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Chapter 2. Analyzing the External Environment of the Firm

Overview:

Overall, the importance of developing forecasts of the business environment is discussed. Environmental scanning, environmental monitoring, and competitive intelligence are defined as the inputs of forecasts. There are varying degrees of unpredictability respective of the industry a company is within. For industries with a high probability of change, environmental scanning and monitoring are key techniques. In summary, key leaders within the organization must have the ability to strategize how to increase their market share and competitive position to stay current and increase their power within their industry.

Chapter 2. Analyzing the External Environment of the Firm

Learning Objectives

1. The importance of developing forecasts of the business environment.
2. Why environmental scanning, environmental monitoring, and collecting competitive intelligence are critical inputs to forecasting.
3. Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. 
4. The impact of the general environment on a firm’s strategies and performance.
5. How forces in the competitive environment can affect profitability, and how a firm can improve its competitive position by increasing its power vis-à-vis these forces.
6. The concept of strategic groups and their strategy and performance implications.

   Question

   Also, provide a graduate-level response to each of the following questions:

   1. Imagine yourself as the CEO of a large firm in an industry in which you are interested. Please (1) identify major trends in the general environment, (2) analyze their impact on the firm, and (3) identify major sources of information to monitor these trends. (Use Internet and library resources.)