Any organization is located and functions in the environment. Every action of all organizations without exception is possible only if the environment allows its implementation. The internal environment of the organization is the source of its life force. It contains the potential that enables the organization to function, and, therefore, exist and survive in a certain period of time. But the internal environment can also be a source of problems and even death of the organization if it does not provide the necessary functioning of the organization.
The external environment is the source that feeds the organization with the resources necessary to maintain its internal potential at the proper level. The organization is in a state of constant exchange with the external environment, thereby providing itself with the possibility of survival. But the resources of the external environment are not unlimited. And many other organizations in the same environment apply for them. Therefore, there is always the possibility that the organization will not be able to obtain the necessary resources from the external environment. This can weaken its potential and lead to many negative consequences for the organization. The challenge of strategic management is to ensure that the organization interacts with the environment that would allow it to maintain its potential at the level necessary to achieve its goals, and thereby enable it to survive in the long term.
In order to determine the strategy of the organization's behavior and implement this strategy in life, management must have an in-depth understanding of both the internal environment of the organization and the external environment, its development trends and the place occupied by the organization in it. At the same time, both the internal environment and the external environment are studied by strategic management primarily in order to reveal the threats and opportunities that the organization must take into account when defining its goals and achieving them.
The external environment in strategic management is considered as a combination of two relatively independent subsystems: the macroenvironment (external environment of indirect action) and the immediate environment (external environment of direct action).
The macroenvironment creates general conditions for the environment where the organization is located. In most cases, the macroenvironment is not specific to a particular organization. However, the degree of influence of the state of the macroenvironment on different organizations is different. This is due both to differences in the spheres of activity of organizations, and to differences in the internal potential of organizations.
Studying the economic component of the macroenvironment allows us to understand how resources are formed and distributed. It involves the analysis of such characteristics as the value of the gross national product, inflation rate, unemployment rate, interest rate, labor productivity, taxation rates, balance of payments, accumulation rate, etc. When studying the economic component, it is important to pay attention to such factors as the general level of economic development, extracted natural resources, climate, the type and level of development of competitive relations, the structure of the population, the level of education of the labor force and the size of wages.
Analysis of legal regulation, involving the study of laws and other normative acts that establish legal norms and the framework of relations, gives an organization the opportunity to determine for itself the permissible boundaries of actions in relations with other subjects of law and acceptable methods of defending their interests. The study of legal regulation should not be limited only to the study of the content of legal acts. It is important to pay attention to such aspects of the legal environment as the effectiveness of the legal system, the established traditions in this area, the procedural side of the practical implementation of legislation.
The political component of the macroenvironment should be studied first of all in order to have a clear idea of the intentions of public authorities in relation to the development of society and the means by which the state intends to implement its policy.
The study of the political component should focus on finding out what programs different party structures are trying to implement, what lobbying groups exist in government bodies, what attitude the government has in relation to various sectors of the economy and regions of the country, what changes in legislation and legal regulation are possible as a result of the adoption of new laws and new forms that regulate economic processes. At the same time, it is important to understand such basic characteristics of the subsystem as what political ideology determines the government's policy, how stable the government is, how capable it is to carry out its policies, what degree of public discontent and how strong the opposition political structures are, in order to use this discontent to seize power.
The study of the social component of the macroenvironment is aimed at understanding the impact on business of such social phenomena and processes as people's attitude to work and the quality of life, as existing customs and beliefs in society, as values shared by people, as demographic structures of society, population growth, level education, mobility of people, i.e. readiness to change place of residence, etc. The value of the social component is very important, since it is all-pervading, affecting both other components of the macroenvironment and the internal environment of the organization. Social processes change relatively slowly. However, if there are certain social changes, then they lead to many very significant changes in the environment of the organization. Therefore, the organization must seriously monitor possible social changes.
Analysis of the technological component allows you to see in a timely manner the opportunities that the development of science and technology opens up for the production of new products, for the improvement of manufactured products and for the modernization of the technology of manufacturing and marketing products. Advances in science and technology bring tremendous opportunities and equally tremendous threats to firms. Many organizations fail to see the new perspectives that open up because the technical capacity to drive change is predominantly created outside of the industry in which they operate. Late in modernization, they lose their market share, which can lead to extremely negative consequences for them.
In order for an organization to effectively study the state of the macroenvironment components, a special system for monitoring the external environment must be created. This system should carry out both special observations associated with some individual events and regular (usually once a year) observations of the state of external factors important for the organization. Observations can be made in many different ways.
The most common observation methods are:
- - analysis of materials published in books, magazines and other information publications;
- - participation in professional conferences;
- - analysis of the experience of the organization;
- - study of the opinion of employees of the organization;
- - holding intra-organizational meetings and discussions.
The study of the components of the macroenvironment should not end only with a statement of the state in which they were previously or in what state they are now. It is also necessary to reveal those trends that are characteristic of changes in the state of certain important factors and try to predict the direction of development of these factors in order to foresee what threats may await the organization and what opportunities may unfold before it in the future.
A macroenvironmental analysis system gives the desired effect if it is supported by internal management and provides it with the necessary information, if it is closely related to the planning system in the organization, and, finally, if the work of analysts working in this system is combined with the work of specialists on strategic issues who in able to trace the relationship between data on the state of the macroenvironment and the strategic objectives of the organization and evaluate this information in terms of threats and additional opportunities for implementing the organization's strategy.
The analysis of buyers, as components of the immediate environment of the organization, is primarily aimed at compiling a profile of those who buy the product sold by the organization. Customer research allows an organization to better understand which product will be most accepted by customers, how much more potential customers can be reached, what the future holds for the product, and much more.
Studying the buyer, the firm also understands for itself how strong its position in relation to it in the bargaining process. If, for example, the buyer has a limited opportunity in choosing the seller of the goods he needs, then his bargaining power is significantly weakened. If, on the contrary, the seller should look for a replacement for this buyer with another who would have fewer opportunities in choosing a seller. The trade power of the buyer also depends, for example, on how important the quality of the purchased product is to him. There are a number of factors that determine a buyer's trading power. These factors include the following:
- - the ratio of the degree of dependence of the buyer on the seller and with the degree of dependence of the seller on the buyer;
- - the volume of purchases made by the buyer;
- - the level of awareness of the buyer;
- - availability of substitute products;
- - the cost for a buyer to switch to another seller;
- - the sensitivity of the buyer to the price, depending on the total cost of purchases carried out by him, his orientation towards a certain brand, the presence of certain requirements for the quality of the product, its profitability, incentive system and the responsibility of those who make the decision to purchase.
Suppliers of materials and components, if they have great strength, can make the organization very dependent on themselves. Therefore, when choosing suppliers, it is important to deeply and comprehensively study their activities and their potential in order to be able to build such relationships with them that would provide the organization with maximum strength in interaction with suppliers.
The following factors determine the competitive strength of a supplier:
- - the level of specialization of the supplier;
- - the value of the cost of switching for the supplier to other customers;
- - the degree of specialization of the buyer in the acquisition of certain resources;
- - the supplier's concentration on working with specific customers;
- - the importance of sales volumes for the supplier.
When studying suppliers of materials, it is necessary to consider the following characteristics of their activities:
- - the cost of the supplied goods;
- - a guarantee of the quality of the supplied goods;
- - time schedule for the delivery of goods;
- - punctuality and obligation to comply with the terms of delivery of goods.
The competitive environment is formed not only by intra-industry competitors that manufacture similar products and sell them in the same market. The subjects of the competitive environment are also those firms that can enter the market, as well as those firms that produce a substitute product. In addition to them, the competitive environment of the organization is significantly influenced by its buyers and suppliers, who, having the power to bargain, can significantly weaken the organization's position in the competitive field.
Many firms do not pay due attention to the possible threat from the "aliens" and therefore lose in the competitive struggle to the newcomers to their market. It is very important to remember this and create barriers in advance to the entry of potential "aliens". Such barriers can be in-depth specialization in the production of a product, low costs due to savings from large production volumes, control over distribution channels, the use of local features that give an advantage in competition, etc. However, any of these measures is effective only when it is a real barrier to the "alien". Therefore, it is very important to know well what barriers can stop or prevent a potential "newcomer" from entering the market, and to erect precisely these barriers. Producers of substitute products have a very high competitive power. The peculiarity of the transformation of the market in the case of the appearance of a replacement product is that if the market of the old product is "killed" by it, then it usually cannot be restored. Therefore, in order to be able to adequately meet the challenge from firms producing a replacement product, the organization must have sufficient potential to move on to creating a new type of product.
The analysis of the labor market is aimed at identifying its potential for staffing the organization. The organization should study the labor market both from the point of view of the availability of personnel of the necessary specialty and qualifications, the required level of education, the required age, gender, etc., and from the point of view of the cost of labor. An important area in the study of the labor market is the analysis of the policies of trade unions that have influence in this market, since in some cases they can severely restrict access to the labor force necessary for organizing.
The internal environment of an organization is that part of the overall environment that is within the organization. It has a constant and most direct impact on the functioning of the organization. The internal environment has several sections, each of which includes a set of key processes and elements of the organization, the state of which together determines the potential and those capabilities that the organization has.
The personnel cut of the internal environment covers such processes as the interaction of managers and workers; recruitment, training and promotion of personnel; assessment of work results and incentives; creating and maintaining relationships between employees, etc. The organizational section includes: communication processes; organizational structures; norms, rules, procedures; distribution of rights and responsibilities; hierarchy of subordination. The production cut includes product manufacturing, supply and storage; maintenance of the technological park; research and development. The marketing cut of the internal environment of the organization covers all those processes that are associated with the sale of products. This is a product strategy, a pricing strategy; product promotion strategy on the market; selection of sales markets and distribution systems. The financial cut includes the processes involved in ensuring the efficient use and flow of funds in an organization.
In particular, this is maintaining liquidity and ensuring profitability, creating investment opportunities, etc.
The internal environment is, as it were, completely permeated by the organizational culture, which, like the above sections, should be subjected to the most serious study in the process of analyzing the internal environment of the organization.
An insight into organizational culture can be obtained from the various publications in which the organization presents itself. An organization with a strong organizational culture emphasizes the importance of the people working in it. Such organizations, in their publications about themselves, pay great attention to explaining their corporate philosophy and promoting their values. At the same time, organizations with a weak organizational culture are characterized by a tendency in publications to talk about the formal organizational and quantitative aspects of their activities.
An understanding of organizational culture provides an observation of how employees work in their workplaces, how they communicate with each other, what they prefer in conversations. Also, the understanding of organizational culture can be improved if you become familiar with how the career system in the organization is built and what criteria serve to promote employees.
Understanding organizational culture is facilitated by studying whether the organization has strong commandments, unwritten norms of behavior, ritual events, traditions, heroes, etc., how aware all employees of the organization are and how seriously they take it all. If employees are knowledgeable about the history of the organization and take the rules, rituals and organizational symbols seriously and with respect, then it can be assumed with a high degree of validity that the organization has a strong organizational culture.
In order to survive in the long term, the organization must be able to predict what difficulties may arise in its path in the future, and what new opportunities may open up for it. The strengths and weaknesses of the internal environment of the organization, as well as the threats and opportunities, determine the conditions for the successful existence of the organization. Therefore, when analyzing the internal environment, strategic management is interested in identifying exactly what strengths and weaknesses the individual components of the organization and the organization as a whole have.
Summarizing the above, we can state that the analysis of the environment, as it is carried out in strategic management, is aimed at identifying the threats and opportunities that may arise in the external or internal environment of the organization, and the strengths and weaknesses that the organization possesses. It is to solve this problem that certain methods of environmental analysis have been developed, which are used in strategic management.
Firm "Nocturne" is constantly studying the internal and external environment of the environment, primarily in order to reveal the threats and opportunities that the organization must take into account when defining its goals and achieving them.
Particular attention is paid to the study of the immediate environment of the organization (customers, suppliers and competitors).
Customer research allows an organization to better understand which product will be most accepted by customers, how much more potential customers can be reached, and what the future holds for the product.
The analysis of suppliers is aimed at identifying those aspects in the activities of entities supplying the organization with various raw materials, semi-finished products, energy and information resources, finance, etc., on which the effectiveness of the organization's work, the cost price and quality of the product produced by the organization depend.
The study of competitors, that is, those with whom the organization has to fight for the resources that it seeks to obtain from the external environment in order to ensure its existence, occupies a special and very important place in strategic management. This study is aimed at identifying the strengths and weaknesses of competitors and, on the basis of this, build your competitive strategy.
Any enterprise is located and operates in a certain environment. The external environment is the source that feeds the enterprise with the resources necessary to form and maintain its potential.
The enterprise is in a state of constant exchange with the external environment, thereby providing itself with the possibility of survival. For this there is a ramified system of various connections. External relations should be understood as the channels of receipt of resources from suppliers and channels of sales of products to customers. There are connections with related enterprises, competitors, unions, government bodies. It should be borne in mind that the resources of the external environment are not unlimited. In addition, other enterprises in the same environment apply for them. Therefore, there is a potential danger that the enterprise will not be able to obtain the necessary resources from the external environment. The task of strategic planning is to ensure such interaction with the external environment that would allow maintaining its potential at the level necessary for normal functioning and development. At the same time, the external environment is investigated, first of all, in order to identify opportunities and threats that must be taken into account when setting your goals and achieving them.
The assessment of the external environment is carried out in order to:
Identify changes that affect different aspects of the strategy;
Determine what environmental factors can pose a threat to the firm;
Assess what environmental factors can be used to achieve a strategic goal. This allows the firm to direct its efforts in the most favorable direction for business development.
Analysis of the external environment helps to obtain important results:
Predict unforeseen circumstances;
Develop measures to prevent unfavorable unforeseen circumstances and threats;
Helps turn potential threats into profitable opportunities.
The role of environmental analysis is to answer the questions:
Where the organization is located in relation to other business participants;
Where senior management believes the entity should be located in the future;
What needs to be done in order for the enterprise to move from the position in which it is to the position where the management wants to see it.
In order for a firm to be able to effectively study the state of the external environment, a special system of its observation and study must be created.
The most common observation methods are:
Participation in conferences;
Analysis of the experience of the enterprise;
Studying the opinion of the company's employees;
Conducting meetings, conferences, brainstorming sessions, various competitions, etc.
In the process of studying, it is important to uncover trends characteristic of changes in the state of individual parameters and try to predict the directions of their development in order to anticipate the threats and advantages awaiting the enterprise in the future.
Characteristics of the macroenvironment
Strategic planning considers the external environment as a combination of two environments: the macroenvironment and the immediate environment. In addition, the internal environment is being investigated.
The macroenvironment creates the general conditions for the existence of the firm. In most cases, the macroenvironment is not specific in relation to a single business entity; it has a general impact on all entities. Nevertheless, the degree of influence of the macroenvironment on different organizations is not the same, which is due to the specifics of the business in which the firm operates, the internal potential of the organization. Let's consider these factors.
1. Economic factors. The current and projected state of the economy has a decisive influence on the activities of business entities. Therefore, the most important parameters of the economy must be constantly monitored and predicted. Among them, the most important are the following: rates of inflation or deflation; the level of employment of labor resources; international balance of payments; interest and tax rates; the size and dynamics of the gross domestic product; labor productivity, etc. These parameters have a different effect on different enterprises: what for one is an economic threat, the other perceives as an opportunity. For example, the stabilization of purchase prices for agricultural products is viewed as a threat for its producers, and as a benefit for processing enterprises.
2. Political factors Political factors must be studied so that the top management of the enterprise has a clear idea of the political intentions of the public authorities. This is important in order to know what state programs the government intends to undertake in the field of politics and economics, to what extent these programs can affect the interests of a particular firm, what lobbying groups exist in the state apparatus, what attitude does the government have towards various sectors of the economy and regions. countries, what changes in the legislative and regulatory and technical base are possible, etc.
3. Market factors. The analysis of the market environment includes numerous factors: demographic factors; life cycles of products and business entities themselves; the level of competition; level and dynamics of income, etc.
4. Technological factors. Analysis of this sphere of the external environment makes it possible to identify in a timely manner the opportunities that the development of science and technology opens up for production. We are talking about the possibility of improving both the product and its manufacturing technology.
5. International factors. The activity of an enterprise on the international market makes it necessary to monitor the scope of international cooperation. Threats and new opportunities here may arise as a result of: facilitating access to raw materials of foreign companies or domestic ones abroad; activities of foreign firms; the creation of foreign cartels (for example, OPEC); changes in the exchange rate; making political decisions in countries acting as foreign investors, etc. The study of these problems should be aimed at strengthening the national market, seeking government support and protection against foreign competitors.
6. Social factors. The study of social factors is aimed at understanding the impact on business of the following social phenomena and processes: people's attitude to work and quality of life; customs and traditions existing in society; values shared by people; mentality of society; the level of education; mobility of people to change their lives, etc. The study of social factors is important for two reasons. First, because they are all-pervading, i.e. determining the internal environment of the enterprise. Secondly, because they affect other components of the external environment and thus have an additional impact on the firm.
Characteristics of the immediate environment
Analysis of the immediate environment involves the study of the components of the external environment with which the company is in direct contact in the course of economic activity. The important thing here is that the enterprise can significantly influence the nature and content of this interaction, prevent the emergence of threats and create some benefits. The immediate environment includes: buyers of products and services of the firm; suppliers; competitors and labor market, contract audiences.
Let's consider these components:
1. Competitors. Competitor analysis takes a particularly important place in strategic planning. This study is aimed at identifying the strengths and weaknesses of competitors and on this basis to build your business strategy.
Competitors include:
Intra-industry competitors, i.e. firms producing similar products;
Firms that produce a replacement product;
Firms that can enter the market (potential competitors).
In addition to the named entities, competitors include buyers and suppliers, which can significantly weaken the position of the firm.
When analyzing, particular attention should be paid to potential competitors. Ignoring threats from firms entering the market is often the most important reason for losing the competition. Therefore, the analysis should aim to plan in advance the barriers to the entry of potential competitors into the market. These may include: low costs due to large volumes of production; control over product distribution channels; using local (local) peculiarities in the production of a product, etc.
2. Buyers. The purpose of this analysis is to identify the consumers of the firm's products. This allows you to find out the following: what product the buyer needs, what volume of sales the firm can count on; the extent to which buyers are committed to the firm's product; how much the circle of potential buyers can be expanded; what awaits the company's products in the future, etc.
The portrait of the buyer can be drawn up according to the following characteristics:
Socio-economic (income, profession, etc.);
Demographic characteristics (age, gender, education, field of activity, etc.);
Psychographic characteristics (lifestyle, opinions, etc.);
Behavioral characteristics (attitude towards the product, perception of price, frequency of purchases in one store, etc.).
The firm determines how strong its position is in order to dictate its terms to the buyer. If the firm is a monopolist, the buyer has a limited opportunity to choose the goods he needs and, therefore, his position in relation to the seller of the goods is significantly weakened. And, conversely, if the buyer has a choice, then the position of the seller of the goods is weaker, and he is forced to look for a replacement for this buyer with another who would have less opportunity in choosing a seller.
The position of the buyer in the market, taken into account when developing a firm's strategy, depends on a number of factors, among which the following are the most important:
Correlation of the degree of dependence of the buyer on the seller with the degree of dependence of the seller on the buyer;
The volume of purchases made by the buyer;
The level of awareness of the buyer about the state of the market for the goods;
Availability and volume of production of substitute goods;
The buyer's sensitivity to the price of a product, which is determined by the volume of purchases of a given product, focus on a certain quality of the product, the economic situation of the buyer, the characteristics of those who make decisions about the purchase, etc.
3. Suppliers. The analysis is aimed at identifying factors in the activities of suppliers supplying the company with raw materials, materials, semi-finished products, fuel, etc., on which the cost and quality of products depend. The influence of suppliers on the firm's performance should not be underestimated as they can make the firm highly dependent on themselves.
The degree of influence of suppliers as competitors can be assessed by the following factors:
Supplier specialization level;
Costs that a supplier may incur when replacing customers;
The ability to replace the resources purchased by buyers with others;
Supplier sales, etc.
When researching suppliers, you need to investigate:
The cost of the supplied goods, and the tendencies of its change;
Quality assurance of the supplied goods;
Delivery time schedule;
Reliability of suppliers (punctuality, obligation to fulfill contractual obligations, etc.).
4. Labor market. Labor market research is carried out in order to identify its potential in providing a firm with qualified personnel. The following is important here:
Availability in the labor market of personnel of a certain qualification, gender, age, etc .;
Analysis of policies pursued by trade unions, government, employers' associations, etc. in the field of employment and wages;
Study of the cost of labor and the dynamics of its change.
5. Contact audiences. These are the media, consumer societies, environmental public organizations, etc., which have a significant impact on the formation of a favorable image of the company.
Analysis and assessment of the internal environment of the company
The purpose of the analysis of the internal environment of the company is to identify the strengths and weaknesses in its activities. To take advantage of external opportunities, the firm must have some internal potential. At the same time, you need to know the weaknesses that can aggravate the external threat and danger. The process by which the diagnosis of internal strengths and weaknesses is carried out is called management survey in strategic planning. It is a process of researching the internal environment of a firm, designed to identify its strategic advantages and disadvantages in business.
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To determine the strategy of the organization's behavior and to implement this strategy in life, management must have an in-depth understanding of the internal environment of the organization, its potential and development trends, as well as the external environment, development trends and the place occupied by the organization in it. At the same time, the internal environment and the external environment are studied by strategic management primarily in order to reveal the threats and opportunities that the organization must take into account when defining its goals in achieving them.
The internal environment of a company is its internal elements, subsystems and processes that affect its potential, competitiveness, and ability to develop.
The internal environment has several sections, each of which includes a set of key processes and elements of the organization, the state of which together determines the potential and those capabilities that the organization has. The personnel cut of the internal environment covers such processes as the interaction of managers and workers; recruitment, training and promotion of personnel; assessment of work results and incentives; creating and maintaining relationships between employees, etc. The organizational section includes: communication processes; organizational structures; norms, rules, procedures; distribution of rights and responsibilities; hierarchy of subordination. The production cut includes product manufacturing, supply and storage; maintenance of the technological park; research and development. The marketing cut of the internal environment of the organization covers all those processes that are associated with the sale of products. This is a product strategy, a pricing strategy; product promotion strategy on the market; selection of sales markets and distribution systems. The financial cut includes the processes involved in ensuring the efficient use and flow of funds in an organization. In particular, this is maintaining liquidity and ensuring profitability, creating investment opportunities, etc.
The internal environment is, as it were, completely permeated by the organizational culture, which, like the above sections, should be subjected to the most serious study in the process of analyzing the internal environment of the organization.
The method used to diagnose internal problems is called a management survey. A management survey is a methodical assessment of the functional areas of an organization, designed to identify its strategic strengths and weaknesses. A management survey includes five functions - marketing, finance, (operations) manufacturing, human resources, and corporate culture and image.
In order to get a clear assessment of the strength of the enterprise and the situation in the market, there is a SWOT analysis.
SWOT analysis is the definition of the strengths and weaknesses of the enterprise, as well as the opportunities and threats emanating from its immediate environment (external environment).
- § Strengths - the strengths of the organization;
- § Weaknesses - weaknesses of the organization;
- § Opportunities - environmental factors, the use of which will create advantages for the organization in the market;
- § Threats are factors that can potentially worsen an organization's position in the market.
To carry out the analysis, you must:
- § Determine the main direction of development of the enterprise (its mission)
- § Weigh the forces and assess the market situation in order to understand whether it is possible to move in the indicated direction and how it is better to do it (SWOT analysis);
- § Set goals for the company, taking into account its real capabilities (defining the strategic goals of the company)
Rice. 2
The SWOT analysis is reduced to filling in the SWOT analysis matrix. In the appropriate cells of the matrix, it is necessary to enter the strengths and weaknesses of the enterprise, as well as market opportunities and threats.
An enterprise's strengths are what it excels at or some feature that provides additional opportunities. Strength may lie in the experience, access to unique resources, the availability of advanced technology and modern equipment, high qualifications of personnel, high quality of products, brand awareness, etc.
The weaknesses of the enterprise are the absence of something important for the functioning of the enterprise, or something that has not yet succeeded in comparison with other companies and puts the enterprise in a disadvantageous position. As an example of weaknesses, one can cite too narrow range of products, bad reputation of the company in the market, lack of funding, low level of service, etc.
Market opportunities are favorable circumstances that an enterprise can use to gain an advantage. As an example of market opportunities, one can cite the deterioration of competitors' positions, a sharp increase in demand, the emergence of new production technologies, an increase in the level of income of the population, etc. It should be noted that opportunities from the point of view of SWOT analysis are not all opportunities that exist on the market, but only those that can be used.
Market threats are events, the occurrence of which may have an adverse effect on the enterprise. Examples of market threats: new competitors entering the market, tax increases, changing consumer tastes, declining birth rates, etc.
Fig. 3
The same factor can be both a threat and an opportunity for different businesses. For example, for a store that sells expensive products, increasing incomes of the population may be an opportunity, as it will lead to an increase in the number of customers. At the same time, for a discounter store, the same factor can become a threat, since its customers with higher salaries can move to competitors offering a higher level of service.
environment outside store danger
The task of management is to ensure that a stable balance is maintained in the relationship between the organization and the external environment by creating a product and exchanging it in the external environment for the resources necessary to ensure the organization's life. In the process of analyzing the interaction of the organization with the external environment, it is important first of all to understand how the organization should behave in the long term in order to ensure its sustainable existence.
In the external environment, dynamic processes of change are constantly taking place: something disappears, something appears. One part of these processes opens up new opportunities for the organization, creates favorable conditions for it. The other part, on the contrary, creates additional difficulties and restrictions. In order to successfully survive in the long term, an organization must be able to anticipate what difficulties it may face in the future and what new opportunities may open up for it. Therefore, when studying the external environment, managers should concentrate their attention on finding out what threats and what opportunities for their business are fraught with the external environment.
Any organization is formed and functions not "in an airless space", but within a certain environment. The "habitat" of an organization can be conditionally divided into two parts: the environment external to the organization (macroenvironment and immediate environment) and the internal environment. Consumers, resellers, competitors, resource providers, government bodies, trade unions, socio-political organizations and similar structures and groups in one way or another interact with the organization and influence it. In turn, the ability of the organization to exert a counter influence on them is most often either significantly limited or absent altogether. Every action of all organizations without exception is possible only if the external environment "allows" its implementation.
The environment of the organization, with which it is forced to reckon with when determining and performing its actions, has received the name of the "external environment". In this case, it is customary to distinguish:
Extra environment (for example, global trends existing in
worldwide);
Macroenvironment (factors affecting the activities of the organization,
manifested on a national or regional scale);
Microenvironment (business environment of an organization).
The external environment is the source that feeds the organization with the resources necessary to maintain its internal potential at the proper level. The organization is in a state of constant exchange with the external environment, thereby providing oneself with the possibility of survival and development.
But the resources of the external environment are not unlimited. And many other organizations in the same environment apply for them. Therefore, there is always the possibility that the organization will not be able to obtain the resources it needs from the external environment. This can weaken its potential and lead to many negative consequences for the organization.
The task of strategic management is to ensure such interaction of the organization with the external environment, which would allow it to maintain its potential at the level necessary to achieve its goals, and thereby give it the opportunity survive in the long run.
In order to determine the strategy of the organization's behavior and to implement this strategy in life, management must have an in-depth understanding not only of the internal environment of the organization, its potential and desirable development trends, but also of the external environment, its development trends and the place occupied by the organization in it.
In this case, the external environment is studied primarily in order to identify those threats and opportunities that the organization must necessarily take into account when defining its goals and when managing the process of achieving them.
Macroenvironment analysis
Macroenvironment determines the most general ("framework") conditions for the organization's activities in the external environment. In most cases, the macroenvironment does not have any special (specific) character in relation to a particular organization, i.e. acts as approximately the same for all organizations of this type. But due to the differences both in the spheres of activity and in the internal potential of organizations, the degree of influence of the macroenvironment on each of them individually may have some differences and features.
The external environment is usually considered as a combination of two environments: the macroenvironment (macroenvironment) and the immediate environment (the organization's business environment).
This process is called STEP analysis (social, technological, economic and political factors).
Economic factors of doing business
Economic relations in the macro environment determine for the organization, first of all, how resources are formed and allocated. The study of the economic situation involves the analysis of a number of indicators: the value of the gross national product, inflation rates, unemployment rates, interest rates, labor productivity, taxation rates, balance of payments, trends in accumulation and consumption, etc.
When studying economic factors, it is important to pay attention to such factors as the general level of economic development, extracted natural resources, climate, the type and degree of development of competitive relations, the structure of the population, the level of education of the labor force and the size of wages.
When studying the listed indicators and factors for substantiating a strategic choice, first of all, it is not the values of the indicators as such that are of interest, but the main trends, i.e. what opportunities for doing business it gives in the future.
Also, the scope of strategic analysis includes the identification of potential threats to the firm, which can be "masked" in certain parameters of the economic situation.
It often happens that opportunities and threats go hand in hand. For example, the low cost of labor, on the one hand, can lead to lower costs. But, on the other hand, it is fraught with the threat of a decrease in the quality of labor.
The analysis of the economic situation should by no means be limited only to the analysis of its individual components, but should be aimed at a comprehensive assessment of its state. First of all, this is an assessment of the degree of competition intensity and the level of business attractiveness for certain markets, the degree and types of risks, etc.
Social factors of doing business
The study of the social situation of the macroenvironment is aimed at understanding the impact on business of such phenomena and processes as cultural norms existing in society and values shared by people, people's attitudes towards the quality of life and work, the demographic structure of society, population growth, education level, labor mobility etc. The peculiarity of the social component is that it “indirectly” affects both other components of the macroenvironment and the internal environment of the organization.
Another distinctive feature of social processes is that they proceed relatively slowly and not always in an "explicit" form, but often lead to many very serious changes in the environment of the organization. It is these processes that have the greatest influence on the formation of consumer preferences, on which the direction and magnitude of consumer demand, and, consequently, the level of the most serious commercial risk - the risk of not being in demand for products, very strongly depend.
Therefore, the organization must seriously monitor social trends that are significant for it and be prepared in advance for the onset of their possible consequences.
Labor market
The analysis of the labor market is aimed at identifying its potential opportunities and limitations in providing the organization with the personnel it needs to solve its problems. The organization should study the labor market both from the point of view of the availability in this market of personnel of the necessary specialty and qualifications, the required level of education, age, gender, etc., and from the point of view of the cost of labor.
An important area of study of the labor market is the analysis of the policies of trade unions that influence this market, since in some cases they can greatly complicate access to the labor force necessary for organizing.
Technological factors of doing business
The analysis of the technological block allows you to see in a timely manner the opportunities that the development of science and technology opens up for the improvement of manufactured products and the modernization of the processes of their manufacture and marketing. The development of science and technology carries both enormous opportunities and equally serious threats to existing businesses.
Many organizations fail to see new perspectives that open up, since the technical potential for fundamentally new (fundamental) changes is mainly created outside the industry in which they operate. Having been late with the modernization or not having decided to implement fundamental changes, they lose their market share, which can lead to extremely negative consequences for them.
Tracking the process of technology development is important not only due to the fact that it is necessary to start using new technological advances on time, but also due to the fact that the organization must anticipate and predict the most appropriate moment to abandon the used (traditional for it) technology. This means that the process of studying the technological component of the macroenvironment should facilitate the selection of such solutions that allow not to be late with the start of the technological update and not to delay too long with the use of once advanced technology and with the production of sometime new product.
Legal regulations and restrictions
Studying the laws and other regulations that establish legal norms and the framework for business relations, gives the organization the opportunity to determine for itself the acceptable boundaries of action and acceptable methods of defending its interests.
It is very important to clarify the extent to which the legal norms are binding, as well as whether they apply to all organizations or there are exceptions to the rules, and finally, to understand how inevitable the application of sanctions to an organization in the event of a violation of legal norms on its part is.
Political factors of doing business
The key process of the political component of the macroenvironment is the struggle of social groups for power. Power, in turn, is associated with the regulation of how money is circulated.
Power, on the one hand, determines how access to money is carried out, and, on the other hand, how and in what amount money is alienated from organizations for state needs. Both of these processes are a source of both opportunities and threats to the functioning of the firm.
The political component of the macroenvironment should be studied first of all in order to have a clear idea of the intentions of state authorities in relation to the development of society and the means by which the state will implement its policy. Therefore, you can find new business opportunities if you know:
- what programs are trying to implement various party structures;
- what lobbying groups exist in government bodies;
- how the government relates to various sectors of the economy and regions of the country;
- what changes in legislation and legal regulation are possible as a result of the adoption of new laws and new rules governing economic processes.
At the same time, it is important to understand the basic characteristics of the political system: what ideology determines the government's policy, how stable it is, is it able to pursue its policy, what is the degree of public discontent and how strong the opposition political structures are.
General features of the study of individual factors
When studying various environmental factors, it is very important to always keep in mind the following two points.
First - it is that all the components of the macroenvironment strongly influence each other. Changes in one of the components necessarily lead to changes in other components of the macroenvironment a little earlier or a little later. Therefore, their study and analysis should be carried out systematically, with an understanding of how these changes will affect other components of the macroenvironment.
Second - it is that the degree of influence of individual components of the macroenvironment on different organizations is not the same. In particular, the degree of influence depends on the size of the organization, its industry affiliation, territorial location, etc. It is believed that large organizations are more dependent on the macroenvironment than small ones. To take this into account when studying the macroenvironment, an organization must determine for itself which of the external factors related to each of the components of the macroenvironment have the most significant impact on its activities.
In addition, the organization should compile a list of those external factors that are potential carriers of threats to it. It is also necessary to have a list of those external factors, changes in which may open up additional opportunities for the organization.
Environmental monitoring system
To study the trends in the macroenvironment, it is advisable to create a special system for monitoring changes in the external environment in the organization. This system should carry out both special observations associated with some special events, and regular (usually once every six months or a year) assessments of the state of external factors important for the organization.
Observations can be made in many different ways. The most common observation methods are:
- analysis of materials published in periodicals, books, other information publications;
- analysis of published normative documents;
- participation in professional conferences;
- study of the opinion of employees of the organization;
- holding meetings and discussions within the organization.
The study of the macroenvironment should not be limited to
a statement of the state in which it was previously or is now. It is important to uncover trends that are characteristic of changes in the state of certain important factors, and try to predict the direction and intensity of the development of these factors in order to foresee what threats may await the organization and what opportunities may open up for it in the future.
Analysis of the organization's business environment
The study of the immediate environment of the organization is aimed at analyzing the state of those components of the external environment with which the organization is in direct interaction.
At the same time, it is important to emphasize that an organization can, to a certain extent, adjust the nature and content of this interaction and thereby actively participate both in the formation of additional opportunities and in the prevention of threats to its further existence.
Organization's client base
The analysis of the aggregate of buyers and customers is primarily aimed at defining (clarifying) the profile of those who buy products or services sold by the organization. Studying the customer profile allows the organization to better understand what product will be perceived favorably by them, what sales volume the organization can expect, to what extent customers are committed (“loyal”) to the product of this particular organization, how much it is possible to expand the circle of potential customers, what the product expects in the future and much more.
A buyer (client) profile can be compiled according to the following characteristics (parameters):
- geographic location;
- demographic characteristics (age, education, field of activity, etc.);
- socio-psychological characteristics (position in society, style of behavior, tastes, habits, etc.);
- the attitude of the buyer to the product (why he buys this product, whether he is a user of the product himself, how he evaluates the product, etc.).
By studying the profile of buyers, the firm also understands for itself how strong their positions are in relation to it in the process of bargaining (in other words, what is their "market power"). If, for example, the buyer has a limited opportunity to choose the seller of the goods he needs, then his ability to bargain is significantly lower. If, on the contrary, the seller should strive to create conditions that would leave the buyer less freedom in choosing the seller.
Factors of interest include:
- the volume of purchases made by the buyer;
- level of customer awareness;
- availability of replacement products;
- cost for a buyer to switch to another seller;
- the sensitivity of the buyer to the price, depending on the total cost of purchases made by him, on his orientation towards a certain brand, on the presence of certain requirements for the quality of the goods and the amount of his income.
At the same time, it is important to pay attention to who pays, who makes the purchase decision and who consumes, since it is not necessary that all three functions are combined by one and the same person.
Supplier relationships
The analysis of suppliers is aimed at identifying the determining factors in the activities of the entities supplying the organization with various raw materials, semi-finished products, energy and information resources, finance, etc., on which both the stability of the organization itself and the cost and quality of the product produced by the organization depend.
Suppliers of materials and components, if they have the ability to coordinate their actions, can make the organization very dependent on themselves. Therefore, when choosing suppliers, it is important to build a relationship with them that would ensure the organization has a minimum of dependence on its traditional suppliers.
The "competitive strength" of a supplier depends on the following factors:
- the level of differentiation of goods and services of the supplier;
- the value of the cost of switching for the supplier to other customers;
- the degree of the buyer's dependence on the purchase of certain resources;
- the supplier's focus on working with specific customers;
- the importance for the supplier of maintaining sales to a specific customer.
When studying the degree of dependence of an organization on suppliers of materials and components, first of all, attention should be paid to the following characteristics of their activities:
- the cost of the supplied goods;
- quality assurance of the supplied goods;
- fulfillment of the goods delivery schedule;
- punctuality and obligation to comply with other terms of delivery of goods.
- Enterprise competitive environment
Study of competitors, i.e. those with whom the organization has to fight for the buyer and for the resources that it seeks to obtain from the external environment, has the goal of identifying the strengths and weaknesses of competitors and, taking this into account, build its strategy of competing against them.
In any branch of the economy, the intensity and severity of competition is determined (according to M. Porter) by five forces:
- ? the threat of the emergence of new competitors;
- ? the threat of the emergence of substitute goods;
- ? bargaining power of component suppliers;
- ? the ability of buyers to bargain;
- ? the rivalry of existing competitors among themselves. Market potential and its attractiveness for the manufacturer
determined by the interaction of these forces. Their interaction is described in the so-called "Porter's model".
The emergence of new competitors is a threat that a firm operating in the market must seek for itself reduce, creating the so-called ENTRANCE BARRIERS.
Barriers to entry usually mean various kinds of restrictions (including those created artificially) for the emergence of new potential competitors on the market, determined by:
- ? By the power of the brand those. the degree of customer loyalty to a brand already offered on the market;
- ? The scale of production, in which the activity in the given market becomes profitable;
- ? Capital requirements to master production and conduct an advertising campaign;
- ? Legal protection(patents, licenses);
- ? Access to distribution networks etc.
Who might be potential competitors? First of all, these are firms that operate outside the considered market, but which can easily overcome entry barriers, as well as:
- ? firms for which entering a new market will give a SYNERGIC EFFECT;
- ? firms for which this is a logical development of their strategy;
- ? customers or suppliers who, in order to strengthen their positions in other markets, can carry out integration "forward" or "backward" (ie, "absorb" raw material suppliers or sales structures necessary for them).
The competitive environment is formed not only by intra-industry competitors that manufacture similar products and sell them in the same market. The subjects of the competitive environment are those firms that, in principle, can enter the target market for the organization, as well as those that produce a substitute product (satisfying the same needs, but in a different way).
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How much competition is felt in our business and how can it develop in the future? |
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The threat of the emergence of new competitors
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Threat of the appearance of substitute goods The word "substitutes" means goods that satisfy the same basic needs, but in different ways The question is: How difficult or expensive can it be for consumers to switch to substitute products, and to what extent does the availability of a substitute “set” the price ceiling in the industry? |
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Sources of "strength" of the client
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Sources of "strength" for suppliers
with a higher added value and will stop selling the semi-finished product |
The actions of manufacturers of mixing products can turn into a very big danger, and primarily because the processes of creating such products are most often outside the scope of traditional attention. Substitute products, as it were, perform the same functions for the same group of consumers, but are based at the same time on other technologies that are not typical for this industry and may even initially be developed for completely different markets. They pose a constant threat, especially if advances in technology can make them more profitable or cheaper to use.
It is also important to note that the threats of the emergence of substitute goods are not always obvious. They can appear in industries that are very far from traditional. Therefore, it is necessary to develop a system for tracking those technological advances that can lead to the emergence of substitute goods, and through this radically change the situation in a particular industry. The emergence of a substitute can simply destroy the market for a traditional product.
Therefore, in order to be able to adequately meet the challenge from firms producing a replacement product, the organization must have either sufficient potential to move to the creation of a product of a fundamentally new type, or "alternate airfields" in other markets.
In some cases, buyers also have certain opportunities to influence their suppliers:
- ? when they unite in group, making a large volume of purchases;
- ? when purchases seriously affect the level of the client's own costs;
- ? when goods are poorly "differentiated" and can be bought from other suppliers;
- ? when the costs associated with changing suppliers are insignificant for the client;
- ? when customers are well informed about demand, real prices and supplier costs.
Suppliers also have the opportunity to seek better terms from their customers and even influence the profitability of their production if the latter cannot compensate for the increased costs due to the actions of suppliers by increasing prices. The problems here are about the same as those discussed in relation to the possibilities of influence from the side of clients.
Many firms do not pay enough attention to the possible threat from the "players" who have come back to their market, and therefore they often lose in the competition to them. It is very important to remember this and to form barriers of entry on the way of potential "aliens" in advance.
Such barriers can be:
- in-depth specialization in the production of a product;
- availability of patent and license restrictions;
- low costs due to economies of scale of production;
- control over distribution channels;
- the use of local peculiarities that give an advantage in competition, etc.
It is very important to know well what barriers can really prevent a potential competitor from entering the market, and try to "build" these particular barriers.
