Assignment 2: LASA 2—Presentation of Strategy Audit Findings- Due 10/21
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m2a2_plumskiaa_1.docxRunning Head: EXTERNAL ENVIRONMENTAL SCAN
EXTERNAL ENVIRONMENTAL SCAN
External Environmental Scan
External Environmental Scan
All business units operate in an environment that consists of factors, either internal or external. These factors influence the operations and functions of a business unit or organization to a great extent. The internal factors in an organization can be defined as factors over which the organization has control. These factors may include employees, the organization’s product and the marketing strategy employed by the organization. On the other hand, the given organization has little or no control over the external factors, and they include competitors, political situation and economic trends and conditions within which the organization operates.
Ashton Woods is a private home building company here in America and has a large market share. However its operations have not been without the influence of external environmental factors such as economic, political, geographic, regulatory and societal factors.
Economically, factors such as the rate of inflation, economic growth and interest rates have had an impact on the growth of Ashton Woods. The economic factors influence not only how this organization operates but also the decisions made. High interest rates have had a negative impact on the amount of capital the organization can raise thus limiting its potential to grow and expand. Fluctuations in the exchange rates have also impacted the cost of construction materials imported from other countries especially China
The company, in the recent years, has had to adapt new strategies in response to the changes in societal factors. After the company had conducted a research, it was established that houses constructed in less secure neighborhoods took a longer time to be bought while those constructed in more secure neighborhoods took a shorter time. In order to maximize on this trend, the company now surveys an area to determine the security status before embarking on house construction in this areas. On the other hand, there is more house construction activities in secure areas with space for construction than there is in the less secure areas. Another trend is that new buyers prefer multiple master suits, as this arrangement makes it easier for one to host a guest and the house can host multiple generations. The company has had to adapt strategies to meet these new trends.
Ashton Woods has embraced new technology in construction in order to minimize the cost of operation thus leading to more profits being realized. Despite the fact that initial investment to acquire this technology is high, the emerging befits seem to outweigh the disadvantages making the company to remain at the top in the house construction industry. The company has adapted a technology that utilizes the energy from the sun in construction, resulting in more energy efficient and environment-friendly houses. While technology incentives, cost of automation and the rate of technological change seem to be the barriers to other house construction companies in American, Aston Woods has seen all these as an advantage since the company has a good capital base. The company thus builds better quality houses at a low cost as a result of technology. Software used by the company in house design has led to innovation as architects come up with better and improved new designs of houses.
The environmental factors such as weather and climate change have caused the company to experience big losses. Usually, the company gives a one year warranty to the buyer for every house that is sold. The occurrence of typhoons and strong storms lead to early destruction of both the already sold and the unsold houses. Since it is the company to meet all the cost of repair and maintenance of such houses, the overall effect is decrease in the profits.
Politically, the government of U.S. has a strong grip in the house construction industry. Government influence features in areas such as taxation where the company pays heavy taxes to the government. In addition the labor law requires high-skilled professionals to be employed in the construction of houses adding to more liabilities in the organization. On the other hand, the company has to meet very strict environmental and health law for the workers in order to be allowed to operate. All this factors pose a threat to the operations of the organization.
There are also many regulatory and legal factors in play. The company has to meet health and safety law for the construction workers, antitrust law as well as consumer law that ensures the customer gets quality products and services. Many of these regulations add to the cost of operation and affects the demand of the houses on the other side, as the cost of each house is set based on the total cost of constructing the house. High house price repels potential house buyers.
Ashton Wood competitors are part of the external environment. Ashton Woods has no control over the products and services offered by the rivals. However, the company has put measures in place to ensure that its products and services are the best in terms of quality and favorable price. The threat of substitute products is a reality as many potential buyers prefer renting a residential house instead of buying their own as a result of the high house price. On the other hand, the customer’s potential to acquire a house is determined by his bargaining power. This bargaining power in turn depends on the individual’s income. Individuals with high income have a higher bargaining power.
In summary, technological advancement, societal factors and favorable economic factors are seen as opportunities to the company while regulatory and legal trends, political factors and unfavorable economic factors pose as threats to the existence of Ashdod Woods. The company therefore has to adjust itself according to make the best out of these trends.
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