Kate O. Cereño BSMA-4 AC526 TTH 12:00-1:30 PM
Set 105 Environmental Scanning/Industry Analysis – 1 1. What external environmental variables should be scanned?
Environmental Scanning which refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment, helps in identifying the threats and opportunities in the environment. Internal and External analysis should be considered. In external analysis, three correlated external environmental variables that should be scanned, studied, and analyzed — * immediate / industry environment * national environment * broader socio-economic environment / macro-environment 2. According to Porter, what determines the level of competitive intensity in an industry?
Michael Porter's analysis of industries captures the complexity of industry competition in five underlying forces. These are, Threat of Entry, Threat of Substitutes, Supplier Power, Buyer Power, and degree of Rivalry. 3. What should be scanned in the task environment?
Task environment is actually another term for the industry environment. The four main components that exert influence in industry are: Suppliers, Competitors and potential substitutes, Potential entrants, and Buyers. These four are the most important component that should be scanned in the task environment. 4. Discuss how a development in a corporation’s societal environment can affect the corporation through its task environment.

5. How can managers identify external strategic factors? a. Environmental uncertainty b. Issues priority matrix c. New entrants d. Entry barriers e. Rivalry f. Substitute products g. Bargaining power of buyers and suppliers
h. Bargaining power of other stakeholders a. Environmental Uncertainty- Situation where the management of a firm has little information about its external environment that is in a state of flux and, hence, largely unpredictably. b. Issues Priority Matrix- is a way to identify and analyze developments in the external environment. Managers can use it to decide which environmental trends should be merely scanned (low priority) and which should be monitored as strategic factors (high priority). c. New Entrants- new comers to an industry. They typically bring new capacity, a desire to gain market share, and substantial resources. In this part, managers look into possible ways on how to prevent new companies to enter in the industry. They set entry barriers. d. Entry Barrier- this is an obstruction that makes it difficult for a company to enter an industry. Economies of scale, product differentiation, capital requirements, switching costs, access to distribution channels, cost disadvantage independent of size, and government policy are examples of which. e. Rivalry- is the amount of direct competition in an industry. Managers then identify the factors that intensify the rivalry. These are: number of competitors, rate of industry growth, product or service characteristics, amount of fixed costs, capacity, height of exit barriers and diversity of rivals. f. Substitute products- products that appear different but can satisfy the same need as another product. Managers then think of new innovations to improve their current products to maintain loyalty from their customers. g. Bargaining power of buyers and suppliers- Buyers can affect the industry through their ability to force down prices, bargain for higher quality or more services, and play competitors against each other. Managers then look into ways on how to meet both the needs and wants of the customers by improving the quality of their product, or perhaps finding cheaper but durable resources to produce affordable and quality products. On the other hand, Suppliers affect the industry through their ability to raise prices or reduce the quality of purchased goods and services. Managers then measure how powerful a supplier is, whether it is dominated by many companies, able to integrate forward or compete directly with their competitors, and the like. These further help managers in deciding which supplier to rely on. h. Bargaining power of other stakeholder-