BU111 Lecture 3: BU111: External Analysis, PEST, Required Readings
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Process of scanning and evaluating the external environment. Firms face multiple environments: general environment; affects all businesses, specific environment; affects industry participants. Makes managers proactive (e. g. weather and dressing in the morning) Helps organization cope with uncertainty (help prepare for possible outcomes) Improves consistency and performance (what does it mean for my strategy and my organization?) Challenges of external analysis: forecasts imperfect, rapid change, time consuming. Specific environment: porter"s five forces analyzes competitive pressure; predicts industry profitability. Quick change (anticipate): predictable or surprising, anticipate and plan contingency strategies. Elements: laws, regulation, taxes (tax on gasoline opportunity for tesla threat for oil companies, trade agreements or conditions (trump wants to negotiate nafta, bad for. Canadians, good for american companies: e. g. water bottles from canadian companies to the us get tariffed making the company less competitive. September 18, 2017: political system (the extent the government plays in business decision, political stability, wars & conflicts.