Internal Environmental Scan/Organizational Assessment

External Environmental Scan

Five Forces Analysis

Threat of New Competition

The line of products and services that the industry is dealing in can allow the entry of new companies producing the same product. Therefore, in order to ensure the just a few or no companies enter the industry, there is need to dominate the market. This is possible through ensuring that there is proper customer satisfaction in order to curb future competition. This will make the small companies wanting to start dealing in the line of business reluctant to join the industry (Hill & Jones, 2010).

Threat of Substitute Products or Services

There are a few companies providing substitutes for the products that the company is dealing in currently. This has greatly decreased the number of buyers the industry since some customers prefer going for cheaper commodities. Therefore, in order to retain customers, there has to be consistency in the industry for both the prices and quality of products. In addition, gaining the confidence of the consumers in terms using effective promotion methods can assist in making industries willing to produce substitutes reluctant to join the market (Hill & Jones, 2010).

Bargaining Power of Customers (Buyers)

The power of customers greatly influences the position of the industry. Therefore, the company has to ensure that it retains the customers under whatever circumstances. This will ensure little or no pressure from the customers. The best method to enhance this is buying ensuring a competitive edge through working to see few suppliers of the product and zero organizations producing substitute products (Hill & Jones, 2010).

Bargaining Power of Suppliers

The suppliers can apply a considerable amount of pressure on the industry. Therefore, there is need to ensure that the company retains all the suppliers helping in the distribution of the products and services. This will assist in ensuring that all the consumers reach the products and the best method to enhance this is through the offering of incentives to the suppliers for them not to leave the supply chain (Hill & Jones, 2010).

Intensity of Competitive

The cost of competition with other industries dealing in the same commodity and substitute products is very high. However, in order to have continuous customers to ensure that the profits are good, then there is need to strike good product promotion strategies. This will ensure that no customers leave and at the same time, acquire more customers to help boost the industry. This will help in dealing with the other companies in the industry effectively (Hill & Jones, 2010).

Key Factors and Trends

Politics plays a major role in the determination of the industry’s position. The political strategies that are favorable for the company will ensure that the company prospers in the industry. However, bad politics will work to frustrate the company in all aspects. For instance, policies that limit the company’s activities will ensure that the company does not succeed in its transactions. Therefore, whereas good politics presents itself as an opportunity for the business to perform well, bad politics comes as a threat to the industry (Ireland, Hoskisson & Hitt, 2008).

The geographical location of the industry greatly determines its accessibility. The location of this industry is strategic thus enabling easy access by the customers and suppliers. Therefore, it is an excellent opportunity for the company’s performance. This will enable the company to receive numerous customers all the time thus ensuring high prospects (Ireland, Hoskisson & Hitt, 2008).

Technological advancements today serve to elevate the position of the companies using them. In addition, the technological advancements will come as an advantage only if the company can manage to use the existing technology effectively. Therefore, the proper implementation of technology in the company will ensure that the company gets an opportunity to maximize its returns. However, misuse of technology will pose as a threat for the business since other companies will use the same technology to outdo the industry (Ireland, Hoskisson & Hitt, 2008).

The society plays a significant role in seeing the success of a business. Therefore, for the industry to experience success, it has to ensure that it gains the confidence of the whole society. The upcoming news concerning the society indicates that societies will only embrace a company that gives back. Therefore, the industry has to ensure that it offers services to the wider society in order to gain the confidence of the people it serves in addition to ensure support from them (Ireland, Hoskisson & Hitt, 2008).

The legal factors can work either for the company or against the company. Legalizing things that the company is dealing with will some as a relief as it will continue with its normal operations. This will present itself as an opportunity for the company as it will be in a position to carry out its activities well. However, restricting some products that the industry is dealing in will become a threat to the industry, as it will pose a major challenge to the firm. Some regulations such as limiting the number of commodities that the industry can produce into the market will also come as a threat (Ireland, Hoskisson & Hitt, 2008).

Opportunities	Threats
Favorable political will	Unfavorable political will
Good geographical location	Bad geographical location
Favorable economic situation	Unfavorable economic situation
Good technologies	Bad technologies
Favorable policies and regulations	Unfavorable policies and regulations
Supportive society	Unsupportive society

In conclusion, the external environmental scan serves to elicit the potentialities of a business. This will greatly determine its capability of succeeding in the industry. The five-force analysis is an effective opportunity in the enhancement of the business success. In addition, the consideration of the factors and trends has the impact of ensuring ultimate operational limit and success in the company.

References

Hill, C. W. L., & Jones, G. R. (2010). Strategic Management Theory: An Integrated Approach.

Boston, MA: Houghton Mifflin.

Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding Business Strategy:

Concepts and Cases. Mason, OH: South-Western Cengage Learning.