Good day!

Please stand up for our opening prayer…

(Our Father)

Thank you. Again shinning, shimmering and splendid day to all of you, I’m Mary Elisha Pineda,
I’m Rencel Dela Buenco and I’m Geomalyn Garcia and we will discuss the Chapter 3 in
Strategic Management titled The Evaluating a Company’s External Environment.

Before tayo magsimula, we are expecting kasi na may chance na maiinip kayo during our
discussion, so we came up with the solution na magpapa-games kami everytime na may
matapos na magsalita sa amin. This is called Pass the Cabbage. Bali ito yung cabbage,
paper lang to na pinagpatung-patong and these paper contains questions and choices. We will
play some a mkusic and you will pass the cabbage sa katabi or if sa dilo ka sa likod and if
pabalik naman, ipapasa mo sa taong nasa harap mo. When the music stops, kung sino man
ang may hawak sa cabbage he/she must take off a layer. He/she will read the question and
answer it.

I think nagets naman yung mechanics? So let’s start…

LEARNING OBJECTIVES

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INTRODUCTION

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As a manager, ikaw yung may responsibilidad sa pagpapatakbo ng company, as in ikaw talaga

ang maraming gagawin, from guiding your employees na hina-handle mo hanggang sa
pagrereport sa boss mo. At hindi lang yon, what if ayaw ng boss mo yung performance ng
company, bali ikaw din ang mag-iisip ng paraan para ma-improve yung performance. Kung
iisipin mo nga naman, isa kang manager pero hindi mo alam kung ano ang nangyayari sa
company na hawak mo, especially yung background and current status nito, hindi ka talaga
makakagawa ng maayos sa decision for those problems na kinakaharap ng company and para
sa ikauunlad or ikalalaki ng company ninyo.

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(1) Sa isang organization, they must know kung sino ba ang kalaban nila. We know that
having new competitors, isang threats yon for the company. But, thinking in a positive
way, they must turn these threats into strengths like product differentiation. Alam naman
natin na mas gaganda ang takbo or operation ng company kung unique yung mga
products natin.

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 (2) Sabi nga nila, kung gusto mong matalo ang kalaban mo dapat alamin mo ang
weaknesses nila. For example, may furniture business ka pero may katapat ka din na
nagtitinda ng furniture. Syempre hindi mo naman gusto na may karibal ka na mga
customers. So ngayon, mag-iisip ka ng paraan para mahigitan mo pa siya. Madami
kang pakulo na gagawin like magpapapromo ka or discounts, also maybe pwedi mo din
baguhin or improve yung mga materials ng mga furniture mo but in a reasonable price
pa rin of course. In that case, ikaw yung tatangkilikin ng mga tao.

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Ang isang manager, in planning for the best strategies na gagamitin nila for them to have a
better operations, dapat alam niya muna yung mga factors that affects ng company internally
and externally. And mamaya is papakita namin yung figure 3.1 and explain na din para mas
mahintindihan pa kung anu-ano ba ang mga bagay na dapat iconsider ng isang manager in
thinking and choosing effective strategies.

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But before that, let’s have a quick view about Understanding the Factors that Determine a
Company’s Situation…

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When we say macro means big or overall environment. It includes all factors and influences
outside the company's boundaries.

 Kung paano mo binabantayan yung mga karibal mo sa business. Nakakaangat kaba sa

kanila or hindi.
 Environmental forces are the factors in the business' environment that influence its
operations. Katulad nalang ng consumer income and the education of the labor force.

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Then, kapag sinabi naman na micro, ibig sabihin ay maliit.

 Kapag sinabi naman na market position, ito yung paano mo ma-eestablish yung image
ng product mo in customer’s mind. Kasama din dito yung 4Ps na alam natin which are
the product, price, place and promotion. I kind of influencing the people to buy your
products or services.

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Fig. 3.1: From Thinking Strategically about the Company’s Situation to Choosing a
Strategy

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For example:

The business is about cosmetics. Alam natin na sobrang daming nagtitinda or nagpoproduce
ng mga make-ups ngayon but You (Manager) and your team want to have more sales. So first
thing that you need to look are the external and internal environment ng company.

For the external, you agreed ng team mo: “Oh, since may budget pa yung company, kailangan
na nating palitan yung mga computers natin dahil sobrang luma na.” Nalaman mo na kaya
pala mas dumadami yung sales ng competitors mo dahil updated yung technology and
systems na ginagamit nila and advantage yon sa kanila in terms of promoting their products.
So syempre kayo dapat mas updated din yung technology niyo hindi lang sa pakikisabay but
also to have more customers. Then, for internal naman, you came up with the plan na: “What if
magkakaroon tayo ng employee for the year?” So in that case, mas mamomotivate yung mga
employees mo na magtrabaho ng maayos dahil doon sa reward na yon. And doon naman
nagkakaroon ng competiton within your company.
Actually marami pang mga strategies na pwedi sa internal and external ng environment and
since we will only focus sa external sa chapter na to. Later matatackle din natin kung anu-ano
nga ba yung macro-environment na to.

Anyways, balik tayo sa figure. So, if may mga strategies that may change or improve your
company’s external and internal environment, you can have these three criteria of a winning
strategy which you can form a strategic vision of where the company needs to head. Also, you
can identify promising strategic options for the company. Lastly, you can select the best
strategy and business model for the company.

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Then, we have Figure 3.2: The components of a company’s Macro-environment.
Sa Macro-environment, we have:
1. General Economic Conditions. Dito nakapaloob yung GDP growth potential, the
unemployment rate, inflation, and fiscal and monetary policy orientations. So bakit
dapat alam ng company to? Based on my research, an improvement in economic
conditions would lead investors to be more optimistic about the future and potentially
invest more as they expect positive returns. So it means na kapag marami mag-iinvest
sa company mo, gaganda pa and financial status nito especially in supporting the
production of your goods.
2. Legislation and regulations. Importanti din na ito dahil dito nakasaad ang mga batas
na dapat sundan specifically sa pagbubusiness. It describes requirements and can
include punishments for breaking the law. For example, you have a factory or
pagawaan ng mga sigarilyo, in this case may requirements ka naman for government
but may mga patakaran ka pa rin na dapat sundin especially bawal na malapit and
planta mo sa school and if you broke that condition, pweding patigilin ang operation or
worse makukulong ka.
3. Then, we have population demographics. The more na dumadami ang bilang ng mga
tao dito sa mundo, mas maraming chance na magkaroon ka din ng mataas na sales.
4. For the societal values and lifestyles, externally, imporatanti din na malaman ito. For
example, meron kang business sa middle east, sabihin na nating restaurant. But, you
are planning to make a dish na included yung baboy sa mga ingredients. You think
papayagan ka na magbenta doon? Of course not, because bawal doon yung pork and
 kasama na doon sa paniniwala and lifestyle ng mga taga roon ang hindi pagkain ng
baboy.
5. Lastly, technology, these days technology plays a big role in our society. Tinutulungan
nito ang mga business na mas mapadali and trabaho nila and gaya nga ng example ko
kanina. Maganda na may latest gadgets and updated system ang isang company in
terms of promoting their products.

In addition, dito naman tayo sa Immediate Industry and Competitve Environment:

1. Suppliers – Sa business hindi lang sa mga customer ka magkakaroon ng competition
but also sa suppliers. For example, may restaurant ka and vegan food yung niluluto
niyo. May pinagkukuhanan kang mga fruits and vegetables sa isang sikat na farm and
suki ka na niya talaga pero nagbebenta rin siya ng mga supplies niya sa ibang vegan
restaurant owner. Then dumating yung tagtuyo and nasira yung tanim niya kaya konti
nalang yung mga nabenta niya. In this case dapat maunahan mo na yung mga
competitors mo to buy those supplies and what if yung mga tanim pala niya yung
dahilan talaga kung bakit masarap yung binebenta mo dba?
2. Substitute Products – Dito naman, kapag substitution product hindi ibig sabihin na
same product. For example sa bigas, nagtitinda ako ng bigas pero nawalan na ako ng
stock, then may stock si rencel which is my competitors and doon bumili yung dapat na
customer ko. Hindi yon product substitution. So ganito siya, kapag wala akong bigas
and hindi makakain ng kanin yung customer ko and naisip niya na bibili nalang siya ng
tinapay. And that is product substitution. Kung walang kanin, magtinapay nalang.
 Parang sa relasyon lang yan. If si girl is hindi available kasi may school works siya,
gagawin ba ni boy is mage-entertain siyang iba babae? No, so bali gagawin ni boy it’s
either maggagames siya or matutulog nalang ganern.
3. Buyers – Alam na natin to in terms of pag-aagawan ng mga customers.
4. New Entrants – May bagong pasok na business na same sa industry mo. May chance
na kumonti yung bibili sayo or bababa yung sales mo.
5. Rival Firms – If malaki or sikat ang business mo mas marami ang bibili sayo but kung
maliit lang ang company mo, may chance na konti yung bibili sayo but if you and your
team found a solid and efficient strategy malaki talaga ang chance na lalaki din yung
business mo.

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Thinking Strategically about a Company’s Macro-environment

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 Direction – In terms of pagpapatakbo ng isang company, hindi naman agad-agad

kikilos, dapat mga directions din na dapat sundan para hindi magkaroon ng conflict ang
bawat isa.

 Objectives – Ano ba talaga ang gustong marating or ma-achieve ng company mo in a

particualar situation.

 Strategy – You must have a unique and effective strategy para mas mapadali ang work
ng bawat isa for reaching your goal.

 Business model – This provides information about an organization's target market.

Panigurado na kapag ang isang company ay may business model mas tataas yung
sales nila because having this model, kasi para summary na nila to from producing their
product haanggang sa pagbebenta nito.

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To gain a deep understanding of a company’s industry and competitive environment, hindi na
kailangan pa ng manager na i-gather lahat yung mga information dahil napakaraming oras na
kakailanganin for this matter. So we have these Key Questions Regarding the Industry and
Competitive Environment:

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Analysis-based answers to these questions provide managers with the understanding needed
upang makagawa ng isang diskarte na naka-rely sa outside situation ng company.

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Why do companies analyze their industry's dominant economic characteristics?

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First Question is about What are the Industry’s Dominant Economic Traits?

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What to consider in identifying industry's dominant economic features?

1. Market size and growth rate - Market size is an indicator of the potential for any new
business, product or service. In this case kasi, kung lumalaki ang market, mas
dumadami ang customers mo dahil mas maraming mga tao ang magkakaroon ng
needs or wants sa market place.
It answers the questions:

2. Number of Rivals – importante na malaman mo kung ilan ba kayong maglalaban-

laban sa business. The more competitors, the more na kumokonti and benta mo unless
you know on how to encourage more customers for them to buy your products.
It answers the questions:
 3. Scope and Competitive Rivalry – actually may advantage din naman ang
pagkakaroon ng competitors because mas magpupursige ang mga members ng
company in doing their works. Besides, it can improve the competencies your
organizations.
It answers the questions:

4. Buyer needs and requirements – The seller that best understands buyer needs is
more likely to win the business. Dapat din natin iconsider yung expectations nila sa
products or services ng company.

5. Degree of product differentiation – Umaangat ang isang business kung ang product
niya ay unique sa mata ng mga consumers. And in this case, kung kayo lang ang
meron ng product na ito, walang choice and mga tao na bumili lang sa inyo.
It answers the questions:

6. Product Innovation - helps companies stay relevant in their market and continue
growing and improving over time. For example yung apple, sobrang unique ng mga
products ng apple compared sa mga android. Like, iPhones run on a closed-source
operating system, iOS, while Android operating systems are open-source. And iOS
devices are faster and smoother than most Android phones at comparable price
ranges. So for me, mas pipiliin ko talaga yung iPhone.
It answers the questions:
 7. Supply/Demand Conditions - Supply and demand have an important relationship
because together they determine the prices and quantities of most goods and services
available in a given market. Diba kapag mas mataas yung demand kaysa sa supply
doon magkakaroon ng shortage and surplus naman kapag mas mataas yung supply sa
demand. For example, in external concept, sa furniture business nalang ulit kanina,
nagkulang sa supply ng kahoy as your raw materials, in that case maaapektuhan talaga
ang business mo at hindi ka din makakagawa ng sapat na furniture for you customers.
It answers the questions:

8. Pace of technological change - Technological change brings efficiency into

production processes and labor performance.
It answers the questions:

9. Vertical integration – It is where two businesses at different stages of the supply chain
join together. Example nalang nito yung Amazon, dito ay hindi lang siya marketplace for
seller and buyer but also nagbebenta rin siya ng products and services. Advantage ito
sa ibang online selling website kasi all of their needs is napoprovide na amazon not sa
ibang bansa kundi worldwide na din.
It answers the questions:
 10. Economies of scale – Ito yung pag-reduce ng cost in terms of increase of productions.
For example, bulk purchasing. By buying a large number of products at once, pweding
kang humingi ng discounts sa supplier mo and in that case mas makakatipid ka for
producing your products or providing your services. Advantage din to sa mga
consumers mo kasi mas mura mo nalang maibebenta yung products mo.
It answers the questions:

11. Learning and experience curve effects - The learning curve identifies how quickly a
task can be performe. For example, based on my experience, I am a Girl Scout kasi
nung jhs ako. First time kong magcamping and hindi ako marunong magconstruct ng
tent but because of manual na kasama doon sa tent na binili namin, nalaman ko yung
pagbuild nito but it took me an hour para matapos ko yon. Since marami kaming
camping activities na sinasalihan noon, nasasanay nakong magbuild ng tent and mas
mabilis ko na din itong naitatatyo. So para ding sa production yan, kung ang company
is may new product na gagawi, syempre mabagal muna silang makagawa dahil first
nilang magmanufacture non eh pero bawat tumatagal nasasanay na sila, mas magiging
less nalang yung time to product and that can also lessen the gagastusin ng company.
It answers the questions:

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For the Question 3: What Factors Are Driving Industry Change and What Impacts
Will They Have?

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Ano ba itong driving forces? It is someone or something that has the power to make things
happen. But in terms of external environment, walang control ang organization dito. Kagaya
nalang ng customer preferences, especially the millennials, kung ano yung uso yun ang
susundin nila and dapat your company is nakikisabay din sa uso for you to increase you sales.
For example, based on my own experience, nauso yung tote bag, so nagbenta din ako ng
totebags and hindi na ako na-shock kung bakit nabenta silang lahat. Also in terms of supplier
instability, kung mahina yung production ng supplier, maapektuhan yung company mo such as
yung example ko kanina na nagtitinda ka ng Vegan Food. And with that wala tayong control
dahil external factor siya.

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For Example nalang in terms of technology, dati people communicate gamit yung pagsusulat
ng letter and syempre isesend ito sa letter box. After days or months doon palang marereceive
ni receiver. But new technology came, and gumagamit na ng telephone. Then after came the
mobile phone we dial a number and communicate with each other by the voice. For example,
Nokia mobile phone company nag-launch ng bagong model na may camera and video
recorder. So, competitors of Nokia mobile phone company also apply camera and video
recorder in the mobile. Kung hindi nila gagayahin si nokia, then customers attract only for
Nokia phone. So, all mobile phone company follow this technology and they become a
competitor to the each other.

For more information, Driving-forces analysis has three steps:

1. identifying what the driving forces are;
2. assessing whether the drivers of change are, on the whole, acting to make the
industry more or less attractive; and
3. determining what strategy changes are needed to prepare for the impacts of the driving
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Moving on to Table 3.2 which are The Most Common Driving Forces
1. Changes in the long-term industry growth rate. For example nalang before
pandemic, diba malakas yung sales ng bawat business, but nung may pandemic
maraming business yung nagsara and sadly bumaba yung industry growth rate ng
bawat bansa. But thankfully right now, unti unti ng gumaganda yung ekonomiya ng
bawat bansa.
2. Increasing globalization. Kapag nag-eexpand na ang company, you can’t only
produce products or provide services in a particular area but malaki na rin ang chance
na you can sell and provide sa globally. For example nalang si Jollibee, dati alam natin
na sikat lang siya dito sa Pilipinas pero right now, marami na siyang branch sa buong
mundo and pasok siya sa top 15 fast food chain globally.
3. Emerging new Internet capabilities and applications. Like I said kanina, kapag nag-
aadapt ng mga new technologies ang company, mas mabilis ang production and pag-
aadvertise ng product and services and also mas mapapabilis din and pag-contact sa
mga customers. And in terms of application such as yung Mc Donalds App, doon is
makakapag-order na tayo sa kanila na hindi na kailangan pupunta pa tayo sa store nila.
4. Changes in who buys the product and how they use it. Best example is gamot
specifically paracetamol for kids, adults and meron din sa mga buntis.
5. Product innovation. Maybe dito best example yung from keypad na cellphone to touch
screen. Since mas mapapadali yung pagtype and more applications pa sa touch screen
na phone, mas gugustuhin na ng tao na bumili ng touch screen na phone.
6. Technological change and manufacturing process innovation. For example with
the use of machines, kasi dito mas mabilis yung pagproduce ng products like sa
pagpiprint ng books diba dati manual sila or gagamit pa ng wood, but now may
electronic printer na tayo minsan nga may bluetooth pa diba?
7. Marketing innovation. Having a unique advertising strategy para makuha talaga ang
intensyon ng mga consumer.
8. Entry or exit of major firms. Entry of major firms, especially kung foreign yung
company, mas tatangkilikin ng mga tao yan dahil alam nila na maganda ang quality but
of course as a domestic company, you will improve the quality and advantage din na
mas mura yung benta mo kaysa sa product nung foreign company na yon. While a Exit
of Major Firms – Advantage yon sayo as a small company kasi sayo nalang nakafocus
yung mga consumers but I think bihira lang itong mangyari kasi since major firms na sila
mahirap silang pabagsakin.
9. Diffusion of technical know-how across more companies and more countries.
Know-how (or knowhow, or procedural knowledge) is a term for practical knowledge on
how to accomplish something. And diffusion means spread. Kung maraming
natututunan ang company externally na nakakaapekto sa production, mas
magkakaroon sila ng knowledge and new ideas to improve their products or services or
maybe in making new products.
10. Changes in cost and efficiency. Simply, the more na bumababa ang mga raw
materials mo sa pagproduce ng produce, nagiging mura ang paninda mo and vice-
versa.
 11. Growing buyer preferences for differentiated products instead of standardized
commodity product (or for a more standardized product instead of strongly
differentiated products). Like I said kanina, kung unique ang product mo, mas
tatangkilikin ng mga consumer yung sayo.
12. Reductions in uncertainty and business risk. If gusto mo na mas malaki ang balik na
profit sayo you have to take risk para maachieve yon. But without an effective risk
management plan, a business cannot define its future objectives.
13. Regulatory influences and government policy changes. Syempre in building your
own business kailangan pa rin na naka-align yung system mo sa rule and regulation
and laws na pinapatupad ng government. Just like yung example ko kanina na bawal
magtinda or magproduce ng sigarilyo na malapit sa school dahil nakasaad yon sa batas
and if hindi mo sinunod yon ay pweding mastop yung business mo or makukulong ka.
14. Changing societal concerns, attitudes, and lifestyles. Dito nakadepende kung
kanino mo ibebenta yung products mo, katulad na din yung example ko kanina na
pagbebenta ng pagkain na lutong baboy sa middle east, dahil doonis hindi sila pweding
kumain ng pork.

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Now we will move on to Question 4: What Market Positions Do Rivals Occupy?

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Strategic Group Mapping – ito ay isang strategy map, katulad ng nakikita niyong may mga
bilog sa screen, it is a visualization tool para makita ng isang company who among them yung
mas nakakalamang sa market. This analytical tool is useful for comparing the market positions
of each firm
separately or for grouping them into like positions when an industry has so many competitors
that it is not practical to examine each one in depth. Generally speaking, the closer
strategic groups are to each other on the map, the stronger the cross-group competitive
rivalry tends to be. Sa image, kung mas malaki ang circle ng company sa map, it means na
malaki ang scope nila sa marketplace.

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Strategic Group – Pinapakita nito kung saan ba kabilang ang isang business. For example,
Jollibee, Mc Donalds, KFC and Chowking. There are belong to fast-food restaurant chains in
the foodservice industry. Mas maganda sa isang Strategy Map is magkakasama ang mga
same industry for them to know their competitors.

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For the Strategic Group Mapping

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