Ch2OutlineTheExternalEnvironmentandOrganizational.pptVIP

Ch 2 OutlineThe External Environment and Organizational Culture 1. The Macroenvironment 2. The Competitive Environment 3. Environmental Analysis 4. Responding to the Environment 5. Culture Introduction and Review Organizations are open systems Organizations affect and are affected by the external environment The external environment has two components Macro-Environment Competitive Environment The Macroenvironment The most general elements in the external environment that potentially can influence strategic decisions Top executives must consider external factors before taking any action Components of the Macroenvironment Laws and Politics Economy Technology Demographics Social Values/Issues Components of the Competitive Environment Suppliers Competitors Potential New Entrants Substitutes Customers The Competitive Environment A smaller environment that includes the specific organizations with which the organization interacts Includes: Threat of new entrants Threat of substitutes Rivalry among current competitors Power of customers Power of suppliers Competitor Analysis Who are the current competitors? What resources do they control? What are their strengths and weaknesses? How will they respond to your actions? How can you respond to their actions? Who else might be able to observe and exploit the opportunity you’ve identified? Are there ways to co-opt competitors by forming alliances? Customer Service “Your most unhappy customers are your greatest source of learning.” - Bill Gates 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 Environmental Scanning Searching and sorting through information about the environment Commonly asked questions (Porter’s Model) Who are our current competitors Are there few or many entry barriers to our industry? What substitutes exist for our product or servi