Strategic

Analysis and Decision-Making

CHALLENGES
IN THE
EXTERNAL &
INTERNAL
ENVIRONMENT
PROF. AL D. PASTELERO

REFERENCE:
DIANNE APRIL M. MIRANDA, MBA
E
E
X N
T V
I
E R
O
R N
M
N E
N
A T
L
Strategic Analysis and Decision-Making
Components of external scanning that could be considered include: TCTCELP
Trends: What trends are occurring in the marketplace or industry that could
affect the organization either positively or negatively?
Competition: What is your competition doing that provides them an
advantage? Where can you exploit your competition's weaknesses?
Technology: What developments in technology may impact your business in
the future? Are there new technologies that can make your organization
more efficient?
Customers: How is your customer base changing? What is impacting your
ability to provide top-notch customer service?
Economy: What is happening in the economy that could affect future
business?
Labor supply: What is the labor market like in the geographies where you
PROF. AL D. PASTELERO
operate? How can you ensure ready access to high-demand workers?
Political/legislative arena: What impact will election outcomes have on your
business? Is there impending legislation that will affect your operations?
According to Aguilar (1967), there are
4 ways of environmental scanning:
FORCES IN THE EXTERNAL ENVIRONMENT
Environmental
responsibility is
the urgent call
of the global
neighborhood.
Ecological
damage is
happening
everywhere.
LEGAL FORCES:
Forces in the
marketing LEGAL FORCES include:
environment that are
• government policy
shaped by government
• political stability or instability
laws affecting
• corruption
business. These are
very similar to political • foreign trade policy
forces. Once laws are • tax policy
enacted they are • labor law
usually very difficult to • environmental law
change. • trade restrictions.
I
E
N N
T V
I
E R
O
R N
M
N E
N
A T
L
 1. Government:
I BUSINESS CARETAKER
E
N N
T V
I
E R
O
R N
M
N E
N
A T
L
 Government:
I BUSINESS CARETAKER
E
N N
T V
I
E R
O
R N
M
N E
N
A T
A monopoly is when a single company produces goods with no close
substitute, while an oligopoly is when a small number of relatively large

L
companies produce similar, but slightly different goods. In both cases,
significant barriers to entry prevent other enterprises from competing.
 2. CULTURE:
I A COMMUNIAL CONVERGENCE
E
N N
T V
I
E R
O
R N
M
N E
N
A T
L
 CULTURE:
I A COMMUNIAL CONVERGENCE
E
N N
T V
I
FILIPINO CULTURE:
E R
O
R N
M
N E
N
A T
L
3. STAKEHOLDERS:
THE BUSINESS INVESTORS
STAKEHOLDERS:
THE BUSINESS INVESTORS
4. COMPETITORS:
BUSINESS THREATS
 Categories of
COMPETITORS
1. Same Products – companies who sell exactly the
same products or offer the same services.
 Categories of
COMPETITORS
2. Similar Products – companies who sell similar
products.
 Categories of
COMPETITORS
3. Substitute Products-
are products that are similar enough
that one can be used in place of
other products.
 Categories of
COMPETITORS
4. Different Products
5. CUSTOMER: THE BUSINESS CHALLENGES
CUSTOMER: THE BUSINESS CHALLENGES

Changes in Consumer Behavior

CUSTOMER: THE BUSINESS CHALLENGES
CUSTOMER: THE BUSINESS CHALLENGES
6. SUPPLIER: THE BUSINESS PARTNERS
7. COMUNITY: THE BUSINESS CONCERN
PORTER’S 5 FORCES MODEL
Michael Porter - founder of the modern strategy field and one of the world’s most
influential thinkers on management and competitiveness.
1. Rivalry among existing Competitors- is a measure of the extent of competition among existing
firms. Intense rivalry can limit profits and lead to competitive moves, including price cutting,
increased advertising expenditures, or spending on service/product improvements and innovation.
2. Bargaining power of Suppliers- is the mirror image of the bargaining power of buyers and refers to
the pressure that suppliers can put on companies by raising their prices, lowering their quality, or
reducing the availability of their products.
3. Threat of Substitute Products- Companies are concerned that substitute products or services may
displace their own. the threat of substitution is high when rivals, or companies outside the
industry, offer more attractive and/or lower cost products.
4. Bargaining power of Buyers- refers to the pressure that customer/consumers can put on businesses
to get them to provide higher quality products, better customer service, and/or lower prices.
5. Threat of New Entrants- refers to the threat that new competitors pose to current players within an
industry. It is one of the forces that shape the competitive landscape of an industry, and it helps
determine the attractiveness of the industry.
THANK YOU!