Broad Environment Essay Example for Free

unsubtle Environment EssayKnowing the Unknown about the Broad Environment University of Tampa MGT 431 Practical Strategic Assessment Dr. George Bud Wynn June 09, 2009 top In Foundations in Strategic Management, pages 21 to 27, author Harrison discusses the influence that the external environment has on a particular lodges trading operations and how its managers provide adapt to environmental uncertainties to sustain their hawkish prefers. Harrison in like manner points out why it is important for firm to analyze and evaluate its ample environment.He also mentions how managers can analyze and evaluate external forces and devise strategies to complement the rapid-changing environment in govern for their comp whatsoever to be competitive throughout and take advantage of its strengths and minimize its threats. He further divides the all-embracing environment into four sub-headings (socio-cultural, scotch, technological and political/legal) and states why each is important and the effect each hold on a companys operations.The purpose of the paper focuses more on informing the reader of the importance of evaluating a particular companys broad environment. The paper also includes a review of and my opinion on what I think firms and their managers should be aw argon of when it comes to their companys broad environment. The Importance of the Broad Environment to Managers Before the 1990s, if a business had a competitive advantage and opened its doors to the general public, it was almost guaranteed success. However, such(prenominal) cases no longer exist.In innovational times, companies with competitive advantages such as sufficient resources, skilled workers, superior technologies and the like can still go under due to the ever-changing environment. Nowadays, successful businesses are shifting focus from just having a competitive advantage in unmatched or two areas, to maximizing on the relevant information that its managers have about its operation e nvironment including the broad and task environment. In order to operate a successful business, it is important for managers to have a comprehensive misgiving of its broad environment in which it plans to operate.The broad environment includes socio-cultural, economical, technological, and political/legal forces which have an effect on how the company plans to gain a profitable merchandise share. Such comprehensive rationality allows managers to save valuable time and money subsequently making their business profitable. Due to the uncertainties of the rapidly changing economy, it is almost essential by top performing firms to research the broad environment even if its plan to merge or joint venture with another firm elsewhere.In addition, such research is also highly recommended for companies that plan to do business globally if the company wishes to create a buffer from potential losses. Also, companies that analyze the broad environment effectively are able to maximize its ad vantages and opportunities while limiting weaknesses and threats. In conclusion, successful firms must(prenominal) recognize the importance of the broad environment in order to take advantage of its strengths and opportunities while minimizing its weaknesses and threats.Well-defined researches coupled with a complete understanding of a companys broad environment are always important because, when done properly, it can enable companies to seize potential market areas and dominate a particular geographical location. Maintaining a complete understanding of the broad environment is vital to a companys success. Understanding the broad environment is important for many reasons. Socio-cultural forces occur randomly and without warning. Many firms pay off difficulties with these forces many times during operations.Examples of socio-cultural forces range from the influence of terrorism on the economy to the legality of abortion. Proper socio-cultural assessment enables firms to minimize i ts threats from potential restrictive legislation. Firms which are assured of pending restrictive law changes can avoid huge fines and penalties. In addition, managers should spend ample time researching law changes in order to save their company from falling intothese traps. Managers who are alive(predicate) of demographic and economic changes in society can take advantage of opportunities that their competition fails to recognize.For example, a careful study of a firms social environment can gather information on what products/ operate or lifestyles people from a particular neighborhood purchase or prefer. In conclusion, a thorough understanding of socio-cultural forces can enable managers to gain from their knowledge about its societal operations and make it work to the high hat interest of their business. This will enable them to take advantage of strengths while also minimizing their threats. Economic forces play a critical part in the understanding of a firms broad environ ment.Factors such as interest rates, economic growth and inflation are important variables which managers must be aware of in order to process their broad environment effectively. Without such knowledge, it would be almost impossible to run an effective and efficient business and establish a competitive advantage. Furthermore, information gained from economic forces enables managers to allocate resources while allowing time to seek other investment opportunities. For example, multinational firms can benefit from favorable exchange rates.In order words, an understanding of fluctuations in exchange rates can lead such firms to purchase raw materials in countries where their own currency is superior to that of the foreign country. On the other hand, without knowledge of inflation, companies can suffer huge losses when investing in these countries. As a result, managers must be aware of such economical changes in fronthand in order to make educated decisions that can assist their compa nys growth and production.Another broad environment which managers should be aware of is technology. Nowadays, technology is changing the ways individuals and firms do business. New innovations such as the internet, handheld computers, and direct satellite systems are making it much easier for firms to purchase, deliver, and sell its products/services. Firms must be aware of and adapt to new technological changes in order to stay ahead of its competition in the fight for market shares and profits.If not, these companies are limitation to fail or file for bankruptcy. Most firms are pumping millions of dollars into research and development in order to find new ways of improving its products life cycle which will in turn, generate more revenue and satisfy customer. One of the world leaders in electronic supply, the Sony Corporation of America, has certain new ideas to save its customer time and money. As a result, Sony is one of the main leaders in its industry and continues to see p rofits soar in 2008.According to one official, one of its newest inventions, Eye on Education, education educators receive competitive pricing, exclusive service and support capabilities, financing options, and trade-in opportunities for Sony professional march products. Technology awareness and continuous improvement in its research and department hasled the company to success over the years. In modern times, in order for any one company to be effective, managers must be aware of the technological forces that can assist their companies to save money, andtime subsequently improving the business purpose and values.Finally, jam attention must be geared towards political/legal forces which can change the companys focus or purpose in one way or another. Government regulations can alter the ways in which companies wish to perform its business in terms of locally or globally. Therefore, managers must pay attention to different types of changes that their companies might undertake if th ere is a desire to join multiple or particular industries. Government normally provides advantages to whatever businesses in the form of tax incentives which promote ethical behavior and remind firms of its responsibilities.Managers who are vigilant can take advantage of these incentives. Overall, a comprehensive understanding of a companys broad environment such as socio-cultural, economical, technological, and political/legal forces are an essential assessment that needs to be considered before a merger, joint venture, acquisition, or even to successfully run a business. On the other hand, trained personnel must carry out such researches in order to avoid huge losses and business failure.Also, integrated understanding coupled with awareness can provide managers with information on what types of products/services to offer, sell, customers, delivery, and the like to enable their business to accomplish its goals. Assessments are highly recommended for starting up and strugglingcompa nies and businesses which wish to operate globally. If somehow a particular set of managers can make a reasonable assessment of its companys broad environment, they are almost guaranteed to run an effective and efficient company.