MONITORING AND

FORECASTING OF
INFORMATION
CHAPTER 5
 THE EXTERNAL ENVIRONMENT

• Remote Environment
• Task Environment
 REMOTE ENVIRONMENT
It has only an indirect impact on
the organization. These consist
political, legal, economic,
sociocultural, and technological
aspects.
 TASK ENVIRONMENT
It consist of those aspects of the
organization that affect the company
itself. These factors are the
stakeholders such as community,
creditors, suppliers, customers,
competitors and other organization.
THREE POPULAR TECHNIQUES USE
TO FORECAST THE FUTURE:

•Cross- impact analysis

•Trend impact analysis
•Delphi technique
CROSS- IMPACT ANALYSIS
Cross-impact analysis is a methodology
developed by Theodore Gordon and Olaf
Helmer in 1966 is the general name given to a
family of techniques designed to evaluate
changes in the probability of the occurrence of
a given set of events consequent on the actual
occurrence of one of them.
CROSS IMPACT ANALYSIS
SAMPLE
TREND IMPACT ANALYSIS
Technique in forecasting
baseline scenario constructed using
trends, (2) Future events are
identified and evaluated for degree of
impact (3) combined effects of 1 and 2
used to create future scenario.
 DELPHI TECHNIQUE
Is a group communication method where a
panel of experts arrive at a consensus over a
series of questions and discussions. It is used for
estimating or forecasting. First, select a suitable
facilitator and experts with relevant knowledge,
and make sure the problem is defined well.
 OPPORTUNITIES
The company takes advantage of the
possible opportunities that may further
gain a strong foothold in the market. It is
not complacent on resting on its laurels.
Opportunities are continuously identified.
 OPPORTUNITIES
• Immediate Opportunities – those for which company
is presently prepared.
• Long – term Opportunities – must be identifed in
terms of both the environment and the firms
capability to reshape itself if necessary.
 COMPETITIVE ADVANTAGE

Is an edge or strength a firm

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has over its competitors. It is

a strategic measure of
business success.
 THREATS
The company is keen in looking
threats and arresting them
before they become obvious.
•
SOURCES OF THREATS
Competitors
• Changes in customer wants and needs
• Dwindling resources and rising prices
• Governmental legislation
• Inflation
• Recession
• International political and money relationship
• Technological breakthroughs
 CONSTRAINTS
Constraints imposed by the
external environment require
careful attention to uncover
and identify.
INDUSTRY ANALYSIS
An industry analysis is a business function
completed by business owners and other
individuals to assess the current business
environment. This analysis helps businesses
understand various economic pieces of the
marketplace and how these various pieces may
be used to gain a competitive advantage.
STRUCTURE CONDUCT PERFORMANCE MODEL
 MARKET STRUCTURE

The role of market structure is that

managers would be able to predict
market outcomes through the extent
of competition in the market.
THREE IMPORTANT STRUCTURAL FEATURES

• Market Concentration – It is the degree by which a

small number of firms dominate the market.
• Entry Barriers – These refers to the difficulties and
challenges by potential new entrants entering the firm.
• Product Differentiation - It refers to the degree by
which a company is able to distinguish its products or
services to other players in the market as valued by the
customers.
 MARKET CONCENTRATION

• Atomistic
•Oligopolistic
•Monopoly
 ENTRY BARRIERS

•Ease of Entry
•Moderately Difficult Entry
•Blockaded Entry
 PRODUCT
DIFFERENTIATION

•Homogeneous Products
•Differentiated Products
 PORTER'S FIVE FORCES
"A good strategy is concerned with
the structural evolution of the
industry as well as the firm's own
unique position in the industry."
 POWER OF BUYERS
• Number of customers
• Size of each order
• Differences between competitors
• Price sensitivity
• Ability to substitute
• Cost of changing
 RIVALRY OF COMPETITORS
• Number of Competitors
• Quality differences
• Other differences
• Switching cost
• Customer loyalty
• Cost of leaving the market
 POWER OF SUPPLIERS
• Number of suppliers
• Size of suppliers
• Uniqueness of service
• Ability to substitute
• Cost of changing
 THREATS OF
SUBSTITUTES
•Substitute Performance
• Cost of Changing
 THANK YOU FOR YOUR TIME
GODSPEED! ☺
A ship is safe in harbor but that's not what ships
are for.William G.T. Shedd