Reply 1 for week 2

1

Running head: Analyzing the External Environment of the Firm

Analyzing the External Environment of the Firm 2

Analyzing the External Environment of the Firm

BADM 624-20 Competitive Strategy

Maham Bilal

University of the Cumberlands

Discussion 2 – Analyzing the External Environment of the Firm

It is important to follow the right strategy to be able to forecast correctly. There are three steps to forecasting which have been identified (Dess et al., 2021). The very first in environmental scanning which involves observation of the external environment to note key changes and the cause for those changes (Dess et al., 2021). The second step is called environmental monitoring which is the following of trends that may occur or other important events such as the introduction of a new technology which may impact the business (Dess et al., 2021). It aids them to spot upcoming threats and opportunities quickly and to remain up to date. The last important aspect is competitive intelligence (Dess et al., 2021). By understanding our competitor’s companies can get essential foresight and may even be able to predict their competitors next strategy. This can help detect unethical or destructive behavior and helps the form avoid surprises. There are certain factors that a business may not be able to control. these include the demographics, political legal structure and the economic environment that all shape the industry (Dess et al., 2021). The porter five forces are a way of understanding the competitive environment of a firm and to determine power they have to make certain changes and what decisions may have a negative impact. This tool looks at the bargaining power of suppliers and customers (Dess et al., 2021). If there is variety of products and a number of competitors, the customers hold greater power. If there is limited supply of resources than the suppliers are able to get a better deal as they have the higher power. Similarly, if our product is something that can be easily substituted it is under threat and in order to stand out differentiation is necessary as well so developing a loyal consumer base. Businesses decide to focus on specific niece products for this reason and they are able to tap into New markets (Dess et al., 2021). Lastly the threat of potential new entrants must be assessed as an industry that is easier to enter will have more and more substitute products which will make competition intense. A trend identified in the education sector is the shift of students from traditional form of study to digital. Universities are starting to see a decline in enrolments for traditional students as the line between in class and virtual study is blurred. People are favoring flexibility and the value for a virtual class is now almost similar (Best Colleges, 2020). As businesses are keen to hire people based on skill students who are able to manage work and study are becoming important. Resources include an education and government census that track how many people are enrolled to a school and what program which makes it easier to note the change (Best Colleges, 2020).

References

Best colleges. (2020). Retrieved from https://www.bestcolleges.com/research/annual-trends-in-online-education/

Dess, G., McNamara, G., Eisner, A., & Lee, S. H. (2021). Strategic Management: Creating Competitive Advantages (10th edition). McGraw-Hill Higher Education