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Environmental scanning- seeking for and
sorting through data about the environment.
External business environment- refers to the
factors/elements outside the organization
which may affect, either positively or
negatively, the performance of the
organization
Internal business environment- refers to the
factor/elements within the organization which
may effect, either positively or negatively, the
performance of the organization

S SComponents of the External Business Environment:

l lGeneral and Specific
i i Systematic monitoring of the major
external forces influencing organizations
d ENVIRONMENTAL d is necessary to improve the management
e FORCES AND of companies. Failure to consider a
e company’s general and specific business
SCANNING environments may affect the strategies
that management will make and use.
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S SComponents of the External Business

l lEnvironment: General and Specific
Inflation, rates of interest, changing
i Components of the i options in stock markets, and people’s
spending habits are some examples of
d External Business d factors/elements of economic situation.
e Environment: e Economic situations may affect
General and management practices in organizations.
For example, companies may postpone
Specific expansion plans if bank loan interests are
3 6 too high.
SComponents of the External Business
lEnvironment: General and Specific
Sociocultural situations include the
i customers’ changing values and
preferences; customs could also affect
d management practices in companies.
For example, Filipino customers are now
e conscious about the importance of
avoiding fatty foods, so many food
companies now make sure that products
7 they offer are cholesterol-free or are low
in cholesterol. In doing so, they avoid
losing their customers.
SComponents of the External Business
lEnvironment: General and Specific
Politicolegal situations refer to national or
i local laws, international laws, and rules
and regulations that influence
d organizational management. For
example, labor laws related to
e preventing employers from firing their
employees without due process require
the former to allow the latter to exercise
8 their right to present their position during
disciplinary action before their
employment can be terminated.
SComponents of the External Business
lEnvironment: General and Specific
Demographic situations such as gender, age,
i educational level, income, number of family
members, geographic origin, etc., may also
d influence some managerial decisions in
organizations. For example, decisions
e regarding hiring of human resources may be
affected by an organization’s management
policy that shows prejudice to the hiring of
married females who are in the child-bearing
9 age. This may be because they would like to
minimize payment of maternity leave
benefits.
SComponents of the External Business
lEnvironment: General and Specific
The technological situations of
i companies involve the use of varied
types of electronic gadgets and
d advanced technology such as
computers, robotics, microprocessors,
e and others that have revolutionized
business management; e-commerce,
teleconferencing, and sophisticated
1 information systems have rapidly
changed the ways that business is
0 conducted in the 21st century.
SComponents of the External Business
lEnvironment: General and Specific
World and ecological situations are
i related to the increasing number of
global competitors and markets, as well
d as the nature and conditions of the
changing natural environment. Products
e produced by companies, of course, must
cater to the changing needs of people in
the global community, while, at the same
1 time, considering their impact on the
natural environment.
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SComponents of the External Business
lEnvironment: General and Specific
i Stakeholders are parties likely to be
affected by the activities of the
d organization, while customers are
e those who patronize the
organization’s products and services.
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SComponents of the External Business
lEnvironment: General and Specific
i Suppliers are those who ensure the
organization’s continuous flow of needed
d and reasonably priced inputs or materials
required for producing their goods and
e rendering their services. Inputs mentioned
also include financial and labor supply.
SComponents of the External Business
lEnvironment: General and Specific
i
Employees are comprised of those who
d work for another or for an employer in
exchange of salaries/wages or other
e considerations.

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SComponents of the External Business S

lEnvironment: General and Specific l
Pressure groups are special-interest
i groups that try to exert influence on the i
organization’s decisions or actions. For Components of
d instance, pressure from the Food and d the Internal
Drug Administration on some department
e stores and drug stores led them to stop
e Business
selling beauty products containing lead
and to stop ordering or importing such Environment
1 products from their suppliers. 1
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SComponents of the External Business SComponents of the Internal Business

lEnvironment: General and Specific lEnvironment
An organization’s internal business
i The organization’s investors or owners i environment is composed of its resources,
provide the company with the financial research and development, production,
d support it needs. The company, of
d procurement of supplies, and the
e course, cannot exist without them; thus, e products and services it offers.
they greatly influence organizational
management.
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Components of Benchmarking is defined as the process
i Environmental Scanning: i of measuring or comparing one’s own
Developing a Competitive products, services, and practices with
d d those of the recognized industry leaders
Mindset, Considering
in order to identify areas for
e Future Business e improvement.
Scenarios, Business
Prediction, and
1 Benchmarking 2
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Knowing the present-day competitors,
i the possible number of barriers to
entering your chosen business industry,
d the existence or nonexistence of
substitutes to your planned product or
e service, and possible dependence on
powerful suppliers and customers will be
helpful in developing a
2 competitive mindset.
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Meanwhile, business prediction, also
i known as business forecasting, is a
method of predicting how variables in
d the environment will alter the future
business.
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