ANALYSING THE ENVIRONMENT KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT ANALYSING THE ENVIRONMENT

TYPES OF ENVIRONMENT Macro environment (General Environment) Industry Environment Competitive Environment Internal Environment

Environment of a Firm General Environment Operating Environment FIRM Internal Environment

Environment Influences on a Firm Possible Environment Probable Environment Immediate Environment The Firm

Environment Influences on a Firm Possible Environment Probable Environment Environment Slip Immediate Environment The Firm

External Assessment External audit: Focuses on identifying & evaluating events beyond the immediate control of the firm

External audit focuses on: External Assessment External audit focuses on: Increased foreign competition Population shifts Demographics (e.g., aging population) Information technology

External Assessment External audit reveals: Key opportunities Key threats Managers then formulate strategies: Take advantage of opportunities Avoid/reduce impact of threats

Aimed at identifying key variables that offer actionable responses External Assessment External Audit Aimed at identifying key variables that offer actionable responses

STEPS IN ENVIRONMENT ANALYSIS UNDERSTAND THE NATURE OF ENVIRONMENT HOW CERTAIN IS THE ENVIRONMENT? WHAT ARE THE REASONS FOR UNCERTAINITY? HOW SHOULD THE UNCERTAINITIES BE DEALT WITH?

STEPS IN ENVIRONMENT ANALYSIS AS UNCERTAINITY INCREASES, ENVIRONMENTAL CONDITIONS BECOME MORE DYNAMIC AND COMPLEX DYNAMISM DEALS WITH THE RATE AND FREQUENCY OF CHANGE

STEPS IN ENVIRONMENT ANALYSIS COMPLEXITY INCLUDES DIVERSITY OF ENVIRONMENTAL INFLUENCES AMOUNT OF KNOWLEDGE REQUIRED TO HANDLE ENVIRONMENTAL FORCES INTERRELATIONS AMONG ENVIRONMENTAL FORCES

Three Stage Approach for Analysis Stage I : Segmenting the environment Stage II : Analyzing the segment SCANNING THE ENVIRONMENT MONITOR THE ENVIRONMENT FORECASTING THE ENVIRONMENT ASSESSMENT OF THE ENVIRONMENT Stage III : Attributing weights to each segment

STEPS IN ENVIRONMENT ANALYSIS TO UNDERSTAND THE NATURE OF ENVIRONMENT SEGMENT IT DEMOGRAPHIC ECONOMIC SOCIAL CULTURAL POLITICAL TECHNOLOGICAL LEGAL

STEPS IN ENVIRONMENT ANALYSIS 2. ANALYSE AND UNDERSTAND EACH SEGMENT FOUR STAGES INVOLVED

STEPS IN ENVIRONMENT ANALYSIS SCANNING THE ENVIRONMENT DETECT THE CHANGES IN THE ENVIRONMENT IMMENIENT RATHER THAN POTENTIAL ALERT ORGANIZATION OF SUCH CHANGES AMBIGUOUS AND ILL-STRUCTURED

STEPS IN ENVIRONMENT ANALYSIS 2. MONITOR THE ENVIRONMENT TRACK THE CHANGES IN THE ENVIRONMENT SEQUENCE AND SERIES OF EVENTS IDENTIFY INDICATORS AND WATCH THEM ASSEMBLE SUFFICIENT DATA TO DISCERN AN EMERGING PATTERN MORE FOCUSED AND SYSTEMATIC

STEPS IN ENVIRONMENT ANALYSIS 3. FORECASTING THE ENVIRONMENT DEVELOPMENT OF PLAUSIBLE PROJECTIONS OF DIRECTIONS, SCOPE, SPEED, AND INTENSITY OF ENVIRONMENTAL CHANGES PROJECTIONS BASED ON TRENDS PROJECTIONS BASED ON ALTERNATIVE FUTURE SCENARIO

STEPS IN ENVIRONMENT ANALYSIS 4. ASSESSMENT OF THE ENVIRONMENT IDENTIFYING AND EVALUATING HOW AND WHY CURRENT AND PROJECTED ENVIRONMENTAL CHANGES WILL AFFECT STRATEGIES OF THE ORGANIZATION DETERMINING IMPLICATIONS OF SUCH CHANGES, POSITIVE AND NEGATIVE

STEPS IN ENVIRONMENT ANALYSIS 3. ATTRIBUTE WEIGHTS TO EACH SEGMENTS NOT ALL ENVIRONMENTAL CHANGES ARE SIGNIFICANT ASSESS THE IMPORTANCE AND DETERMINE THE KEY FACTORS