Environmental Scanning & Porter's Five Forces in Business

Topics: Hamburger, Fast food restaurant, McDonald's Pages: 5 (1126 words) Published: May 27, 2012
Individual Assignment

Question 1
Word Limit : 1000 words
In about 1000 words, highlight importance of conducting environmental scanning for a business organization.

Question 2
Word Limit : 1000 words
Conduct a detailed SWOT and Five Forces analysis for a business organization that you are familiar with in about 1000 words.

Importance of Conducting Environmental Scanning for a Business Organization

The success of certain organizations depend on the environment in which it's operations are conducted in. The success of the organization then depends on the dependency of the environmental factors which affect the organization.

Environmental scanning also involves the acquisition of information of the external environment which affects the organization, enabling futuristic planning and strategies to be implemented or devised to secure the organization's success and stability of their position in the market.

For companies intending to expand operations, environmental scanning is also imperative as this process also analyzes the macro-environmental factors which include ;

• Political - tax policies, labor law, environmental law, trade regulations, tariffs and political stability, unemployment policy. It is the extent of how much a government intervenes with the company.

• Economic - customer liquidations, economic growth, interest rate, recession, exchange rates and inflation rates. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's operational costs and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy

• Social - educational levels, income levels, cultural aspects, health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce, increasing the costs of labor. Furthermore, companies may change various management strategies to adapt to these social trends such as recruiting older workers. (IE: Mc Donalds)

• Technological - research and development, automation, technological incentives and technological upgrades. They can determine barriers of entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and innovation.

• Environmental - waste disposal, energy consumption, weather, climate. Climate changes which may affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.

• Legal - unemployment law, advertising regulations, product labeling, discrimination law, consumer law, anti-trust law, labor law, health and safety law. These factors affect how a company operates, costs and demand for it's products. REF: Armstrong, G., & Kotler, P. (2011). Analyzing the Marketing Environment.Marketing - An Introduction (pp. 98-120). USA: PEARSON. The acquisition of information in environmental scanning (macro-environment) is imperative in assisting operational management to analyze the market and devise and strategize the course of action in both long and short term to ensure the company's stability and continued operations.

Conduct a detailed SWOT and Five Forces analysis for a business organization that you are familiar with in about 1000 words. The McDonald's Corporation is the world's largest quick service restaurant chain. There are over 30,000 McDonald's restaurants in more than...
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