book for further information.
                  Criteria of the Domain Definition



•Geographic market area
•Segment defined by competitive methods made up of the mix of product and
service attributes
•Primary competition
•Major descriptors of target market


•Existing competitors, potential competitors, substitutes, suppliers and buyers


•Relationships with suppliers, competitors
•Relationships among different environmental categories
•Primary and secondary relationships (hierarchical)
                         Organizational Structure Issues

• Who participates in the process, what resources
are allocated to this endeavor, and how the
information is processed and used.
• Scanning the environment must fit into that
structure because resources
must be allocated to this
important management activity.

        Please read page 95 in the text book for further information.
                  Determining Information Needs

• Determining the information needs of the firm can
  begin only after the process of defining the domain
  the firm must complete in is completed.

• Once established, the information will generally fall
  into four categories;
   ◦   Quantitative
   ◦   Qualitative
   ◦   Personal
   ◦   Non-personal
Examples of Quantitative Information
            Determining the Information Medium

• Most common medium is face-to-face personal
    interaction.
•   The written medium, both personal and impersonal,
    continues to be an important one.
•   The telecommunication revolution will no doubt
    bring about rapid changes in the mediums used.
         Please read page 101 in the text book for further information.
New Communication in the Information
                                Age
                             Assessing Timing of Information

• The phase timing is everything has a great deal of
    validity in the world of strategy.
•   Bad timing can be avoided most often when firms
    have effective scanning systems and the
    organization has structured itself to improve the pro
    cessing of information and its timing.
•   The timing also reflects how managers study the
    emerging forces that are developing.

       Please read pages 101 through 102 in the text book for further information.
Body of Knowledge in the Hospitality
                           Industry
                          Identifying Sources of Information

• The primary concern of the manager in selecting
    the sources of information are validity and
    reliability.
•   Validity refers to fact that the information accuratel
    y represents and describes the relationships that ar
    e necessary to make important strategic decisions.
•   Reliability refers to the need for accuracy and
    consistency over time.



       Please read page 103 in the text book for further information.
Common Information Sources Available
           to the Hospitality Manager
                                    Choosing Scanning Activities


• Scanning is an activity that does not lend itself to
    neatly defined processes or timetables.
•   It cannot be done effectively without strong
    cognitive, experimental, and perceptional skills.


    Please read pages 105 through 107 in the text book for further information.
              Concept Map of Environmental Event




   Please read pages 110 through 113 in the text book for further information.
                                                                          Matrix Analysis

• Today’s manager must be able to understand the
    present relationships and regulators.

• To do this, the use of matrices to assess
    relationships becomes extremely useful.

• Matrix analysis help to create greater
    understanding of the present and emerging body of
    knowledge.

    Please read pages 113 through 117 in the text book for further information.
                     Information-Sharing Feedback and
                                  Evaluations Systems




   Please read pages 117 through 118 in the text book for further information.
             A Continuous Process of Scanning is
                                      Necessary
• A good scanning system will never be able to
    remove all the uncertainty from a decision.

• Scanning should be done on a continuous basis
    levels of executives who contribute substantively to
    the strategic management process.

   Please read page 118 in the text book for further information.
                         Summary of the Chapter

• The chapter provides an overview of tools
    necessary for proper environmental scanning.
•   It begins with the importance of identifying forces
    that drive change and how to establish a domain for
    analysis purposes.
•   It then provides insight into the steps in the
    effective assessment of key forces and
    opportunities.
•   Shows the importance of sharing derived
    conclusions throughout the organization.
                         Readings for the Chapter

• http://www.widenarrow.com/begrepp__bi-cykeln.ht
  ml (interactive webpage)

• Literature in strategic management in
  the hospitality industry,
  Michael D. Olsen

• CEO Perspectives on Scanning the Global Hotel
  Business Environment, Michael D. Olsen,
  Bvsan Murthy and Richard Teare
                                       Case Study

• Please read Case Study: ‘Technology as a Competi
  tive Method: The Case of InterContinental Hotels’
  (page 119-125).

• Please answer the discussion questions at the end
  of the Case Study.
Case Study Answers
Case Study Answers
Figures for Case Study




Figure 1
      Figures for Case Study




      Figure 2
IT Planning Process
 Figures for Case Study




Figure 3
 Figures for Case Study




Figure 4
                                     Chapter Questions

• Which is NOT a function of the scanning system?

  ◦     Identify each force, the variables, and their
      interdependencies with other variables
  ◦     Suggest cause and effect relationships
  ◦     Determine resource allocation
  ◦     Determine the history and timing of the development of
      the forces
  ◦     Assist in estimating the impact of forces driving change
                       Chapter Questions (cont’d)

• The concept of industry structure refers to

  ◦   the degree of complexity in the market place.
  ◦   the degree of uncertainty in the market place.
  ◦   another way to define the industry domain.
  ◦   the degree of concentration of suppliers.
  ◦   the degree of dispersion of customers.
                                   Chapter Questions (cont’d)

• In understanding industry structure, the manager must be able to assess
  the degree of interdependencies that exist in the domain. This statement
  refers to

   ◦     the firm's ability to lead competitors in creating new products and services.
   ◦     the investment in strategic alliances with other firms.
   ◦     the degree to which the firm is dependent upon its board of directors.
   ◦     the manager's ability to determine the cause and effect relationships in the business
       domain.
   ◦     the manager's ability to utilize such management tools as yield management.
                          Chapter Questions (cont’d)

• The term body of knowledge refers to

  ◦    the sum total of the firm's knowledge regarding its
      competitive method.
  ◦    the ability of the firm to gain competitive advantage
      because it possesses more knowledge.
  ◦    the sum total of all literature that has been written on
      a particular topic.
  ◦    the consultants' reports on industry structure.
  ◦    none of the above
                         Chapter Questions (cont’d)

• Which is not a criterion for evaluating the quality of
  information sources?

   ◦   The influence it has on strategic thinking
   ◦   The number of sources
   ◦   Timing
   ◦   Validity
   ◦   Reliability
                      Chapter Questions (cont’d)

• Which company led the hotel industry in utilizing tec
  hnology in the1980s?

  ◦   Holiday Inn Worldwide
  ◦   Marriott
  ◦   Hilton
  ◦   Starwood
                       Chapter Questions (cont’d)

• When discussing the structure of an environmental
  scanning system, one must consider the following i
  ssue(s):

  ◦   who should participate in the process.
  ◦   what resources should be allocated.
  ◦   how the information is being processed and used.
  ◦   all of the above
  ◦   none of the above
                       Chapter Questions (cont’d)

• What skill is not required for the director of competit
  ive intelligence or development analysis?

   ◦   Analytical skills
   ◦   Marketing skills
   ◦   Communication skills
   ◦   Self-management capability
                      Chapter Questions (cont’d)

• Which is not considered a category of information?

  ◦   Quantitative
  ◦   Qualitative
  ◦   Personal and personal
  ◦   Signals and signs
                       Chapter Questions (cont’d)

• Which field is not mentioned in the sampling of
  disciplines and fields of study contributing to the
  body of knowledge in the hospitality industry?

  ◦   Nutrition
  ◦   Sociology
  ◦   Safety and security
  ◦   Accounting
                        Chapter Questions (cont’d)

• Which mode of scanning activities would most man
  agers fit into now?

  ◦   Proactive
  ◦   Routine
  ◦   Reactive
  ◦   Null
                        Chapter Questions (cont’d)

• Content analysis is a tool to help managers interpret the
  large amount of information about the environment. In using
  content analysis, which skills are not required for applying
  the content analysis process?


   ◦   Comprehension skills
   ◦   Analytical skills
   ◦   Synthesizing skills
   ◦   Application skills
   ◦   Extrapolation skills
                      Chapter Questions (cont’d)

• Environmental scanning activities should be carried
  out:

  ◦   annually.
  ◦   bi-annually.
  ◦   quarterly.
  ◦   continuously.
                            Chapter Questions (cont’d)

• Concept mapping is another tool to help interpret the large a
  mount of data that a manager must review in analyzing the
  environment. It is a useful tool to help managers:

   ◦     determine the frequency and volume of ideas that have emerged
       from the content analysis process.
   ◦     assess the relationship among various themes identified in the
       content analysis process.
   ◦     rank the most important themes.
   ◦     identify relationships among various themes.
   ◦     all of the above
                       Chapter Questions (cont’d)

• Matrices are excellent ways of understanding the
  relationship of:

  ◦   the task environment with the remote environment.
  ◦   the task environment with the resources of the firm.
  ◦   the firm environment with the multinational environment.
  ◦   the task environment with the resources of the firm; the
    firm environment with the multinational environment.
  ◦ all of the above
                             Chapter Questions (cont’d)

• Scanning is best accomplished by

   ◦     a team of individuals working independently on policy oriented
       matters.
   ◦     a team of individuals working together on strategic issues.
   ◦     information shared equally among all the firm's employees.
   ◦     information sharing based on the total body of knowledge on the
       subject.
   ◦     a team of individuals working together on strategic issues;
       information sharing based on the total body of knowledge on the
       subject.
                                 Student Learning Objectives

On completion of this chapter, you will be able to;

   Identify the environmental scanning process.
   Develop an appreciation to scan the business environment effectively.
   Describe the effective environmental scanning system.
   Identify the unique elements business domain.
   Identify and define the sources of information and give at least 1 hospitality
    related example for each of them.
   Identify the timing information.
   Achieve a more practical understanding of forces that drive change in hospitality.
    (Case Study)
   Comprehend the feedback and evaluation systems.

				
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