ENVIRONMENTAL SCANNING

AND INDUSTRY ANALYSIS

 MEMBER
PITCH DECK PRESENTATION

MEMBER
1. Ngô Huy Cường
2. Nguyễn Thị Thu Hiền 203
3. Nguyễn Thị Thanh Ngân
4. Đỗ Văn Thụ
PITCH DECK PRESENTATION

CONTENT
CONTENT
 3.1 ENVIRONMENTAL SCANNING & EXTERNAL
ENVIRONMENT
1. Environmental Scanning
Process of monitoring, evaluating, and sharing information for strategy
development
Helps firms avoid strategic surprises
Positively related to profit and long-term performance
Executives consider macro-level trends as key strategic inputs

2. External Environment Includes:

Natural Environment (resources, climate, ecosystem)
Societal Environment (economic, technological, political–legal, sociocultural
forces)
Task Environment (customers, competitors, suppliers, government, etc.)
👉 Understanding these environments helps firms identify competitive advantages.
 SCANNING THE NATURAL
ENVIRONMENT & SUSTAINABILITY

Natural Environment Sustainability Concept

Includes physical resources, wildlife, Long-term success depends on:
and climate Economic system
Previously seen as “free resources” Social system
Pollution treated as externalities → Natural ecosystem
Firms must:
now regulated by governments Monitor climate change & resource
scarcity
Measure and reduce carbon footprint
Develop environmentally friendly
products
3.2 STRATEGIC IMPORTANCE OF THE
EXTERNAL ENVIRONMENT
 [Link] THE SOCIETAL ENVIRONMENT: STEEP ANALYSIS
1.1 Overview of STEEP Analysis
- Organizations must
continuously monitor
changes in the societal
environment because
these trends can
significantly influence
business strategies and
operations.
- One widely used
framework is STEEP
Analysis, which examines
five major dimensions of
the external environment:

➡️ By analyzing these factors, companies can identify potential opportunities and threats in the
external environment.
 [Link] THE SOCIETAL ENVIRONMENT: STEEP ANALYSIS

1.2 Major Sociocultural Trends Affecting Business

Several important sociocultural trends are transforming markets and
consumer behavior.

1. Increasing environmental 5. Declining mass market

awareness 6. Changing pace and location of
2. Growing health consciousness life
3. Expanding senior market 7. Changing household
4. Impact of Millennials composition
8. Increasing diversity of
workforce and markets
 [Link] THE SOCIETAL ENVIRONMENT: STEEP ANALYSIS

1.3 Technological and Ecological Trends

Technological and ecological developments also create significant changes in
industries and business strategies.

TECHNOLOGICAL TRENDS ECOLOGICAL TRENDS

Portable information devices The development of renewable energy sources such as

wind and solar power is increasing.
Genetically altered organisms Climate change causes droughts, floods, and extreme
weather conditions, which can disrupt supply chains.
Smart and mobile robots
Companies need to develop sustainable and
environmentally friendly products to respond to
environmental challenges.
SCANNING THE TASK ENVIRONMENT
 3. IDENTIFYING EXTERNAL STRATEGIC FACTORS

External strategic factors are external elements that have a significant

impact on the success of a business.
However, companies cannot monitor every environmental factor, so they
must focus on identifying the most important ones.
 2. IDENTIFYING EXTERNAL STRATEGIC FACTORS

Process of Identifying Factors

-Collect environmental information
(e.g., market research, industry reports)
-Analyze trends and their potential impacts
-Identify opportunities and threats
Example
-Large companies such as Procter & Gamble (P&G) develop environmental
scanning systems to gather information from different departments within the
organization.
📌 This helps companies anticipate market changes and develop more effective
strategies.
 3.3 INDUSTRY ANALYSIS: ANALYZING THE TASK
ENVIRONMENT

An industry is a group of firms that produces a similar product or

service, such as soft drinks or financial services. An examination of
the important stakeholder groups, like suppliers and customers, in
a particular corporation’s task environment is a part of industry
analysis.
 PORTER’S APPROACH TO INDUSTRY ANALYSIS

Michael Porter argues that the level of competition within an industry

determines how profitable firms in that industry can be. To analyze an
industry, he introduced the Five Forces model, which explains the key
competitive pressures shaping industry structure.
The Five Forces include:
[Link] of new entrants
[Link] among existing competitors
[Link] of substitute products or services
[Link] power of buyers
[Link] power of suppliers
 [Link] OF NEW ENTRANTS

New entrants create a threat to established firms.

The level of threat depends on barriers to entry
and the expected reaction of existing competitors.
Key entry barriers include economies of scale,
product differentiation, capital requirements,
switching costs, access to distribution channels,
first-mover advantages, and government policy.
The higher the entry barriers, the more difficult it
is to enter the industry, and the greater the
competitive advantage of existing firms.
 [Link] AMONG EXISTING COMPETITORS

Firms within the same industry are mutually dependent; a

competitive action by one firm often leads to retaliatory
responses from others.
Intense competition arises when several unfavorable
factors exist at the same time.
The main factors that increase competitive intensity
include: the number of competitors, slow industry
growth, low product differentiation, high fixed costs, large
capacity expansions, high exit barriers, and strategic
diversity among rivals.
The more intense the competition, the greater the
downward pressure on prices and industry-wide profits.
 [Link] OF SUBSTITUTE PRODUCTS OR SERVICES

Substitute products satisfy the same need as another

product.
When switching costs are low, substitute products
place strong pressure on firms.
Substitutes create a price ceiling for products within
an industry.
Substitute products should be identified based on
function, not merely appearance.
 [Link] POWER OF BUYERS

Buyer power comes from the ability to force down

prices and demand higher quality or better services.
Buyers are powerful when they purchase large
volumes, have many alternative suppliers, and face
low switching costs.
High buyer power leads to strong downward
pressure on prices and reduces firms’ profitability.
 [Link] POWER OF SUPPLIERS

Supplier power comes from the ability to raise

prices or reduce the quality of inputs.
Suppliers are powerful when they face few
competitors, offer unique products, have limited
substitutes, and can integrate forward.
High supplier power leads to higher costs and lower
profitability for firms in the industry.
 3.4 CATEGORIZING
INTERNATIONAL INDUSTRIES
 3.4 CATEGORIZING
INTERNATIONAL INDUSTRIES
In the context of globalization, a thorough
understanding of the nature of the industry in which a
business operates is crucial for determining its
competitive strategy.
International industries are often categorized based on
the degree of pressure between local response and
global integration.
Industry classification helps businesses:
-Determine appropriate competitive strategies
-Understand the pressures of global integration
-Determine the level of adaptation to the local market
 [Link]-DOMESTIC [Link] INDUSTRIES
INDUSTRIES Companies operating in this industry
These are industries where the view the world as a single market.
company's branches in each country Operations in different countries are
operate independently of each other. closely interconnected and
interdependent.
Characteristics: Products are heavily
customized to suit the unique Characteristics: Focus on economies of
culture, preferences, and regulations scale, product standardization to
of each international market. reduce costs.

Examples: Consumer food, Examples: Aircraft manufacturing,

insurance, or retail. semiconductors, or consumer
electronics.
 INTERNATIONAL Before facing danger, businesses need to consider
the potential political, economic, and social risks in
RISK ASSESSMENT the target country.

STRATEGIC A group of businesses in the same industry that

follow similar strategies (e.g: low-cost vs. high-
GROUPS end).

How companies respond to the environment

STRATEGIC TYPES (Pioneer, Defender, Analyst, or Reactor).

The rapidly changing market conditions mean that

HYPERCOMPETITION competitive advantages are only temporary.
THANK YOU
[Link]