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Evaluating External Environment Steps

Chapter 5 outlines a four-step process for evaluating an external environment: scanning, monitoring, forecasting, and assessing. It details the components of the macroenvironment, including political, economic, sociocultural, technological, environmental, and legal factors, and highlights managerial challenges related to demographic diversity. Additionally, it discusses assessing environmental turbulence and the importance of identifying opportunities and threats within the industry environment.

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4 views2 pages

Evaluating External Environment Steps

Chapter 5 outlines a four-step process for evaluating an external environment: scanning, monitoring, forecasting, and assessing. It details the components of the macroenvironment, including political, economic, sociocultural, technological, environmental, and legal factors, and highlights managerial challenges related to demographic diversity. Additionally, it discusses assessing environmental turbulence and the importance of identifying opportunities and threats within the industry environment.

Uploaded by

nabeelbird
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Chapter 5:

The four steps of evaluating an external environment:


1. Scanning: Studying all elements of the external environment and identifying early
signs of potential change or changes taking place.
2. Monitoring: Determining if there is an important trend in the environment.
3. Forecasting: Develop estimates of what might happen.
4. Assessing: To determine the implications of changes and trends of the environment on
the organization.

What makes up the macroenvironment:


P - Political:
National: The government of the entire country
Subnational: The provincial government, town etc
Supranational: Political bodies that exert influence on many countries
E – Economical:
Fiscal policy: The management of the national economy through the government’s revenue
and expenditure.
Monetary policy: The management of the national economy by changing the supply of
money (volume of money) and price of money (interest rates)
S – Sociocultural and demographic:
Social culture: the impact attitudes, values, and beliefs have on consumers spending habits
Demographic: the impact size and structure of populations on demands and attitude to work
Managerial challenges related to demographic and social structure:
 Makes it more difficult to market because there is more than 1 demographic
 Employees from different demographics have different values and way of behaving
that need to be accommodated
T – Technological:
Information technology: Plays an important role in an organisation’s strategy
Allows for ways to communicated that could not be possible before.
Inadequate IT impedes the operation for both manufacturing and service organisations
Manufacturing technology: Plays an important role in an organisation’s operational process
E – Environmental:
Real concern is sustainable development
L – Legal

The industry environment:

Assessing turbulence of an environment:


Changeability: The degree of change
Predictability: The ease at which changes can be predicted
High turbulence is when the degree of change is high and ease of prediction is low.

Identifying and evaluating opportunities and threats:

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