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The following will be discussed in this chapter: The organizational environment, external environment, importance of external assessment, how to conduct external audit, key external factors, industry life cycle.
Management Practices Lecture-5 Recap • Behavioral Management • The Hawthorne Studies • Theory X and Y • Theory X v Theory Y • Theory Z • Systems Considerations • Contingency Theory Contingency Theory Today’s Lecture • The Organizational Environment – – External Environment • Importance of External Assessment • How to conduct external audit • Key External Factors Internal Environment External Assessment • The purpose of an external audit is to dev elop a finite list of opportunities that could benefit a firm and avoid threats “The idea is to concentrate our strength against our competitor’s relative weakness.” Bruce Henderson External Audit • • Industry analysis – An assessment of the profitability of an industry – To characterize the driving forces of competition within an industry – Help management create and maintain a competitive advantage Environmental scanning – To indentify the opportunities and threats External Audit Focuses on identifying & evaluating events beyond the immediate control of the firm – Increased foreign competition – Population shifts – Demographics (e.g., aging population) – Information technology External Audit (Cont.) • • External audit reveals – Key opportunities – Key threats Managers then formulate strategies – Take advantage of opportunities – Avoid/reduce impact of threats Process of External Audit • The process of performing an external aud it must involve as many managers and employees as possible • Lead to understanding & • Commitment from organizational members To perform an external audit, a company fir st must gather competitive intelligence and information about: Competitive Intelligence A broad definition of competitive intelligence is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors and any aspect of the environment needed to support executives and managers in making strategic decisions for an organization 10 Process of External Audit Once information is gathered, it should be assimilated, evaluated, and prioritized Key external factors should be important t o achieve: – long term and annual objectives – Measurable goals 11 Facilitating Tools • • • Monitor sources of information magazines, articles, etc.) Utilization of Internet Suppliers, distributors, customers as sources of information 12 (key Examples of Key External Factors – Market share – Breadth of competing products – World economies – Price competitiveness – Technological advancements – Interest rates 13 Key External Factors 14 Summary • The Organizational Environment – External Environment • Importance of External Assessment • How to conduct external audit • Key External Factors 15 Next Lecture • • Economic Forces – Availability of credit – Interest rates Social, cultural, demographic environmental forces – Life expectancy rates – Per capita income 16 and ...Recap • Behavioral Management • The Hawthorne Studies • Theory X and Y • Theory X v Theory Y • Theory Z • Systems Considerations • Contingency Theory Contingency Theory Today’s Lecture • The Organizational... • Importance of External Assessment • How to conduct external audit • Key External Factors 15 Next Lecture • • Economic Forces – Availability of credit – Interest rates Social, cultural, demographic... profitability of an industry – To characterize the driving forces of competition within an industry – Help management create and maintain a competitive advantage Environmental scanning – To indentify the