An environmental scanning process consists of an organization gathering information about the industry in which it operates, including information about the economy, government, laws and demographic factors such as population size, distribution and other factors. The organization should focus on its competitors. The company should examine the research for trends, opportunities and threats that might impact its business. An internal scan of the organization is needed to examine the organizations strengths and weaknesses. An organization should gather information from the community it conducts business and interview the leaders of the groups or use surveys. An external scan of the organization is the opportunities and threats that are outside the organization. When conducting an environmental scan, a variety of methods should be used to collect data, including publications, focus groups, leaders inside and outside the organization and the media. After the data is collected, the final step is to analyze the data and identify changes that can be made using a SWOT analysis, resource–based view, and the VRIO framework. According to the reading, the VRIO framework helps organizations determine if a resource adds value or defend against threats (Pearce & Robinson, 2013). If the answer is yes, then a resource is considered valuable. Organizations need to constantly monitor the value of the resources because changes in internal or external conditions can make them less valuable or useless. Resources that can only be acquired by an organization are considered rare. Imitation can occur in two ways either through duplicating or substituting the resource. An organization that has valuable, rare and costly to imitate resources can achieve a competitive advantage. An organization needs to manage its systems, processes, policies, organizational structure and stakeholders to be able to fully realize the potential of its valuable, rare and costly to imitate resources and its intangible assets.
Microsoft’s ability to manage their people effectively is a source of both differentiation and cost advantages. Microsoft uses data about its employees to manage them. This capability allows making correct (data based) decisions about which employees to offer employment and the best way to use his or her skills. As a result, Microsoft is able to hire innovative employees that are also very productive. Besides being valuable, it is also a rare capability because no other company uses data based employee management this often. It is costly to imitate, at least, in the near future. Microsoft has trained HR managers that know how to use the data and manage employees. It also has the needed IT skills to collect and manage the data about its employees.
According to the reading, RBV is an approach to achieving a competitive advantage(Pearce & Robinson, 2013). In other words, organizations should look inside its departments to find the sources of competitive advantage instead of looking at the competitive environment because its easier to exploit external opportunities using existing resources in a new way rather than trying to acquire new skills for each different opportunity. An organization can achieve an edge over its competitors through external changes when its capable to respond faster than other organizations. An organization can achieve cost or differentiation advantages when it develops VRIO resources.
According to the reading, the external environment consists of political, economic, socio-cultural, barriers to entry,economies of scale, and technological factors(Pearce & Robinson, 2013). When these factors change many opportunities arise that can be exploited by an organization to achieve an edge over its competitors. An advantage can also be realized when an organization is the first one to exploit the external change. Otherwise, if an organization is slow in its capitalizing on changes it may never benefit from the opportunities....
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