Why Does Corporate Governance Fail?

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Environmental factors that impact a business can include new competition, legislation or naturally occurring events. The ability to either prevent negative impact or prepare for imminent consequences is critical to any business. One of the first thoughts that crept into my mind was corporate espionage or insider trading. The largest external/environmental obstacle that most businesses will face is their competition, knowing where the competition plans to take their company can be critical in formulating an external business strategy. Unfortunately, this is illegal in most forms and people go to jail for it all the time. The next best thing is to take the environmental and evaluate them with the "Issues Priority Matrix". This basically evaluates the probability of an external event occurring and the level of impact that event will have on the company. If a possible event is rated high in both categories, it must be planned for.

The EPA has enacted new regulations that require cars and trucks to be capable of at least 35 miles per gallon by 2020 and also requires that vehicle emissions standards be reduced by about 15 percent by 2016 (Gardner, & Ljunngren, 2010). This has a high probability of affecting car manufacturers. The probability of occurrence is not high, it is definite. When we couple this situation with the high price of gas and the current economy, the car makers have a major problem. They have seen this coming and are now making hybrid and electric vehicles, this was good external strategy on their part.
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