environmental scanning business laws.ppt

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Understanding Environmental
scanning
External Environment

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Coverage in session
•In this session , we will study about
•Environmental scanning
•External Environment Analysis

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Environment Scanning
•Its an art of systematically exploring and
interpreting the external Environment to
better understand the nature of trend and
drivers of change and their likely future
impact on your organization.

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Components of Business
Environment
Two components
•External
•Internal
–Internal:
•5 M’s- Man, Material, Machinery, Money and
Management- Various examples(RBW Model)
Controllable
Modifiable
–External: (Micro/Macro)
•SWOT

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The Broad Process
scan Interpret Decide
Internal &
External
Scenario/
Options
Strategic
Directions/
plans

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Environmental scanning
•A component of Global Environment
scanning.
•Different part….
Environmental Monitoring
Environmental assessment
Environmental Forecasting

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Objectives of Environmental
scanning
•detecting scientific, technical, economic, social,
and political trends and events important to the
institution,
•defining the potential threats, opportunities, or
changes for the institution implied by those
trends and events,
•promoting a future orientation in the thinking of
management and staff, and
•alerting management and staff to trends that are
converging, diverging, speeding up, slowing
down, or interacting.

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Process of scanning
Analyze Environment
Community Analysis Market Analysis Competitor Analysis
Selection of strategic Factors
Opportunities
Threats
Supplier AnalysisGovt. Analysis

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External/Macro/Non-Economic
• Political Environment: - It affects different business units extensively. Components:
(a) Political Belief of Government
(b) Political Strength of the Country
(c) Relation with other countries
(d) Defense and Military Policies
(e) Centre State Relationship in the Country
(f) Thinking Opposition Parties towards Business Unit
•(ii) Socio-Cultural Environment: - Influence exercised by social and cultural factors, not
within the control of business, is known as Socio-Cultural Environment. These factors
include: attitude of people to work, family system, caste system, religion, education,
marriage etc. (Meat Factory)
•(iii) Technological Environment: - A systematic application of scientific knowledge to
practical task is known as technology. Everyday there has been vast changes in products,
services, lifestyles and living conditions, these changes must be analyzed by every
business unit and should adapt these changes.(Banglore- Hub)
•(iv) Natural Environment: - It includes natural resources, weather, climatic conditions, port
facilities, topographical factors such as soil, sea, rivers, rainfall etc. Every business unit
must look for these factors before choosing the location for their business.
•(v) Demographic Environment :- It is a study of perspective of population i.e. its size,
standard of living, growth rate, age-sex composition, family size, income level (upper level,
middle level and lower level), education level etc. Every business unit must see these
features of population and recognize their various need and produce accordingly(Reatil
stores in Hyderabad)
•(vi)International - It is particularly important for industries directly depending on import or
exports. The factors that affect the business are: Globalization, Liberalization, foreign
business policies, cultural exchange.

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External-Micro
•Micro/Operating Environment: The environment which is close to business and affects its capacity to work is
known as Micro or Operating Environment. It consists of Suppliers, Customers, Market Intermediaries,
Competitors and Public.
•(1) Suppliers: – They are the persons who supply raw material and required components to the company. They
must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier.
•(2) Customers: - Customers are regarded as the king of the market. Success of every business depends upon
the level of their customer’s satisfaction. Types of Customers:
(i) Wholesalers
(ii) Retailers
(iii) Industries
(iv) Government and Other Institutions
(v) Foreigners
•(3) Market Intermediaries: - They work as a link between business and final consumers. Types:-
(i) Middleman
(ii) Marketing Agencies
(iii) Financial Intermediaries
(An institution that acts as the middleman between investors and firms raising funds. Often referred to as
financial institutions-chartered banks, insurance companies, investment dealers, mutual funds, and
pension funds)
• (iv) fiscal Intermediaries
•A fiscal intermediary manages funds, makes payments, and accounts for expenditures made on behalf of
the consumer as directed by the consumer, family, or circle of support. The fiscal intermediary is not a
direct service provider, but handles the business end of securing services and supports.
•(4) Competitors: - Every move of the competitors affects the business. Business has to adjust itself according to
the strategies of the Competitors.
•(5) Public: - Any group who has actual interest in business enterprise is termed as public e.g. media and local
public. They may be the users or non-users of the product.

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Firm’s External Environment
Remote
-Economic
-social
-Technological
-Ecological
Industry Environment
-Entry Barriers
--supplier Power
-- Buyer Power
-- substitutable Availability
--Competitive Strategy
Operating Environment
-Competitors
-- Creditors
-- Customers
--Labor
--Suppliers

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Global Business Environment
•Economic Environment
•Level of Economic Development
•Population
•GNP
•Per capita Income
•Literacy level
•Social Infrastructure
•Natural Resources
•Climate
•Monetory and fiscal policies
•Wage and salary levels
•Nature of competition
•Inflation
•Legal Environment
•Legal Tradition
•Effectiveness of legal system
•Treaties with foreign National
•Patents, trademarks, laws
•Political system
•Form of Govt.
•Political ideology
•Stability of Govt.
•Strength of opposition
•Govt. attitude towards foreign firms
•Foreign Policy
•Cultural Environment
•Customs
•Languages
•Motivation
•Social Institutions
•Status symbols
•Religios beliefs