STRATEGIC MANAGEMENT

(External Environment)

The major text content of this presentation draws from the book of Dr. Felina C. Young. In particular,
Young, Felina C. (2015). Strategic Management Made Simple, Rex Book Store Inc. (RBSI).
Learning Objectives
• Analyze and evaluate the
External environment
• Identify external forces
that may prove beneficial
or detrimental to an
organization
• Assess challenges in the
external environment
Scanning the Environment
• Organizations exist to survive; they need to
be clear, deliberate and strategic. They
should develop organizational intelligence.
• Organizational intelligence refers to the
expertise, insight, and wisdom possessed by
an entity.
• Environmental Scanning is the study and
interpretation of the forces existing in the
external and internal environments
Constraints
• For informal scanning, experience and
expertise will help make the process
effortless and straightforward
• ES can be demanding, comprehensive and
needs accurate information. It depends on:
1. Speed of Organization to conduct ES
2. Availability of complete information
3. Physical and Financial capability
 EXTERNAL ENVIRONMENT FORCES
• These forces may
• POLITICAL influence an
organization, an industry,
• ECONOMIC or any entity
• SOCIAL • Environmental scanning
• TECHNOLOGICAL is carefully monitoring
the surroundings with the
• LEGAL end goal of ascertaining
• ENVIRONMENTAL indications of prospects
and challenges
 POLITICAL Forces
• Geopolitical issues have
become the focus of major
political powers. Political
independence, changing
governments, balance of
power, terrorism, suicide
bombings, global alliances,
and chemical & nuclear
warfare.
 POLITICAL INDEPENDENCE and
CHANGING GOVERNMENTS
• Political sustainability becomes the focus of
developed and power-driven countries.
• They fight wars to maintain political supremacy
• Global ideologies are the main determinants of
global support while global power is the main
ingredient of global leadership.
• Changes in government: from COMMUNISM to
SOCIALISM to CAPITALISM; from
DICTATORSHIP to DEMOCRACY.
 TERRORISM/SUICIDE BOMBINGS

• The bloody and painful

transition toward
equality of basic human
rights and the right to a
better life have brought
about critical security
problems like terrorism,
bombings, and hijacking.
These are brazen
testimony of disregard
for law and order.
 CHEMICAL/NUCLEAR THREADS
• Some countries go on
developing and producing
weapons with the intention
of blackmailing or
intimidating other
countries
• Political survival and power
are the great determinants
of political decision-making
and peaceful coexistence
 GLOBAL ALLIANCES
• Politically, nations are
aligning themselves for self
preservation, global
stability and strength.
• Today no nation attempts
to stand alone because
global relationships are
essential to national
survival
 ECONOMIC FORCES
• Economic issues greatly affect the
growth and development of nation
• Nations strategize to maintain
financial stability like transactions
on trade and investments to
ensure monetary security.
• Economic realities are
globalization, fall of financially
stable organization, increasing oil
prices, economic trade
agreements, emerging markets
and rise of china
 PEOPLE

PRODUCTS
IDEAS GLOBALIZATION &
SERVICES

MONEY
 TECHNOLOGICAL FORCES
• Technology is an
important catalyst of
competition
• Technological advances
are observed in the fields
of communication,
business, banking,
education, medicine,
security and in all facets
of everyday living
 LEGAL FORCES
• Powers and limitations that arise from legislation
and interpretation of laws, and which impel or
restrain individual or organizational activities
Examples:
1. TRAIN law
2. Court rulings
3. Consumer law
4. Employment law
ENVIRONMENTAL FORCES
• Environmental responsibility is the urgent call of the
global neighborhood. The safety and survival of one
should the concern of others
Examples
1. Climate Change/ use of biodegradable materials
2. Environmental waste management
3. Preservation of rainforest and marine life
COMMENT BELOW!

What external factor have you observed, other than the pandemic, that affects the
businesses/organizations in this time?