Management

Organizations External
Environment

31

Environmental Analysis
If managers do not understand how the environment
affects their organizations or cannot identify opportunities
and threats that are likely to be important, their ability to
make decisions and execute plans will be severely
limited.
Environment uncertainty: Lack of information needed to
understand or predict the future
Environment complexity: refers to the number of issues to
which a manager must attend as well as their
interconnectedness.
Environment dynamism: refers to the degree of
discontinuous change that occurs within the industry.
32

Environmental Analysis
Environmental scanning
Searching out information that is unavailable to most
people and sorting through that information to
interpret what is important and what is not.
Competitive intelligence: information that helps
managers determine how to compete better.

33

Environmental Analysis
Scenario development
Scenario: a narrative that describes a particular set of
future conditions
The value of scenario development is that it helps
managers develop contingency plans for what they
might do given different outcomes.

34

Environmental Analysis
Forecasting
Forecasting is used to predict exactly how some
variable or variables will change in the future.
Although forecasts are designed to help executives
make predictions about the future, their accuracy
varies from application to application.

35

Environmental Analysis
Benchmarking
In order to predict changes in the environment, firms
undertake intensive study of the best practices of
various firms to understand their sources of
competitive advantage.
Benchmarking: the process of comparing an
organizations practices and technologies with those
of other companies

36