Scenario

Mr. Reyes is the sole proprietor of a

small computer shop located at the
corner of West Avenue and EDSA in
Quezon City. From a current capacity of
30 computer desktops, he is thinking of
expanding his business by doubling the
number of his computer desktops.
This Photo by Unknown Author is licensed under CC BY-NC-ND
Scenario
Presently, he is maintaining five
employees, which include three trained
computer assistants, and administrative
assistant who also works as accountant, and a
utility person who makes sure the office is
always kept clean and orderly. The business
operates from 8 am to 10 pm.
This Photo by Unknown Author is licensed under CC BY-NC-ND
Scenario
A security personnel whom he has a
contracted from an agency safeguards the
computer shop.

This Photo by Unknown Author is licensed under CC BY-NC-ND

Environmental Scanning
seeking for and sorting through
data about the environment.
External Business Environment
refers to the factors/elements outside
the organization which may affect, either
positively or negatively, the performance
of the organization.
Internal Business Environment
refers to the factor/elements within the
organization which may affect, either
positively or negatively, the performance
of the organization.
Components of the External
Business Environment
The general business environment includes
the economic, sociocultural, politico legal,
demographic, technological, and world and
ecological situations; all these must be
considered as manager’s plan, organize, staff,
lead and control their respective organizations.

This Photo by Unknown Author is licensed under CC BY-NC

Economic situations
may affect management practices in organizations.
For example, companies may postpone expansion
plans if bank loan interests are too high.

Sociocultural situations
include the customers changing values and
preferences; customs could also affect management
practices in companies.
Politico legal situations
refer to national or local laws, international laws, and
rules and regulations that influence organizational
management.

Demographic situations
such as gender. Age, education level, income number
of family members, geographic origin, etc., may also
influence some managerial decisions in organizations.
The Technological situations
companies involve the use of varied types of electronic
gadgets and advanced technology such as computers,
robotics, microprocessors, and others that have
revolutionized business management; e-commerce,
teleconferencing, and sophisticated information systems
have rapidly changed the ways that business is
conducted in the 21st century.
Natural Risks
This pertains in the impacts of climate change and
global warming; business establishments need to
assess their exposure to natural risks. Natural risks
include strong typhoons that may cause massive
flooding and landslide, earthquakes, volcanic
eruptions, tsunamis, and storm surges.
Specific Business Environment
focuses on stakeholder, customer, pressure groups,
and investors or owner and their employees.
Stakeholders
are parties likely to be affected by the activities
of the organization, while customers are those
who patronize the organization’s products and
services.
Suppliers
are those who ensure the organizations
continuous flow of needed and reasonably price
inputs or materials required for producing their
goods and rendering their services. Inputs
mentioned also include financial and labor
supply.
Pressure Groups
are special interest groups that try to exert
influence on the organization’s decisions or
actions. For instance, pressure from the Food
and Drug Administration on some department
stores and drug stores led them to stop selling
beauty products containing lead and to stop
ordering or importing such products from their
suppliers.
The organization’s investors or owner
provide the company with the financial support it
needs. The company, of course, cannot exist without
them; thus, they greatly influence organizational
management. Top-level, middle-level, and lower-level
managerial decisions are all influenced by the
investors or owns of organizations.
Employees
are comprised of those who work for another or for
an employer in exchange of salaries/ wages or other
considerations. Employees execute the company’s
strategies and are important for the maintenance of
the company’s stability.
Components of Internal
Business Environment
Internal Business Environment
An organization's internal business environment
is composed of its resources, research and
development, production, procurement of sup-
plies, and the products and services it offers.
The organization's internal environment must
also be subjected to internal analyses.
Internal Business Environment
Internal strengths and weaknesses,
opportunities and threats with regards to its
resources research and development
endeavors, production of goods, procurement
of supplies, and products and services must all
be considered prior to organizational planning.
 Components of
Environmental Scanning
Developing a Competitive mindset,
Considering Future Business Scenarios,
Business Prediction and Benchmarking
Competitive Mindset
Ignorance of present-day realities may cause
individuals or organizations to do certain things
that they may regret in the future; hence,
environmental scanning is necessary.
Competitive Mindset
By seeking for and sorting through data about
the environment, you may be able to
understand and predict the various changes,
opportunities, and threats that may affect
organizations in the future.
Competitive Mindset
Knowing the present-day competitors, the
possible number of barriers in entering your
chosen business industry, the existence or
nonexistence of substitutes to your planned
product or service, and possible dependence on
powerful suppliers and customers will be
helpful in developing a competitive mindset.
Considering Future Business Scenario
By realistic consideration of both worst-case
scenario or unfavorable future, conditions and
best-case scenario or favorable future
conditions, as well as middle-ground possible
conditions, you will have an idea of what to do
in the future.
Bench Marking
is defined as the process of measuring or comparing
one's own products, services, and practices with those
of the recognized industry leaders in order to identify
areas for improvement. Best practices of said industry
leaders are observed so that understanding their
competitive advantage would be easier.
 Business Prediction
also known as business forecasting. is a method of
predicting how variables in the environment will alter the
future of business. It could be used in making decisions
regarding offshoring, branching out locally, and
expanding or downsizing the company. However, the
accuracy of such business predictions cannot always be
assured
Bench Marking
This is followed by gathering information about the
company's own operations and those of the other
company in order to identify gaps; this in, turn, could
be used to find out the underlying reasons for
performance differences. From these said reasons, a
set of best practices in one's own company will be
listed down and that, ultimately, leads to the
company's improved performance
Political
• Changes in tax laws • Local and national
• Environmental protection elections Oil, currency, and
laws labor markets
• Fiscal and monetary • Political conditions in
policies foreign countries
• Government regulations or • Size of government
deregulations budgets
• Import-export regulations • Special tariffs
Economic
• Shift to service economy
• Demand shift for different product and service categories
• Income differences by region and consumer group
• Level of disposable income
• Availability of credit
• Propensity of people to spend Interest, inflation, and tax
rates
• Monetary and fiscal policies
Economic
• GDP/GDRP trend
• Consumption patterns
• Price fluctuations
• Worker productivity levels
• Unemployment trends
• Export of labor and capital
• Economic conditions in foreign countries
Social, Sociological, Cultural, Demographic,
and Environmental
• Air and water pollution control
• Attitudes toward product quality and customer
service
• Average level of education
• Changes in tastes and preferences
• Energy conservation and waste management
• Life expectancy rates
Social, Sociological, Cultural, Demographic,
and Environmental
• Lifestyles and buying habits.
• Number of high school and college graduates
• Number of women workers
• Per capita income and average disposable
income
• Social programs
• Social responsibility
Technological and Technical
• The Internet
• Provides decision and support systems
• Spurs productivity and living standards
• Alters product life cycles and distribution systems
• Technological advancements and developments
• New and improved products
• Shortage of technical skills