PYAR PAOLO F.

DELA CRUZ STRATEGIC MANAGEMENT 3-1

Chapter 3 – Take home Exam

1. In your own words, what is Environmental Scanning and why do we need to study
it?
Environmental scanning is the process of monitoring, analyzing, and interpreting
information from the external environment of an organization to identify potential
opportunities, threats, and emerging trends. It is a crucial aspect of strategic
management that helps organizations stay informed about changes in their surroundings.
Environmental scanning can be categorized into three main types: ad-hoc scanning,
regular scanning, and continuous scanning.

First, Ad-hoc scanning refers to the occasional and unplanned gathering of

information from the external environment. It happens in reaction to specific events or
situations and usually isn't part of a structured procedure. Second, regular scanning is a
systematic and scheduled process that involves collecting and analyzing data at
predetermined intervals, like quarterly or annually. Its objective is to offer insights into
the external environment during these specific moments. Third, Continuous scanning is
the most thorough and continuous type, entailing the ongoing monitoring of the
environment through diverse data sources and tools. This approach enables organizations
to proactively and promptly adapt to changes as they unfold.

Environmental scanning plays a crucial role in organizational management for

several reasons. Firstly, it serves as a means to uncover growth and innovation prospects.
Through vigilant monitoring of evolving trends, market dynamics, and technological
breakthroughs, organizations can adjust their approaches to capitalize on these openings.
Secondly, it acts as an early warning system for identifying potential hazards and
vulnerabilities. By detecting forthcoming challenges in advance, organizations can devise
plans to minimize the consequences of adverse developments. Thirdly, environmental
scanning fosters well-informed decision-making by providing decision-makers with
invaluable insights and data-driven information, enabling them to make more strategic
and effective choices.

Understanding and practicing environmental scanning is vital as it plays a pivotal

role in ensuring the enduring viability and competitive edge of an organization. In the
swiftly evolving realm of business today, organizations that neglect to observe and adjust
to external shifts find themselves at a considerable disadvantage. Studying the
environmental scanning equips individuals and entities with the expertise and knowledge
necessary to effectively navigate complex and ever-changing settings. Moreover, it
foster an atmosphere of strategic deliberation and forward-looking preparation within
an organization, an indispensable element for maintaining a lead in an intensely
competitive global arena.
2. Briefly discuss Porter's five forces model.
Porter's Five Forces model is a strategic framework developed by Michael Porter
to analyze and assess the competitive forces within an industry. It helps businesses
understand their competitive environment and make informed strategic decisions.

The first component of this model is the Threat of Substitute Products and
Services. This aspect analyzes how alternative offerings could potentially fulfill the same
customer needs. A substantial threat of substitutes indicates that customers have
accessible options, which can constrain a company's ability to set prices and maintain
profitability.

The second components of this model is the Threat of Established Rivals, which
centers on the level of competition among the companies already operating within the
industry. When rivalry is strong, these firms engage in fierce competition, competing for
advantages in areas such as pricing, product quality, and innovation. In industries where
there are many evenly-matched competitors, it's common to observe intense price
competition and profit margin pressures, as can be seen in the example of the smartphone
market.

The third components of this model is the Potential for New Entrants, which
evaluates the level of difficulty for new competitors to enter the market. When there
are substantial barriers to entry, such as substantial capital demands or a loyal customer
base, it can act as discourage for new entrants. Conversely, in industries with minimal
barriers, there is a continuous risk of new players emerging, aiming to disrupt the
established order, as seen in the dynamic tech startup sector.

The fourth component of this model is the Bargaining Power of Suppliers. This
concept pertains to the influence suppliers hold in setting conditions, pricing, or the
amount of resources they provide to the companies they supply. In sectors with a limited
number of suppliers or rare and essential resources, suppliers wield greater control. To
illustrate, in the automotive sector, suppliers specializing in unique components might
possess substantial bargaining power, which can impact the costs of production.

The fifth component of this model is the Bargaining Power of Customers. This
aspect delves into the extent of influence that customers wield in determining pricing,
product quality, and service standards. When customers are presented with numerous
options and encounter minimal obstacles when switching between providers, they possess
the ability to request more favorable pricing and higher service standards, thereby
potentially diminishing a company's profitability. For instance, within the retail sector,
empowered customers can readily compare prices and insist on competitive pricing along
with top-notch customer service.

In conclusion, Porter's Five Forces model provides a comprehensive framework

for analyzing the competitive dynamics of an industry by assessing the Threat of
Substitute Products and Services, the Threat of Established Rivals, the Threat of New
Entrants, the Bargaining Power of Suppliers, and the Bargaining Power of Customers.
Understanding these forces helps businesses formulate effective strategies to navigate
their competitive landscapes.
3. State a specific establishment in Puerto Princesa and create a SWOT Analysis.

MISTER DONUT

Strengths:
Mister Donut enjoys a strong brand recognition and a loyal customer base. Its
extensive menu offers a wide variety of donuts, pastries, and beverages, catering to
diverse tastes. The franchise also benefits from a well-established distribution network
with numerous outlets across Puerto Princesa City. Additionally, its affiliation with local
culture, such as introducing unique Filipino flavors, gives it a competitive edge in the
market.

Weaknesses:
One of the notable weaknesses for Mister Donut is the stiff competition in the
fast-food and dessert industry. Rivalry from both international and local brands here in
Puerto Princesa City poses a challenge. Furthermore, the brand may need to focus on
enhancing its digital presence and online ordering systems to keep up with changing
consumer preferences. Operational consistency across all outlets is another area that
requires attention to maintain the quality of products and customer experience.

Opportunities:
There are several opportunities Mister Donut can explore. Firstly, there is room
for menu expansion and innovation by introducing healthier options or catering to dietary
preferences like vegan or gluten-free products. The company can also leverage digital
marketing and delivery platforms to reach a wider audience and increase convenience for
customers. Collaborations with local businesses and events could help boost brand
visibility and attract new customers. Lastly, expanding into untapped regions or
international markets could be a viable growth strategy.

Threats:
In the ever-evolving food industry, Mister Donut faces threats such as changing
consumer preferences towards healthier eating habits, which could impact sales of
traditional pastries. Economic fluctuations and rising ingredient costs may also affect
profitability. Moreover, stringent food safety regulations and quality standards need to
be consistently met to avoid potential legal and reputational issues. Lastly, the ongoing
COVID-19 pandemic continues to pose challenges to the restaurant industry, affecting
customer traffic and operational norms.