The General Environment
SUMMARY OF UNDERSTANDING STRATEGIC MANAGEMENT
CHAPTER 2: The General Environment
The external environment facing the organization consists of both: a. A general environment, often referred to as the macro-environment because changes that occur here will have an effect that transcends firms and specific industries. b. A competitive environment, consists of the industry and markets in which an organization competes.
In order to scan and monitor their environment, firms require tools of analysis that will allow them to factor in the changes in the general environment and evaluate their impact. One such approach involves scanning the environment to detect signals that will act as a signpost for future changes in the organization’s industry. In addition, an organization must monitor its environment to discern patterns and trends that are beginning to form and try to forecast the future direction of these trends. a. Scanning the environment
Scanning, therefore, is an opportunity for the organization to detect weak signals in the general environment before these have coalesced into a discernible pattern which might affect its competitive environment. The first is that the organization may fail to identify these signals. The second is that the organization may discern a pattern that is not there but is based on the assumptions and mental models that managers carry in their heads.
b. Monitoring the environment * Monitoring can be seen as the activity that follows these initially disparate signals and tracks them as they grow into more clearly discernible patterns. * Monitoring allows an organization to see how these general environment trends will impact on its competitive environment. * Monitoring uses a finer brush stroke. * There is no focus for an organization’s monitoring activities. * One way in which an organization might monitor weak signals is to set thresholds such that any activity which occurs above the threshold
CHAPTER 2: The General Environment
The external environment facing the organization consists of both: a. A general environment, often referred to as the macro-environment because changes that occur here will have an effect that transcends firms and specific industries. b. A competitive environment, consists of the industry and markets in which an organization competes.
In order to scan and monitor their environment, firms require tools of analysis that will allow them to factor in the changes in the general environment and evaluate their impact. One such approach involves scanning the environment to detect signals that will act as a signpost for future changes in the organization’s industry. In addition, an organization must monitor its environment to discern patterns and trends that are beginning to form and try to forecast the future direction of these trends. a. Scanning the environment
Scanning, therefore, is an opportunity for the organization to detect weak signals in the general environment before these have coalesced into a discernible pattern which might affect its competitive environment. The first is that the organization may fail to identify these signals. The second is that the organization may discern a pattern that is not there but is based on the assumptions and mental models that managers carry in their heads.
b. Monitoring the environment * Monitoring can be seen as the activity that follows these initially disparate signals and tracks them as they grow into more clearly discernible patterns. * Monitoring allows an organization to see how these general environment trends will impact on its competitive environment. * Monitoring uses a finer brush stroke. * There is no focus for an organization’s monitoring activities. * One way in which an organization might monitor weak signals is to set thresholds such that any activity which occurs above the threshold