Soran University

Faculty Of Law, Political Science and Management. 1

School Of Management, Business Management Department

2end Stage
2end Semester
Environmental Scanning (Porter - SOWT analysis models).

Strategic Management
Hushyar Y. Sulaiman
Email: [email protected]
Year: 2021-2022

Module 7,March, 2022

 By the end of this session, you will be able to:
2

• Identify what is environmental scanning

Session • To know variables of environment
Objectives • To know what is Porters five forces
• Identify what is SWOT Analysis

• t
 Overview/Outline 3

Overview
• What is Strategy, Management, Strategic Management
• Benefits of Strategic Management
• Characteristics of Strategic Management
• Difference between strategy, Tactic, Policy, Plan

Outline
• Environmental Scanning
• Environmental Variables (Types)
• Porters Forces
• SWOT Analysis
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 Environmental Scanning
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Environmental scanning is the monitoring, evaluating, and
disseminating of information from the external and internal
environments to key people within the corporation.

Its purpose is to identify strategic factors—those external and

internal elements that will determine the future of the corporation.
Environmental
The simplest way to conduct environmental scanning is through
scanning SWOT analysis. SWOT is an acronym used to describe the
particular Strengths, Weaknesses, Opportunities, and Threats that are
strategic factors for a specific company.
 Environmental Scanning
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The external environment consists of variables (Opportunities and

Threats) that are outside the organization and not typically within
the short-run control of top management.

They may be general forces and trends within the natural or

societal environments or specific factors that operate within an
Environmental organization’s specific task environment often called its industry.
Scanning
The internal environment of a corporation consists of variables
(Strengths and Weaknesses) that are within the organization itself
and are not usually within the short-run.
 Environmental Scanning
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The organization collects information regarding its environment

and analyzes it to forecast the impact of changes in the
environment. This eventually helps the management team to make
informed decisions.

Environmental
Scanning
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Environmental
Variables
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Components of
Environment
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Natural environment includes physical resources, wildlife, and

Environmental climate that are an inherent part of existence on Earth. These factors
form an ecological system of interrelated life.
variables
Societal environment is mankind’s social system that includes
External general forces that do not directly touch on the short-run activities of
Environment the organization that can, and often do influence its long-run
decisions.
(Macro)
 Task environment includes those elements or groups that directly affect
a corporation and, in turn, are affected by it. These are governments, local
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communities, suppliers, competitors, customers, creditors,

employees/labor unions, special-interest groups, and trade associations. A
corporation’s task environment is typically the industry within which the
Task firm operates.

environment
(Industry)
(Micro)
 Internal environment refers to the culture, members, events and
factors within an organization that has the ability to influence 12the
decisions of the organization, especially the behavior of its human
resource.

Internal environment
 1. Microenvironments are those forces that have direct contact with
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the business while macro-environment are those forces that have no
direct influence on the business.
Difference 2. The microenvironment is also known as the internal environment

between and macro environment as the external environment

3. Microenvironment can easily be controlled by the business while
Micro the macro environment cannot be controlled since they are dynamic
&Macro 4. An example of microenvironment elements is described as

Environment COSMIC analysis while the macro environment as PESTLE

Analysis.
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Michael Porter, an authority on competitive strategy, contends that a
corporation is most concerned with the intensity of competition
within its industry environment. The level of this intensity is
determined by basic competitive forces.
Porters
In carefully scanning its industry, a corporation must assess the
Approach for importance to its success of each of six forces: threat of new
entrants, rivalry among existing firms, threat of substitute
industry products or services, bargaining power of buyers, bargaining
power of suppliers, and relative power of other stakeholders.
analysis
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Why is Porter's Five Forces analysis important?

It determines the factors affecting profitability.

Importance of You can make better decisions on expansion or capacity.

Porter’s Five It informs your overall strategy.

Forces
 Acronym for Strengths, Weaknesses, Opportunities, and Threats
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Planning tool used to understand Strengths, Weaknesses, Opportunities,

& Threats involved in a project / business.

Used as framework for organizing and using data and information

gained from situation analysis of internal and external environment.
(SWOT)
Analysis
 Characteristics of the business or a team that give it an advantage over
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others in the industry.
Positive tangible and intangible attributes, internal to an organization.

Examples - Abundant financial resources, Well-known brand name,

Economies of scale, Lower costs (raw materials or processes), Better
marketing skills, Good distribution skills, Committed employees.

STRENGTHS
 Weaknesses are the factors which do not meet the standards we feel 19
they should meet. However, weaknesses are controllable. They must
be minimized and eliminated.

Detract the organization from its ability to attain the core goal and
influence its growth.

WEAKNESSES Examples - Limited financial resources, Weak spending on R & D,

Very narrow product line, Limited distribution, Higher costs, Out-of-
date products / technology, Weak market image, Poor marketing
skills, Limited management skills, Under-trained employees.
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Chances to make greater profits in the environment - External
attractive factors that represent the reason for an organization to exist
& develop.
Arise when an organization can take benefit of conditions in its
environment to plan and execute strategies that enable it to become
more profitable.
OPPORTUNITIES Examples - Rapid market growth, Rival firms are complacent,
Changing customer needs/tastes, New uses for product discovered,
Economic boom, Government deregulation, Sales decline for a
substitute product
 External elements in the environment that could cause trouble for the21
business - External factors, beyond an organization’s control, which
could place the organization’s mission or operation at risk.

Arise when conditions in external environment jeopardize the

reliability and profitability of the organization’s business.

THREATS Examples - Entry of foreign competitors, Introduction of new

substitute products, Product life cycle in decline, Changing customer
needs/tastes, Rival firms adopt new strategies, Increased government
regulation, Economic downturn.
 Assume that a car manufacturing company has recently launched its
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products(friend with environment). Perform a SWOT analysis for the
Company or Product.

Weakness
Strength
•High Price
• No Competition
•Competition from gasoline vehicles
• Environment friendly
Activity

Opportunities Threats
•Growing demand of green technologies •Entry of competitors
• Rising fuel costs •Availability of hybrid vehicles
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Environmental scanning, disseminating, determine, variable,

operate, force, trend, physical resources, wildlife, climate ,
inherent, existence, influence, concern, entrant, substitute,
Terms to be discover, deregulation, Economic downturn, distribution,
Economic boom.
Memorize
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Next module topic:

Strategy Formulation, strategic
vision and mission
What’s Next? • Next module Date:
• March 14th

Questions and Answers