1. Business Policy & Strategy Chapter Two The Field of Action: Environment of a Business System Murdick, Moor, Babson & Tomlinson Sixth Edition, 2000

2. Business System Inputs are transformed into outputs Inputs include raw materials Transformation involves labor, land, equipment Outputs must be delivered to the customer

3. STAKEHOLDERS Customers Shareholders General public/community Suppliers Competitors Government(s) – local, state, country, trade associations Special interest groups Employees Managers

4. Corporations Should Act Morally Responsibly Holding individuals accountable for specific actions Following rules established by externally imposed societal norms Allowing individuals to make decisions that produce in others a feeling of trust, respect, and rationality

5. Monitoring & Forecasting the Remote Environment Economics Trends Political & Legal Trends Social & Demographics Trends Technology Trends, and sometimes Physical Environment (weather, climate, earth changes such as El Nino, etc)

6. Monitoring & Forecasting the Immediate Task Environment Customers & potential customers Competitors Labor forces Suppliers Creditors Regulatory agencies at various levels of governments

7. Major Methods of Environmental Forecasting Cross Impact Analysis – select 25 events and estimate probabilities/time of occurrences, interpret impact on future Trend Analysis – five year results, regression analysis, statistical forecasting Delphi Process – group of experts individually assesses the future without face to face (F2F) discussion. The results are combined and returned for another round of estimations until consensus is reached

8. Opportunities & Threats in the External Environment Immediate examples include: Unrecognized needs of individuals, firms & companies New applications of products & services Sudden growth in demand Synergy achieved through M/A New distribution methods (Internet) New manufacturing process/substitute materials New or better methods for customer service

9. Threats Management incompetence is often hidden by high rewards for short-term performance rather than for long-term survival. US tile makers believed it was a mature market and were overcome by foreign producers/importers.

10. Environmental threats Competitors Changes in customer preferences Dwindling resources Rising prices and wages Legislation Inflation or Recession International economic & political relationships Technological breakthroughs

11. Constraints Legal or pending legislation Political instability Lack of natural resources Well established competitors Declining GDP Declining productivity Cost of capital, equipment, union labor

12. Table 2.1 Pages 8-9 in Chapter Two provide an extensive list of environmental considerations to elaborate on the social, political, environmental and technological fields.

13. Assignment For your company analysis, identify all of the stakeholders Identify a list of opportunities Identify a list of threats Review Table 2.1 to determine which of these factors affect your firm