4. External environmental factors change over time, some at a very rapid pace. O

Question

4. External environmental factors change over time, some at a very rapid pace. Organizations cannot take occasional snapshots of the external environment; they must measure and track continuously. Review the numerous environmental factors described in this chapter and decide how an organization would follow changes in them over a period of years. The factors subject to quantitative measurement are easy. Try to figure out how you would evaluate the more subjective sociocultural factors year to year.

Explanation / Answer

External environmental factors includes regular gathering of information of a established organization, their analysis of the data which effect each other, Demographics, technology, economics and sociocultural trends and factors do not proceed in isolation. Technology innovations like internet surfing, televisions etc. in past two decades caused sedentary lifestyles in many people.

A popular way to see it through a scenario Prediction and scenario a informed speculative description of the business external environment, covering all factors in some point or in future. The few scenarios are optimistic, conservative and likely scenario. The future will tell all and firm will realise which assumptions and trends are accurate and which are not. External environment of a business value lies in understanding the external forces and their effects on business strategies.

Operation of a business firm depends on great variety of external environment information in which it operates. There are some overlaps of sources consulted for market intelligence and research programme for competition. The most common sources available are newspaper clipping services, websites, charitable research foundations, think tanks, consulting firms, legal, journal, periodicals, trade and professional associations.

The collection of information and data of external environment for a business should be a continuous process. The customers, industry, market, competitors will be changing constantly. To plan strategies to stand on top the company should adopt changes in exgternal environment.

A business establishment can collect enough data but it should be analysed to interpret the output and their examples are sorting and classifications, trend identification and extrapolation, statistical modelling, brain storming and role playing.

An examples is a health care provider organization in local area like hospital and conduct an external environment assessment for the firm by covering all basic categories of environmental factors. Project graphs of it showing external environment forces identified, their relationship among them and with other organizations. AFTer completion of the assessment identify few main threats and opportunities. The business firm should ready to face threats and make them successful opportunities.

Market and customers make few major components of the external environment. The customers purchase the products, services and revenue generation and profits for its existence. The competitors stand in the line to grab opportunities, its customers and profits. The other component is the broad social. Political/economic environment, a neutral factor effecting all organizations equally. The more attention should be given to competition than customers back bone of the business.

Many firms have their own customers for many years granted but they should study the other customers needs where more customers available in the market and sell the products and market there.

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