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Organizational Environment; is the set of all factors both outside & inside the
organization that can affect its progress toward attaining organizational goals.
Environmental Monitoring; A process of gathering information regarding
companies external environment, analyzing it and forecasting the impact
Environmental Analysis; is the process of monitoring the organizational
environment to identify both present & future threats & opportunities that may
influence the firms ability to reach its goal.
ROLE
Focus
Task / Relationship
Policy
Oriented
Integrated
Strategic
Planning
Functional
Oriented
Improve organizational
performance of a particular
organizational function.
SCOPE
RELATIONSHIP
PURPOSE / ISSUE
Policy
Oriented
Broadest
Loosely
Related
Integrated
Strategic
Planning
Focused
Close
Relationship
Functional
Oriented
Specifically Close
Targeted
Relationship
Environmental Structure
External Environment
Environment exists outside the organization, whish are beyond
organizational control. Can be further categorize in Two Types:
o The General Environment; consisting of economic, technological, political
& legal and social components. Components are normally broad in scope,
having little immediate application for managing the organization.
o The Operating Environment; consisting of supplier, competition,
customer, labour and international components. Components have
relatively specific and more immediate applications for managing the
organization.
Environmental Structure
The General Environment; consisting of economic, technological,
political & legal and social components.
The Operating Environment; consisting of supplier, competition,
customer, labour and international components.
The Internal Environment; covers marketing, financial, personnel and
production aspects.
Environment
Scope
Implications
Control
Type Nature of Organizational Environment Structure
General
Environment
Broad
Little immediate
application
No
Operating
Environment
Relatively
Specific
More immediate
application
No control, but
exercise little
influence
Internal
Environment
Specific
Immediate
Yes
Economic Conditions
Stage of Business Cycle
Marketing executives need to know which stage of business cycle the economy
currently is in because companys marketing programmes be changed from one
stage of the business cycle to another. A marketing programme is affected by the
following economic factors: Prosperity is a period of economic growth, organizations tend to expand their
marketing programmes by adding new products & entering new markets.
Recession is a period of retrenchment for consumers & business. Some
consumers cut back on eating out & entertainment outside the home.
Resultantly firms catering to these needs face serious marketing challenges.
Recovery is period when economy is moving from recession to prosperity.
Inflation
A rise in prices goods and services represents inflation when price rise at a faster
rate than personal incomes, consumer buying powers declines. Inflation rates
affect government policies, consumer psychology and marketing programmes.
Interest Rates
Another external economic factor that influence marketing programme. Once
interest rate is higher consumer tend not to make long term purchases
SOCIAL COMPONENT
Demographics.
The characteristics of human population, including size, distribution and growth.
Since people constitute markets, demographics are of special interest to marketing
executives.
Age, family life cycle stage (bachelor, young married, middle aged, divorced/single,
old etc), income, social class and education formulate the basis of demographics
analysis.
LABELED GENERATIONS
TYPE 0F
GENERATION
Silent
Generation
Baby Boomers
Generation X or
Baby Busters
Generation Y or
Echo Boomers
or Millennium
Generation
PERIOD
People born before
1946
People born between
1946 to 1966; 20
years following WW-II
40 Million people born
between 1966 & 1976
NATURE
BUYING
PREFERANCES
* Entered workplace
during recession.
* Labeled as cautious &
pessimistic.
People born between *Sizable target market. Homogeneous &
1977 to 1997; children *Relatively, optimistic & receptive to a single
of Baby Boomers; 71 materialistic.
marketing appeal.
Million
SOCIAL COMPONENT
Demography
Educational Level & Literacy Rates
Customs, Norms, Values, Beliefs,
Lifestyle, Age, Geographic
Distribution
POLITICAL COMPONENT
Type of Government in Existence
Government Attitude Toward Various
Industries
Lobbying Efforts by Interest Groups
Progress Towards Legislation
TECHNOLOGY COMPONENT
Employment of Robots for Improving
Productivity
Create Competitive Advantage
Automation & Computerization
ENVIRONMENTAL STRUCTURE
The General Environment
Economic Component
Social Component
Political Component
Legal Component
Technology Component
ENVIRONMENTAL STRUCTURE
The General Environment
Economic Component
Social Component
Political Component
Legal Component
Technology Component
Potential
Entrants
Bargaining
Power of
suppliers
INDUSTRY
COMPETITORS
Threat of new
entrants
Bargaining
Power of buys
Suppliers
Buys
Revelry Among
Existing Firms
Substitutes
Threat of
substitute
products or
services
IMPLICATIONS
As rivalry among
competitive
firms increases,
industry profit
declines, in
some cases to
the point where
an industry
becomes
inherently
unattractive.
STRATEGY EMPLOYED
Price Competition
Advertising Battles
New product
introduction &
Additional Services
Enhancing Quality &
Adding Features
Extending warranties
IMPLICATIONS
STRATEGY
EMPLOYED
Consumers ability to
influence market &
competition.
Bargaining power of
consumer is higher
when products are
standard and
undifferentiated,
Whenever the
bargaining power of
consumer is
substantial rival
firms efforts are
focused to gain
consumers loyalty.
Higher quality
Negotiate selling
price
Warranty coverage
/
Extended
warranties
Accessory package
Special services
IMPLICATIONS
STRATEGY EMPLOYED
Increases capacity and
market penetration
Supplier can be
a competitive
threat and at
times control
the market.
IMPLICATIONS
STRATEGY EMPLOYED
IMPLICATIONS
STRATEGY EMPLOYED
ENVIRONMENTAL STRUCTURE
The General Environment
Economic Component
Social Component
Political Component
Legal Component
Technology Component
SUPPLIER COMPONENT
Suppliers
People or firm that supply the goods or services required by a producer to make what
it sells are critical to marketing success & vital part of its marketing environment.
Marketing Intermediaries
Intermediaries are independent business organizations that directly aid in the flow
of goods between a marketing firm and its markets. Types of intermediaries are:
Middlemen wholesalers & retailers.
Facilitating Organizations transportation, warehousing & financing
Channel of Distribution intermediaries operate between a company & its
markets and between a company and its suppliers.
Value Chain
Collectively the company, suppliers and its intermediaries comprises a value
chain.
It is easy to comprehend the value added by manufacturer but it is difficult to
detect the value added by other members of the value chain
ENVIRONMENTAL STRUCTURE
The General Environment
Economic Component
Social Component
Political Component
Legal Component
Technology Component
Legal Environment
Legal Tradition
Effectiveness of Legal System
Treaties with Foreign Nations
Patent Trademark Laws
Laws Effecting Business Firms
Economic Environment
Level of Economic Development
Population
Gross National Product
Per Capita Income
Literacy Level
Social Infrastructure
Natural Resources
Climate
Cultural Environment
Customs, Norms, Values, Beliefs
Languages
Attitudes
Motivations
Social Institutions
Status Symbols
Religious Beliefs
Political System
Form of Government
Political Ideology
Stability of Government
Strength of Opposition Parties
Social Unrest
Foreign Policy
Government Attitude Toward Foreign
Firms
Organizational Aspects
Marketing Aspects
Financial Aspects
Personnel Aspects
Production Aspects
Organizational Aspects
Communication Network
Organizational Structure
Span of Control
Hierarchy of Objectives
Policies, Procedures, Rules
Ability of Management Team
Marketing Aspects; Development of Marketing Programme Strategy
Market Segmentation
Choosing Value Proposition
Marketing Mix Elements
Market Segmentation; Process of dividing the total market for a good or service
and several smaller groups such that members of each group are similar with
respect to factors that influence demand. The basis of market segmentation are
Geographic, Demographic, Psychographic & Behavioral factors.
Choosing Value Proposition; Company must decide how it will serve target
customers? How it will position and differentiate itself in the market place.
Positioning; arranging for a product to occupy a clear distinctive & desirable
place relative to competing products in the minds of target customers.
Differentiation; actually differentiating the market offering to create superior
value.
Marketing Mix (4Ps) & Elements; A combination of the four elements product,
pricing structure, distribution system and promotional activities used to satisfy
the needs of an organizations target market & achieve its marketing objectives.
Organizational Aspects
Communication Network
Organizational Structure
Span of Control
Hierarchy of Objectives
Policies, Procedures, Rules
Ability of Management Team
Marketing Aspects; Development of Marketing Programme Strategy
Market Segmentation
Choosing Value Proposition
Marketing Mix Elements
Organizational Aspects
Communication Network
Organizational Structure
Record of Success
Hierarchy of Objectives
Policies, Procedures, Rules
Ability of Management Team
Marketing Aspects
Market Segmentation
Product Strategy
Promotion Strategy
Distribution Strategy
Financial Aspects
Liquidity
Profitability
Activity
Investment Opportunity
Personnel Aspects
Labor Relations
Recruitment Practices
Training Programmes
Performance Appraisal System
Incentive Systems
Turnover & Absenteeism
Production Aspects
Plant Facility Layout
R&D
Use of Technology
Purchasing of Raw Materials
Inventory Control
Use of Sub-contracting
HIGH
Internal
General
Operating
Internal
General
Operating
Internal, Operating
Internal Operating
Internal Operating
MEDIUM
-
REDUCED
-
General
-
General
General
ENVIRONMENTAL FORECASTING
It is the process of determining, what conditions will exist within on
organizations environment at same future tine. To ensure future
environmental success companies determine future environmental
conditions. Environmental forecasts commonly made include economic,
social, political & technological forecasts. Methods of Environmental
Forecasting are: Expert Opinion
Trend Exploitation
Trend Correlation
Dynamic Modeling
Cross Impact Analysis
Multiple scenarios
Demand/hazard forecasting