Summary Environmental Scanning and Industry Analysis

Environmental Scanning 🌍🔍

Environmental scanning refers to the process of monitoring, evaluating, and sharing information that is important for an organization to develop its strategies. It helps businesses stay aware of changes in their environment and make informed decisions. 🌱

Identifying External Environmental Variables 🌐

1. Natural Environment 🌳🌏

This includes the physical resources, wildlife, and climate that are naturally found on Earth. These are interconnected elements that affect life and business, like water resources, forests, and climate change. For example, companies in the farming industry must consider rainfall and temperature patterns to grow crops. 🌾🌞

2. Societal Environment 🧑‍🤝‍🧑🌍

This involves social systems and broader social forces like economic, technological, political-legal, and sociocultural factors. These don’t impact short-term activities directly but can affect long-term decisions. For instance, a new law on carbon emissions could impact industries for years. 🌎💼

3. Task Environment 🏢

These are the elements or groups that directly affect a company, like governments, communities, suppliers, customers, employees, and competitors. For example, if a company’s competitors launch a new product, it may force the company to innovate to stay competitive. 📦👥

STEEP Analysis 🔍

STEEP stands for Sociocultural, Technological, Economic, Ecological, and Political-Legal forces that help analyze trends in society and the environment. 🌳💻

Sociocultural Trends 🧑‍🎤📱

Some current trends include:

• Environmental awareness: People care more about eco-friendly products 🌱.
• Health consciousness: Many consumers are choosing healthier food options 🥦.
• Increasing senior market: A larger portion of the population is aging, creating a market for senior products 👴👵.
• Millennials’ influence: Young adults driving trends in tech and sustainability 👩‍💻🌍.

Technological Breakthroughs 🦾

Technology is rapidly changing! Examples include:

• Portable devices: Smartphones help businesses reach customers anywhere 📱.
• Alternative energy: Solar panels and wind turbines are reshaping the energy market 🌞🌬️.
• Genetically modified organisms (GMOs): Used in agriculture to increase crop yields 🌽.

Categories of Risk: Climate Change 🌪️

Risks associated with climate change include:

• Regulatory risk: New government laws on emissions 🏛️.
• Supply chain risk: Extreme weather could disrupt production 🌧️.
• Product risk: New products may be affected by environmental conditions 🌱.

Porter’s Five Forces ⚔️

1. Threat of New Entrants 🚪 New companies entering an industry can disrupt the market. For example, a new smartphone brand may challenge Apple or Samsung.

   Entry Barriers include:

   • Economies of scale: Big companies like Amazon can produce cheaper because they sell in bulk 📦.
   • Product differentiation: Unique products, like iPhones, are hard for newcomers to replicate 📱.
2. Rivalry Among Existing Firms 🔥 Companies compete fiercely with each other. For example, Coke and Pepsi are constantly battling for market share with similar products 🥤.
3. Threat of Substitute Products 🔄 Substitute products satisfy the same need. For example, electric scooters might replace cars for short-distance travel.
4. Bargaining Power of Buyers 💰 Buyers can influence prices and quality. For instance, large retailers like Walmart can demand lower prices from suppliers due to their purchasing power 🏪.
5. Bargaining Power of Suppliers 🛠️ Suppliers can raise prices or reduce quality, affecting the entire supply chain. If Apple’s chip supplier raises prices, it could affect the cost of iPhones 📱.

Industry Evolution 🌐

• Fragmented Industry: No company has a big share. Think of the coffee shop industry where many small shops compete ☕.
• Consolidated Industry: Few large firms dominate, like the automobile industry, where companies like Ford and Toyota lead 🚗.

Categories of International Industries 🌍

• Multi-domestic industries: Operate differently in each country. For example, McDonald’s offers different menus depending on the country 🍔🍟.
• Global industries: Operate worldwide with minimal adjustments, like Coca-Cola 🍾.
• Regional industries: Coordinate activities within specific regions, like European luxury car makers 🚘.

Strategic Groups 💡

A strategic group is a group of businesses following similar strategies. For instance, both Nike and Adidas focus on sportswear but with different styles and marketing strategies 👟.

Strategic Types ⚙️

1. Defenders: Companies focusing on efficiency, like Walmart, which keeps costs low 🏪.
2. Prospectors: Companies focused on innovation, like Tesla, which constantly develops new electric vehicles 🚗.
3. Analyzers: Businesses that focus on a mix of markets, like Microsoft, which offers both software and cloud services ☁️.
4. Reactors: Businesses that don’t have a consistent strategy, like some struggling retail brands 📉.

Hypercompetition ⚡

In markets with hypercompetition, like technology, stability is challenged by fast changes and frequent new competitors. For example, smartphones are constantly evolving with short product cycles 📱🔄.

Key Success Factors (KSF) 🏆

These are elements that significantly impact competitive success in an industry. For example, high-quality products and excellent customer service can be KSFs for a luxury brand like Louis Vuitton 👜.

Competitive Intelligence 📊

Gathering information about competitors can be done through:

• Internet research 🌐
• Industry reports 📈
• Social media monitoring 📱

Useful Forecasting Techniques 🔮

Some common ways to predict the future include:

• Expert opinion: Consulting industry experts 🧠.
• Brainstorming: Generating ideas with a team 💭.
• Prediction markets: Collective predictions based on market trends 📊.

By regularly scanning the environment and considering these factors, companies can adapt and thrive in an ever-changing world. 🌟