External Analysis – Social,

Environmental and Technological

Chapter 8
Chapter learning objectives
 Explain medium and long term effects of social and demographic trends on
business outcomes and the economy
 Describe the impact of changes in social structure, values, attitudes and tastes
on the organisation
 Identify and explain the measures that governments may take in response to the
medium and long-term impact of demographic change
 Explain the effect of technological change on organisation structure and
strategy: downsizing, delayering, outsourcing
 Describe the impact of information technology and information systems
development on business processes
 List ways in which the business can affect or be affected by its physical
environment
 Describe ways in which business can operate more efficiently and effectively to
limit damage to the environment
 Identify the benefits of economic sustainability to a range of stakeholders.
Social and Demographic factors
 Demographic trends
 Population size: factors birth rate, death
rate, migration
 Population composition: age group
 Population Location: Rural or Urban
 Wealth: Disposable Income
 Education: Key driver of economic growth
 Health: affects demands on healthcare
providers
Social and Demographic factors
 Social Trends
 Social Structure- Social Class
 Values- Accepted behavior and norms
 Attitudes: Like or Dislike
 Tastes: Personal preference or patterns of
choice – fashions and tastes in society
Social and Demographic factors
 Government policy
 Population Structure
 Housing
 Employment
 Health
Environmental Factor
Business effect on the Environmental effects upon
environment the business
 Pollution  Changing climate
 Wastage of resources  Lack of resources
 Destruction of natural  Loss of sales
habitat  Legislation
 Loss of plant and animal
species
Environmental Factors
Ways in which businesses can limit damage to the
environment
 Redesign of products to use fewer raw materials
 Reduction in packaging on products
 Recycling
 Improving energy efficiency
 Careful production planning
Environmental Factors
Sustainability
 Business can benefit from being environmentally sustainable
 Sustainability means using resources in such a way that they
do not compromise the needs of future generations.
 Various stakeholders can benefit:

Stakeholder Benefit
Workers/ Social Community Healthier environment
Customers Feel more ethical
Shareholders Improved profit
Public Fewer environmental problem
Technological Factors
 Can impact organization as follows:
 Organizational structure
 IT systems for administrative and managerial roles
 Robots/ automation in production
 Improved communication
 Product Development
 Production Changes
 Marketing
Technological Factors
 Organizational structure
 IT systems for administrative and managerial roles
 Robots/ automation in production
 Improved communication
 As a result
 Downsizing: reduce employees without reducing
output
 Delayering: removing layers of management
 Outsourcing: contracting work to outside specialist.
Technological Factors
 Types of IT Outsourcing
 Total :All IT systems and services
 Ad-hoc: Short period temporary IT system
 Partial: Some but not all IT functions outsource
 Project Management:Creation/implementation
of specific IT system are outsourced
Outsourcing
Advantages
 Supplier has specialist skills
 Fixed fee- no uncertainty
 Flexibility on level of work
 Cost saving- specialist are
more efficient.
Disadvantages
 Difficult to bring back IT
in-house- loss of staffs
 Locked into unfavorable
contract
 Access to organization’s
information- data security
 No competitive advantage
from its system- no unique
system
Technological Factors
 Impact on products – sophisticated, user friendly e.g. Mobile
replacement substitute e.g cinema hall by video, netflix
 Impact on Production processes: robotics, automation,
efficient scheduling and monitoring by IT system
 Impact on marketing: monitor competitor price, website,
social media for promotion, internet as distribution channel
 Impact on society as a whole: E-commerce, home banking,
shopping learning, entertainment, Networking
Chapter learning objectives
 Explain medium and long term effects of social and demographic trends on
business outcomes and the economy
 Describe the impact of changes in social structure, values, attitudes and tastes
on the organisation
 Identify and explain the measures that governments may take in response to the
medium and long-term impact of demographic change
 Explain the effect of technological change on organisation structure and
strategy: downsizing, delayering, outsourcing
 Describe the impact of information technology and information systems
development on business processes
 List ways in which the business can affect or be affected by its physical
environment
 Describe ways in which business can operate more efficiently and effectively to
limit damage to the environment
 Identify the benefits of economic sustainability to a range of stakeholders.