Knowing the Unknown about the Broad Environment
University of Tampa
Practical Strategic Assessment
Dr. George Bud Wynn
June 09, 2009
In “Foundations in Strategic Management”, pages 21 to 27, author Harrison discusses the influence that the external environment has on a particular company’s operations and how its managers can adapt to environmental uncertainties to sustain their competitive advantages. Harrison also points out why it is important for firm to analyze and evaluate its broad environment. He also mentions how managers can analyze and evaluate external forces and devise strategies to complement the rapid-changing environment in order for their company to be competitive throughout and take advantage of its strengths and minimize its threats. He further divides the broad environment into four sub-headings (socio-cultural, economical, technological and political/legal) and states why each is important and the effect each have on a company’s operations. The purpose of the paper focuses more on informing the reader of the importance of evaluating a particular company’s broad environment. The paper also includes a review of and my opinion on what I think firms and their managers should be aware of when it comes to their company’s broad environment.
The Importance of the Broad Environment to Managers
Before the 1990’s, if a business had a competitive advantage and opened its doors to the general public, it was almost guaranteed success. However, such cases no longer exist. In modern times, companies with competitive advantages such as sufficient resources, skilled workers, superior technologies and the like can still go under due to the ever-changing environment. Nowadays, successful businesses are shifting focus from just having a competitive advantage in one or two areas, to maximizing on the relevant information that its managers have about its operation environment; including the broad and task environment.
In order to operate a successful business, it is important for managers to have a comprehensive understanding of its broad environment in which it plans to operate. The broad environment includes socio-cultural, economical, technological, and political/legal forces which have an effect on how the company plans to gain a profitable market share. Such comprehensive understanding allows managers to save valuable time and money; subsequently making their business profitable. Due to the uncertainties of the rapidly changing economy, it is almost required by top performing firms to research the broad environment; even if its plan to merge or joint venture with another firm elsewhere. In addition, such research is also highly recommended for companies that plan to do business globally; if the company wishes to create a buffer from potential losses. Also, companies that analyze the broad environment effectively are able to maximize its advantages and opportunities while limiting weaknesses and threats. In conclusion, successful firms must recognize the importance of the broad environment in order to take advantage of its strengths and opportunities while minimizing its weaknesses and threats.
Well-defined researches coupled with a complete understanding of a company’s broad environment are always important because, when done properly, it can enable companies to seize potential market areas and dominate a particular geographical location. Maintaining a complete understanding of the broad environment is vital to a company’s success.
Understanding the broad environment is important for many reasons. Socio-cultural forces occur randomly and without warning. Many firms experience difficulties with these forces many times during operations. Examples of socio-cultural forces range from the influence of terrorism on the economy to the legality of abortion. Proper socio-cultural assessment enables firms to minimize its...