Business Environment
Dealing with Uncertainty
The Changing Environment Condition can cause Negative Impact on the Performance of each and every Industry
Currently, the world is facing the most important environmental problem of all, and that is the climate change. It has a great impact on the decision-making process and performance and each and every company, specially those huge and multinational companies. In 2006, the Stern Report showed that the cost of global warming is trillion ( 2006).
There are different problems that must be considered by each and every company that are related with the issue of climate change such as changes in international, national and local regulation, decrease in the asset value and utility, increase of competition and the importance of reputation. In connection to the issue of environmental condition, it is also important to consider the decreasing amount of different resources primarily water and other important minerals that are used in energy consumption. Thus, these aspects are important in order to deal with the process of decision-making regarding the different internal policies and standards that must be implemented in order to sustain the competitive advantage of the industry. One of this is the influence of the technological solutions that will cover both the mitigation and adaptation that will help to slow down the global warming (March, 2008).
Aside from that, it is important to consider that image or reputation is one of the most important marketing strategies in terms of business. It is important to consider the response of all the stakeholders such as the customers and investors regarding those companies who failed to respond the climate change.
The Changing Social Demographics
The demographic is considered as one of the most important aspects that are considered in the field of marketing as well as the entire business processes. First and foremost, it will have affect the entire international, national and even local regulation that will push savings, alteration of the pension provision rules, together with the private health care, family support and the fiscal policy. Thus, in terms of attitude, it will push for care for elderly, transfer of wealth between generations, attitudes towards migrants as well as savings for long retirements. This is important due to the fact that it can influence the entire buying behavior of an individual.
On the other hand, competition is also another important problem. This will affect the process of recruitment, retention costs, changes in the different working practices as well as the age profiling of the work force. This is important in the process of the decision-making due to the fact that the human resource is considered as the most important resource of any organization. Thus, its shortage can affect the entire industry.
In addition to that, the industry must also focus on the issues regarding inequality, and then apply it in their social responsibility in order to maintain their reputation and connection with the customers. By implementing different programs that will help to lessen the negative effect of inequality in terms of social status such as free education and financial support, the company will be able to maintain their competitive advantage at the same time helping the entire community.
Information and Communication
As of now, information plays a vital role in any organization and even industry. The importance of information and communication inside and outside the organization and industry is important due to the fact that it plays a vital role in the entire flow of process from the first entity in the supply and value chain up to the customers.
Information and communication can help each and every organization to maintain their competitive advantage due to the fact that it can help the entire decision making from the different fields and areas of the organization such as the marketing, innovation, forecasting etc.
In terms of marketing, it can help the organization to know the development and changes in the buying behavior and demand of the customers, that can help them to focus on the specific groups or demographic. Thus, the result of the said information gathering can be useful in the aspect of innovation. Innovation is also considered as a vital process of an organization because it helps them to maintain the interests of the customers by focusing on the different factors and aspects that will affect their preferences and tastes.
Above all, it has a great impact over the process of forecasting, where in the information that were gathered from the different departments and parts of the organization that can help to monitor the different important aspects that are related with the customers such as the demand for different products, thus it can help to decide in managing the raw materials as well as the entire relationship with the suppliers and other important stakeholders.
Technology Trends
Technology trend will play an important role in the development of any organization and industry. This is important due to the changing economic as well as consumer behavior. Where in customers are demanding for fast, reliable and efficient products as well as services.
With connection to the information, technology is a very important aspect, due to the fact that it can help to efficiently manage and control information and be used for different processes that are important for the company.
In general, the Internet is considered as the most important aspect that must be considered in the issue about the technology trends. This is due to the fact that as of now, the Internet is considered as one of the most important factors that affects the life of each and every individual in the world. There are growing demand for online business, due to the changes in the lifestyle and references of the people, in most of the developed country, most of the people prefer to do their shopping online because it can help them to save money as well as effort in shopping, and they were just in the vicinity and comfort of their homes.
It is also considered as one of the most used marketing strategy because it helps different organizations to target huge number or population of people because there is an immeasurable and vast number of an online user. As a result, it will offer more customers and target market compare to the traditional way of marketing.
Value of Environmental Scanning
Environmental Scanning
Environmental scanning can be defined as the formal methodology that was developed in the profit sector that focuses on the process of gathering information as well as enhancing the understanding and knowledge about the environment. Thus, it is considered as the key component of the entire strategic planning. In addition, it is the methodology that is used in order to cope with the different external issues: social, economic and technological issues that can be difficult to observe or even predict but cannot be ignored and will not go away. Above all, its main purpose is to detect, monitor as well as analyze the trends and issues in the internal and external environment where in a specific organization operates ( 2004 ).
McDonald’s and Environmental Scanning
It is important to consider that without the environmental influences, any company cannot expect to improve and develop its strategy. Thus the success of any management depends on the ability of the leaders to adapt on the ever changing external environment (2005).
In McDonald’s the environmental scanning had helped them to maintain their position as the number 1 fast food chain in the world, although, the company had faced different problems during late 1990s up to 2003. The plan to win leadership implemented several environmental scanning in order to develop and implement plans and programs that will help to ensure competitive advantage, by ensuring that the internal factors of the organization are meeting up the demands and changes of the external environment.
First, the environment scanning can help McDonald’s to see that they have a strong brand reputation and image, thus it will be important for them to implement different innovation in order to maintain the said position. Furthermore, it can also help the company to analyze the different negative and positive impact of globalization in the business. Furthermore, it will focus on the differences between the employees as well as the customers that can help them to focus on the different strategies that they must do in order to meet the different demands of different people from different parts of the world.
Aside from that, it can also help McDonald’s to focus on the reality regarding the food industry, where in it is considered as saturated thus different restaurants must focus on the process of analyzing the balance between the increasing price of different raw materials, together with the behavior of the customers towards price and quality (2007).
On the other hand, it can help the company to focus on the different opportunities that can be used and taken advantage in order to ensure competitive advantage. First, is the globalization that can offer the company an opportunity to expand their operation, thus increasing their target market. This is due to the fact that the company needs more penetration in different countries, particularly those starting to be developed countries such as China, Korea and other parts of Asia. Thus, in China, the fast food industry is experiencing a rapid growth, and considered as one of the fastest growing industry in the country that shows an annual growth rates of 25% ( 2008).
In addition, it will also help the company to decide regarding the process of diversification as well as acquisition of other quick-service restaurants that can help the company to expand their services towards the customers ( 2005 ).
Furthermore, the environment scanning can help the company to focus on the growth of its industry, the fast-food industry. It is important to consider that in the US alone, the fast food market shows an astonishing growth within the last year. That’s why; the said market is forecast to maintain the current expectation of growth. Consequently, it will drive the industry to a high value of .6 billion by the end of year 2010 or a total of 12.1% from 2005. As a support, the Data monitor Industry Market Research shows that the fast food industry will have a total of 37 billion transactions showing a great increase of 5.3% from 2005.
The reason behind those changes and development is due to the social a cultural change in the world as well as in local settings. Thus, the said factors are important to consider in terms of innovations and customer relationship. Due to the growing importance of time, increasing number of dual-income family as well as the increasing participation of women in the human resource, the demand for fast-food is increasing due to the lack of time.
Like any other global or multinational companies, the company is exposed to any changes in the global economy and its aggressive international expansion has left it as very sensitive to other economic slowdown of other countries ( 2005 ). One of example is the fluctuation of the foreign currency. In addition, due to the economic slowdown in some countries, particularly in most of developing countries, customers tend to become price sensitive, and it has a great impact over the buying behavior of the customers.
In addition, competition is also one of the most important threats in the company. As of now, there are many players in the industry, and most of them are offering the same or similar products and services. The reason behind the said growth is due to the improvement of the entire fast food industry in the world. That is the reason why there is intensive price war, extreme battle of innovations and breakthrough and serious promotions and advertisements are being implemented by each and every players in the said industry. Increasing competition has led to aggressive pricing policies amongst the large brands as well as pushed them to increase their menu diversification as well as product developments in order to increase sales and market share, thus maintain current position in the entire market ( 2002 ).
Another thing, and considered as the most important factors that must be considered by using the environmental scanning is the fact that all of the fast-food hamburger chain are being forced to respond to the changes in the tastes and preference of the customers towards the high-calorie foods like burgers and fires to healthier one like deli sandwiches, baked potatoes and salads ( 2005). It is important to consider that the fast food industry is holding a negative image as one of the most important factors in causing different health problems. There are different ideas that show that the blend of longing and craving for convenience from society and the greed that is driving the market has helped to shape and create a culvert of repulsive and disgusting eating habits and lifestyle (2008).
Currently, more and more customers are becoming aware of nutritional values and health benefits of products and services that they are availing and more and more people are becoming aware of their figure and body compare before. This is due to the fact that people are much aware on the negative impact of too much intakes of calories both for physical appearance as well as health. In addition, childhood obesity is also being connected with the fast food industry, thus lots of health organization are blaming the increasing cases of childhood obesity towards the fast food industry, and its impact on the health problems during adulthood. That’s why it will be important for the company to focus on offering their customers products that will meet their health needs.
It is important to consider that different organization and different industry have different aspects that must be considered in their external environment, together with the internal environment in order to make sure that their strategies are meeting those important aspects, and make them successful. One of the most important factors that must be considered is the culture where in the business or organization is situated. As we all know, culture plays a vital role in the preferences, tastes and demands of an individual. That’s why, for companies that are operating in different places or those multinational companies, it will be important to focus on the cultural differences and its impact over the behavior of the customers.
Aside from that, different industries are facing different political, social, environmental as well as technological factors. That’s why it will be important to focus on the different external changes as well as development that are connected with the process of improving innovation, customer relation, human resource etc.
However, currently, it can be observed that most of the organizations are facing the same threat, and that is the changing environment. This is due to the fact that the corporate social responsibilities of an organization. In connection to that, it has a great impact over the image and reputation, thus it can affect the perception of the customers.
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