1. Explain how to conduct an external strategic-management audit.

Having external strategic management audit helps a company identify problem areas and
make solutions when strategic approaches are not effective. It can show where a change
has happened and where strategic management no longer matches the demands of the
marketplace. Furthermore, as explained by David et al., “The purpose of an external audit
is to develop a finite list of opportunities that could benefit a firm as well as threats that
should be avoided”.
External forces can be broken down into five types: economic, social, political,
technological, and competitive. For the sake of performing an external audit, research
must be done to obtain information pertaining to all five types of external forces. Media
outlets can be monitored for change such as magazines, and journals, after which periodic
reports can be constructed, to observe the market for changes in trends. After all the
information is gathered, several meetings should take place among all managers to decide
which topics are of the utmost importance, and therefore which factors require immediate
attention. Lastly, is creating a list and giving priority to those that are more immediate is
quite necessary and helpful when it comes to making difficult decisions regarding the
allocation of resources. However, each company is different and may have different ways
of executing an external audit. According to Lillis and Szwejczewski, “companies use a
variety of integration techniques to verify on‐going cohesion across infrastructural
decision‐making categories of the content of service operations strategy”.

2. Discuss Michael Porter's Industry Framework.

Porter's Five Forces is a simple yet powerful tool for understanding the competitiveness
of one’s business environment, and for identifying strategy's potential profitability.
In here, one will be able to understand the forces within the environment or industry that
can affect the profitability and to be able to adjust company’s strategy accordingly. Also,
it can be of help in analyzing the strengths and weaknesses of one’s position, and how
they can impact the company’s long-term profitability For example, one could take fair
advantage of a strong position or improve a weak one, and avoid taking wrong steps in
future.
Porter's Five Forces
This tool was created by Harvard Business School professor Michael Porter in 1979, to
analyze an industry's attractiveness and likely profitability. Since then, Porter’s 5 Forces
has become one of the most popular and highly regarded business strategy tools.
Porter recognized that organizations likely keep a close watch on their rivals, but he
encouraged them to look beyond the actions of their competitors and examine what other
factors could impact the business environment. He identified five forces that make up the
competitive environment, and which can erode your profitability. These are:
1. Competitive Rivalry. This looks at the number and strength of your competitors. How
many rivals do you have? Who are they, and how does the quality of their products and
services compare with yours?
Where rivalry is intense, companies can attract customers with aggressive price cuts and
high-impact marketing campaigns. Also, in markets with lots of rivals, your suppliers and
buyers can go elsewhere if they feel that they're not getting a good deal from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing what you
do, then you'll likely have tremendous strength and healthy profits.
2. Supplier Power. This is determined by how easy it is for your suppliers to increase their
prices. How many potential suppliers do you have? How unique is the product or service
that they provide, and how expensive would it be to switch from one supplier to another?
The more you have to choose from, the easier it will be to switch to a cheaper alternative. But
the fewer suppliers there are, and the more you need their help, the stronger their position and
their ability to charge you more. That can impact your profit.
3. Buyer Power. Here, you ask yourself how easy it is for buyers to drive your prices down.
How many buyers are there, and how big are their orders? How much would it cost them
to switch from your products and services to those of a rival? Are your buyers strong
enough to dictate terms to you?
When you deal with only a few savvy customers, they have more power, but your power
increases if you have many customers.
4. Threat of Substitution. This refers to the likelihood of your customers finding a
different way of doing what you do. For example, if you supply a unique software
product that automates an important process, people may substitute it by doing the
process manually or by outsourcing it. A substitution that is easy and cheap to make can
weaken your position and threaten your profitability.
5. Threat of New Entry. Your position can be affected by people's ability to enter your
market. So, think about how easily this could be done. How easy is it to get a foothold in
your industry or market? How much would it cost, and how tightly is your sector
regulated?
This shows how easy or difficult it is for competing firms to enter the market. It is
determined by the barriers of entry such as high-cost requirements, access to supplies or even
having a strong branding. The harder it is for competitors to enter the market, the more
market power an existing firm has. This will allow them to set higher prices and bargain for
lower costs with their suppliers.
If it takes little money and effort to enter your market and compete effectively, or if you have
little protection for your key technologies, then rivals can quickly enter your market and
weaken your position. If you have strong and durable barriers to entry, then you can preserve
a favorable position and take fair advantage of it.
3. Identify a recent economic, social, political, or technological trend [at least two fators]
that significantly affects [your choice of company/industry].

‘Amang’ Rodriguez Memorial Medical Center (ARMMC)

The COVID-19 pandemic has significantly affected the healthcare system of the country,
more so to the government-run hospitals. ARMMC is a Department of Health Hospital
located in Marikina City. The hospital provides affordable healthcare as well as “free
healthcare” to indigent patients. However, when COVID-19 came all resources were diverted
to focus on attending patients afflicted with the virus including mitigations to protect its
personnel. The following are the external factors that has affected ARMMC:
 Economic – This pandemic has severely impacted the country’s economy with millions
of Filipinos unemployed that’s why more Filipinos are going to rely on the government’s
help especially healthcare. When the lockdown was lifted back in June, a considerable
spike of the numbers infected/affected Filipinos were recorded which overwhelmed our
healthcare system that’s why the “timeout” was called by the health practitioners. This
lead to the county’s second lockdown but not as severe as before. The effect may have
helped the healthcare system recover and replenish its diminishing ranks however this has
pushed the country to further economic difficulty. If we can’t flatten the curve then this
will be a vicious cycle which could lead to further economic recession.
 Political – The COVID-19 has become a bandwagon for politicians who wants to score
“political points”. The local government of Marikina has heavily influenced the
hospital’s administration to make the hospital a COVID center despite its lack of
capability. Meaning we lack the resources like quality personal protective equipment,
ventilators, hemoperfusion machine, testing capability, laboratory capability etc. This
approach has led to most (more than 60%) of the frontline workers either on quarantine
or admitted due to the virus. This has crippled the hospital workforce which ultimately
led to transferring our patients to other hospitals. After the second government imposed
MCQ, the hospital suspended admissions unless its life or death situation for another 2
weeks. This political incursion into our realm has consequences (like death of healthcare
worker) that simply incalculable.
 Social – The COVID-19 stigma is a well-documented effect of this pandemic. The virus
is so contagious with high mortality rate that it creates fear among the society. The people
who are infected are either shunned by their family members or the community or even
loose a job. Because of fear of being discriminated against, some opted to not get tested
which again contributes to the spread of disease. Which leads to further financial burden
of every household then the whole country. Another thing, I mentioned above that some
would take advantage of this effect. Like politicians trying to score political points. Since
COVID-19 is in every airwave (radio, television, social media platforms) some
politicians would project to be compassionate just to get an interview without thinking of
contingency plans. All wanted to be in the COVID-19 bandwagon that they forget there
non-COVID patients that equally needs attention from the healthcare workers. This is the
 sad reality of the government hospital culture nowadays. Because all the resources are
diverted to COVID patients, patients with other ailments like cancer patients are left to
fend for themselves with no hospital to take care of them unless they have money to seek
private consult. I had a patient who had operable cancer of the maxillary sinus way back
in March. When the lockdown came, she has no choice but to stay at home and wait. Our
operating room is closed and would not accept cases unless its emergency. She may opt
to go to other hospital however there is no transportation. Imagine the difficulty of these
patients. Time is valuable for cancer patients. If it is not addressed then the operable
tumor may now be inoperable which is a death sentence to the patient. They’d rather
have COVID so they can be entertained in the hospital.

4. Identify two industries experiencing rapid technological changes and two industries
that are experiencing little technological change.  How does the need for
technological forecasting differ in these industries?  Why?
Example of industries experiencing rapid technological change are retail and travel
industry. In retail, ecommerce had made possible for retailers to customize shopping
experiences and deliver more meaningful information and offers to individual customers.
While for the travel industry, there’s an evolving system that prioritizes convenience,
speed and specialization. One of the major trends here is a move toward mobile-first.
From finding and reserving airline flights on your phone, to actually using that same
device as your boarding pass, to apps that prompts you if its boarding time already.
There’s a lot that’s actually going on in the travel industry. AirBnB has been the
mainstream for personalization of accommodation, while technology is being developed
for a paperless passport etc. The possibilities in the travel industry is endless.

Example of industries experiencing little technological change are the Newspapers and
libraries. Newspapers have seen their circulation numbers decline steadily, replaced by
online media and blogs. Increasingly, computer software is actually writing news stories,
especially local news and sporting event results. Libraries and librarians are moving
online. References like Wikipedia have replaced the multi-volume encyclopedia.
Librarians used to help people find information and conduct research, but nowadays it
can be done individually over the internet with sites like google scholar, OVID, PubMed,
Academia etc.

We are in the era of digital age and the newspapers and libraries are casualties of what we
call “creative destruction”. The term was coined by Austrian economist Joseph
Schumpeter which means technological progress improves the lives of many, but only at
the expense of a smaller few. It’s not actually having a faulty forecasting system that’s at
fault in these industries, it’s just that it’s time has come or coming to an end just like
horse drawn carriage as it was replaced by automobiles.

5. Construct an External Factor Evaluation Matrix (hypothetical) for an organization

of your choice.  Assign corresponding weight and rating accordingly. 
 External Factor Evaluation Matrix for Netflix

Netflix EFE Matrix

Key External Factors Weight Ratin Weighted

g Score

Strengths

1. On demand and instant gratification for 0.2 4 0.8

consumers streaming video

2. Library of movie and television titles that pay TV 0.1 4 0.4

cannot offer

3. Multiple Marketing Channels 0.05 3 0.15

4. Proprietary Technology 0.1 4 0.4

5. Market Segmentation 0.05 3 0.15

Weaknesses

1. 10 year restriction on access to content of movie and 0.1 1 0.1

television titles

2. Cost of pursuing current-season TV shows 0.1 2 0.2

3. Brand Recognition 0.1 1 0.1

4. Not a top-ten provider of internet video content 0.1 1 0.10

5. Minimal industry entry barriers 0.1 2 0.2

TOTAL 1 2.6
On demand and instant gratification for consumers streaming video is a major strength and
weighted very high at 0.2. With today’s technology advancements consumers want content as
soon as they demand it, and Netflix provides the best service for customers to utilize in the
industry.
Netflix has a library of movies and television shows that pay TV cannot offer.
Netflix has Multiple Marketing Channels. Netflix is invested in its partnerships, making this an
external strength weighted at 0.05 and rated as a minor strength. Instead of using traditional
marketing channels, Netflix has used agreements with studio where Netflix receives cash for
featuring studios’ movies in their promotions. Because of its great customer referral rating, word
of mouth is a marketing channel that is successful for Netflix.
Proprietary Technology is weighted at 0.1 and is rated as a major strength. Again, have a patent
on its technology provides subscribers a better experience from beginning to end making Netflix
unlike anyone else in the industry.
The strength of Market Segmentation is weighted at 0.05 and a minor strength. Because Netflix
has been able to diversify its market segmentation domestically and internationally it becomes a
strength it can continue to build on.
An external weakness is the 10 year restriction on access to content of movie and television
titles. The industry also has contracts that limit some of the movie and television show selection
that Netflix will be able to obtain. This may be a detriment to the company, limiting options for
subscribers. The weight of this weakness is high at 0.1 and rated as a major weakness.
The Cost of pursuing current-season TV shows is a weakness. Netflix is currently paying for
right for current-season shows at approximately $100,000 per episode. The company has to have
the cash on hand to make the purchase and with current contracts expiring with Disney and
Sony, the company may need to reserve cash until the contract is renewed. The weakness is
weighted heavy at 0.1 and is a minor weakness.
Recognizing Brand Recognition as an external weakness is important. Amazon, a major
competitor to Netflix has excellent brand recognition and provides the same services, consumers
in this industry are likely to go with the brand it recognizes. This weakness is weighted at 0.1 and
rated as a major weakness. Without brand recognition the company could lose consumers before
they even utilize its services, leaving customers at the door.
Netflix is not a top ten provider of internet video content. This weakness, weighted at 0.1 and is
considered a major weakness. Competitors are finding other ways to deliver content without the
subscription putting Netflix at risk of losing market share to its competitors because of limited
ways to deliver their product and services.
Minimal Industry Barriers of entry are a minor weakness and weighted at 0.1. The market could
become saturated with startup companies in video on demand industry. This may raise
competition and give consumers the opportunity to receive the benefits of a highly competitive
market.