Environmental Scan Paper
The evaluating, monitoring, and disseminating of information from internal and external environments to key people within the corporation is called environmental scanning. (Wheelen and Hunger. 2010) Environmental scanning helps an organization identify relevant factors and use those factors to obtain a competitive advantage within the environment. The author will discuss how an organization creates value and sustains a competitive advantage through strategies. How an organization measures success in order to identify the effectiveness of a strategy. The author will identify the strategies of various companies and identify tactics that make the company successful.
An organization that has a strategic advantage over its competitors that enables the organization to have greater sales and retain more customers is believed to have a competitive advantage. Many organizations have a competitive advantage within technological industries to include: Google, Apple, and Amazon. Each organization creates value in its products and services in order to stay ahead of the competition.
Google is considered the industry leader when it comes to search and has 65% of the search market, according to Hit Wise. The company maintains its competitive advantage by developing a diversified infrastructure that gives them the ability to provide high speed searches and branch out into other industries. Goggles infrastructure is made up of hardware, bandwidth, storage systems and servers. The company has access to all kinds of information about organization from all over the world and can easily track the competitions movements. Google has developed a brand and tools that customers have learned to depend on. Google has expanded into the mobile phone industry with the Android which provides customers an assortment of tools and applications developed by Google. Google creates value by giving its customers easy access to information from around the world and the ability to access it from any location.
Apple Inc. was started in 1976 and incorporated in 1977. The company markets and designs electronic devices to include: personal computers, consumer electronics, computer software, ipad, iphone, and the ipod. The main competitive advantage of Apple is its marketing and customer service. The organization markets how its product line will enhance its customer’s life style. The company keeps its product line relatively small and only sells products that will generate profits. The product lines that Apple creates stay on the markets for longer periods of time and are priced to be competitive within the industry. The company doesn’t go to trade shows and give its competitors information on its new products. The company hosts events that show the products and concepts that are going to be available immediately. Apple rewards its employees for contributing to the organizations success and maintains a highly talented work force.
Amazon is an online book retailer that sells various other products at competitive prices. Amazon is completely online based and doesn’t have a store front which reduces cost. Amazon warehouses are located in a central location so that the organization can reduce cost on postage and rent. Amazon allows consumers to sell used books online that are shipped directly to customers that want the book. Independent venders sell various products on Amazon and ship directly to the customer saving Amazon time and money. The organization passes it cost saving on to its customers which enjoy extremely low prices. The main competitive advantage of Amazon is the ability to provide a large variety of product and services at an extremely low price.
Environmental Scanning & SWOTT Analysis
In the previously stated companies each one has a distinct competitive advantage and strategies that enables them to be successful within the industry. Environmental scanning helps an organization observe its environment for external and internal issues that can affect the functionality of the company. By observing the environment an organization can plan for its future needs. Each of the previously stated companies does environmental scanning on a continual basis in order to stay ahead of the competition.
When an organization conducts an environmental scan a team is formed that is composed of various experts within the organization. Usually the members are the representatives of the key departments within the organization. The expert’s positions may include: mid-level managers, employees within the company, and front line supervisors. The specific selection of the team members is done to identify problematic issues that may affect the company. Once the team is formed each member is responsible for one or more internal or external factor. The team members make a list of factors that are relevant and the data that proves why those factors are relevant. The team exchanges information and compiles a complete list of factors. The external sources of data include: occupation information, demographic information, government influences, economic conditions, geographic information, technology information and the competition. The internal sources of data includes: current workforce skills, demographic profiles, unions, turnover data, budget data, and political environment. Once the previous data is collected the organization conducts internal and external surveys to gage the perception of the organization. Conducting surveys can help the organization focus the SWOTT analysis.
Once the environmental scan information and survey information is organized the company will begin selecting members for the SWOTT analysis team. The SWOTT analysis identifies the strengths, weaknesses, opportunities, threats, and trends. The reason a new team is selected is because a new team will have a fresh perspective on the information that was gathered and usually organizations use its top officials to do the SWOTT analysis. The SWOTT analysis team reviews the environmental scan and surveys in order to construct a SWOTT analysis draft. The members of the team need to be objective, simple, realistic, and specific. Identify who the competition is and how they threat the organization. The draft is submitted to the workforce supervisor for review and the supervisor interviews the members of the team until the final SWOTT analysis has been completed. Once the SWOTT analysis has been completed the organization will begin to implement the information within the organization. The information will be used to make management decisions and strategic planning.
When constructing a SWOT analysis for Google we can make the following observations. The strengths of Google are that Google is an established brand and is rated as a number one search engine. The market cap of Google is 174.59 billion dollars according to yahoo finance August 31st 2011. Google offers both products and services to include: hardware products, web products, mobile product, and desktop products. Google’s operating cost is relatively low and hires PHD specialist to enhance search speeds. The weaknesses of Google are dependence on search based advertising. Customers have problems identifying the positioning of their ads and internet ranking can be manipulated easily. Google is weak in social media and hasn’t launched Google plus to compete with Facebook. Google’s opportunities are the use of higher value content on the web and implementing social media platforms. Provide more services to handheld devices and create apps for televisions. Google main threats are censorship, legal trials, competition, and federal laws.
An organization conducts environmental scanning, SWOTT analysis, and implements the strategic plan. Once the strategic plan has been implemented an organization measures how effective the strategic plan was and in what areas could the strategic plan be improved. Each organization has different measurement guidelines for measuring strategic effectiveness of the organization. An organization like Apple would use the “Sink and Tuttle” framework for measuring the strategic plan. The seven guidelines used in this framework include: “efficiency (inputs), effectiveness (outcomes), productivity (output/ inputs), Profitability/ budget ability, Quality (anywhere in the process model), innovation, and quality work life,” (“DOE G 120.1-5, Guidelines for Performance Measurement ,” 1996, para.). A company like Amazon would us the “Family of Measures” framework in order to measure the effectiveness of the strategic plan. The framework has the following guidelines for measuring performance to include: “profitability, productivity, external quality (customers, “field performance”), internal quality (efficiency, waste), and “other” quality (innovation, safety, organizational culture),” (“DOE G 120.1-5, Guidelines for Performance Measurement,” 1996, para.). Google would use the “Balanced Score Card “Framework to measure the strategies effectiveness. The frameworks guidelines for measuring the strategy include: “financial, customers, internal business processes, and measure of innovation and learning,” (“DOE G 120.1-5, Guidelines for Performance Measurement,” 1996, para.). The measurement guidelines are usually specific to the industry and by observing the status of the organizations outlined in this paper the measurement guidelines seam very effective.
In conclusion the author has gone over the strategies that Google, Apple, and Amazon use to obtain a competitive advantage. The steps an organization can make to conduct an environmental scan for the organization. The author provided steps that an organization can use to make a SWOTT analysis for the organization. The author provided a simple SWOTT analysis using Google as the example. The different guidelines an organization can use to measure the performance of the implementation of the strategic plan.
Wheelen, T. L., & Hunger., D. J. (2010). Concepts in Strategic Management and Business Policy: Achieving Sustainability, (12th ed.). New York, New York: Pentacle Hall.
DOE G 120.1-5, Guidelines for Performance Measurement. (1996, June). Dempartmental Directives program, (), . Retrieved from https://www.directives.doe.gov/directives/current-directives/120.1-EGuide-5/view?searchterm=None