Understanding the external factors which affect, and external environment and organization operates in is critical for the development of a strategic roadmap.
BUSI770 – External Environment DB Post Replies – Michael WelletProvide a Discussion Board Reply to the following using the following instructions
Discussion Reply: External Environment, Power / Weakness, and Decision ModelsYou will reply to one of your classmate’s thread. Minimum of 250 words in the body
Minimum of 2 sources from the literature in addition to course texts
Current APA format must be used.
Content must include:
• Summary of the author’s Thread – no less than 125 words
• What you agreed with, did not agree with and why – no less than 125 words
• Support your factual assertions with citations.
Discussion Board 3: External Environment, Power / Weakness, and DecisionModelsMichael W. Wellet Jr.BUSI – 770 B02School of Business, Liberty University Online
Author Note
Michael W. Wellet, Jr.I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Michael W. Wellet Jr.
Introduction
Understanding the external factors which affect, and external environment and organization operates in is critical for the development of a strategic roadmap. External, or environmental, factors can include, vendors, clients, and competitors, as well as geopolitical events, social and cultural factors, to name a few (Gamble, et al., 2021). Coordinating these factors in a way that plays into the success of a business is a skill that many leaders fail to master. It can be an overwhelming challenge to simultaneously consider the development of technology, societal trends, the behavior of competitors, customers and regulators, all within a changing legal, political, environmental and financial framework (Eppler & Platz, 2009).Process: Evaluating the External Environment
When evaluating the external environment, it is helpful to think of the environment in terms of concentric circles where the circle closest to the core, which is the company, has the greatest immediate effect and for which, the company has the most control. Examples of those factors closest, industry environment, to the company are those such as clients, vendors, and competitors, whereas example of those further away, macro-environment, are those such as politics, sociocultural and regulatory factors (Gamble, et al., 2021, p.39). Stable environments usually require less planning activity while unstable environments usually require increased plan comprehensiveness and greater flexibility to cope with the fluctuations. (Jennings & Disney, 2006).
Business executives must be able to identify the advantages their company’s products or services offer to their market base, within their given environment. Teams, organizations, and even nations have advantages of certain kinds of rivalry under certain conditions and the secret to executing on this this advantage is understanding this particularity (Rumelt, 2011, p. 161). 1 Corinthians 9:24 (English Standard Version, 2011) makes an interesting note of this by saying, “Do you not know that in a race all the runners run, but only one receives the prize? So run that you may obtain it”. Strategic Thinking: Discussion of a Key source of Power / Weakness
The strongest of the five competitive forces is the constant rivalry among competing firms for products and services (Gamble, et al., 2021). The dynamics, such as fluctuations in demand, cost, and diversity to name a few, in a given market present a relative advantage in organizational rivalry. One way to gain advantage over the rival is to exploit the various dynamics within a given market (Rumelt, 2011). Competitive dynamics is defined by firms operating in dynamic environments where they and their competitors are constantly engaged in competitive actions such as a new product introduction, advertising campaign, price cut, initiated by a firm to create competitive advantage (Kumar, et al., 2017).
Intercompany rivalries can be classified many different ways depending on the relative dynamics of the markets in which they operate. For example, in a market where price is the most important factor, the words used to describe the competition are terms like vicious or ruthless, while in markets where low margins are squeezed, words used to describe are like, intense or strong. Each market dynamic can be described in a specific way. 1 Corinthians 9:24 (English Standard Version, 2011) makes an interesting point of this, “Do you not know that in a race all the runners run, but only one receives the prize? So run that you may obtain it”.Decision Modeling: How do my decision models aid / hinder this process and why? What other models are being considered?
Typically, when reviewing the strategic environment, like most of my models, I first start with the most simplistic model I can come up with. I evaluate the industry environment because many times those factors are the ones most likely to affect the business immediately while the macro-environmental factors take some time to have an effect but can be as good or bad as the industry level factors. For example, a virus like standard influenza may not affect a business beyond a few personnel outages, however, a virus like COVID-19, it not planned for correctly, has the power to shutter a business if leadership is inflexible and unable to adapt to change. In many cases, the macro and industry level factors are interrelated.
Conclusion
Understanding the environment in which a business operates is crucial to not only strategic planning but to overall operation of the company. Environmental factors such as politics, regulatory changes and global geopolitics can alter a company’s direction as much as the competition, vendors, and clients’ needs. Because environmental factors can be some complex and intertwined, it is important, for me anyway, to look to the Lord for guidance and to light the path as in Proverbs 16:8-9 (English Standard Version, 2011), “Better is a little with righteousness than great revenues with injustice. The heart of man plans his way, but the Lord establishes his steps”.
References
Eppler, M. J., & Platts, K. W. (2009). Visual Strategizing: The Systematic Use of Visualization in the Strategic-Planning Process. Long Range Planning, 42(1), 42.
This article shows how visualization can be used in the strategic-planning process, by examining the use of real-time, interactive visual representations in the business strategy process. Starting with a concise review of literature, we postulate that visualization can improve the quality of the strategic planning process by addressing many of its cognitive, social, and emotional challenges.
Gamble, J. E., Peteraf, M. A., & Thompson, A. A. (2021). Essentials of strategic management (7 e, international student edition ed.). McGraw-Hill.
The general insight of the text is an overview of the basics of strategic management. The book in its entirety applies to the assignment.
Jennings, D., & Disney, J. J. (2006). Designing the strategic planning process: does psychological type matter? Management Decision, 44(5), 598-614. 10.1108/00251740610668860
The purpose of this paper is to provide a review of the empirical literature concerning the design of the strategic planning process and its relationship to environmental, organizational, strategic and psychological factors. The paper aims to focus on psychological type and its relationship to planning preferences.
Keller, T., & Alsdorf, K. L. (2014). Every good endeavor (First Riverhead trade paperback edition. ed.). Riverhead Books.
Demonstrates how God calls all individuals to express meaning and purpose through a career, sharing spiritual insights into finding relevance in cutthroat professional environments and staying true to Christian values in spite of competition. This text applies to almost everything we do in everyday life.
Kumar, A., Cantor, D. E., Grimm, C. M., & Hofer, C. (2017). Environmental management rivalry and firm performance. Journal of Strategy and Management, 10(2), 227-247. 10.1108/JSMA-11-2015-0089
The purpose of this paper is to build and test theory regarding how rivalry in environmental management (EM) affects a focal firm\’s environmental image and financial performance. Practical implications this paper can serve as a testament to the value of monitoring rival firm strategies and signaling to counter the impact of rival signals in the environmental domain.
Rumelt, R. (2011). Good Strategy/Bad Strategy (1st ed. ed.). Profile Books.
Even though everyone is talking about it, there is no concept in business today more muddled than \’strategy\’. The book discusses this problem head-on in a jargon-free explanation of how to develop and act on strategy, in business, politics and beyond.
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