Environmental Scan Paper
ENVIRONMENTAL SCAN PAPER 7
Acompany`s degree of growth is influenced by a number of factors.Political, social and environmental issues are some of the factors.Second world countries refer to nations that are associated with andadvanced industrialized economies and include the East European andthe soviet Unions. The levels of their per capita income are highenough to generate funds that boost economic growth (Lesca, 2013). Incontrast, the third world countries are less advanced economicallyand are referred to as the developing world. They include Africa,Asia and part of Middle East. Environmental scanning means evaluatingthe company’s internal and external environments in order toidentity the threats and opportunities that may hinder existing andfuture plans of businesses (Lesca, 2013).
Thereare certain events that occur in the business that may positively ornegatively affect the business operations. These factors affect theoperation of business in both 2 and 3 real continents. The firstexternal environment is social factors. Second world countries areaffected by unproductive social functions for example war and largefamily sizes (Lesca, 2013). Third world countries are characterizedby high levels of education that helps lead businesses to succeed.Majority of the managers of businesses in developing world lack thenecessary leadership skills.
Thegovernment plays an important role in the success of businesses. Thegovernment officials of third world are corrupt and they make moneyat the expense of businesses rather than representing them. Thegenerate regulations that limit their expansion into new markets.Majority of the developed world find it risky to invest in developingcountries because they are unstable. In contrast, the government ofsecond world countries has fewer restrictions giving them greateropportunities to grow (Lesca, 2013). The third factor is the economy.Businesses in third world countries generate insufficient savingsthat do not lead to economic growth as compared to second worldcompanies.
Theinternal environment consists of factors within the organization thathas an impact on the success of the company. It is important for afirm to identify the threats and opportunities that may arise. Theorganization direction is an important element in the company`sinternal environment. One of the problems affecting third worldcompanies is human resource (Mitchell & Coles 2011). This iscrucial in economic development. Humans provide labor power neededfor production. Third world countries lack efficient and skilledlabor and this limits business expansion. Businesses in developingcountries are managed by people who lack the required knowledge andhence do not provide any assistance in developing the country (Lesca,2013). Corruption is another limiting factor in businesses indeveloping countries. It is advised that unless third worldbusinesses change their administrative systems, capitalists andinventors will continue exploiting these countries for their owngain.
Thecompetitiveness of a country depends on the ability of businesses toinnovate and upgrade. The challenges and pressure from industries inother countries assists companies to gain a competitive advantageagainst the world competitors. Strategies are plans chosen by themanagement team that helps the company achieve the desired goals(Hitt et al., 2014). Businesses in developed world employ strategiesthat are different from each other in all the aspects and everycompany has its own strategies. Third world companies benefits byhaving demanding domestic customers. Having strong local competitorsand aggressive suppliers enables a country to gain an advantage overthe other. Second world companies have unique competitive advantagesas compared to the developing world companies. Developed countrieshave a competitive advantage of technology. They have a technologicalsuperiority than the developing countries and hence their productionis higher. They produce at a lower cost that helps them dominate themarket (Lesca, 2013).
Theavailability of resources is another source of competitive advantagefor a country. Countries that lack technological superiority may havean advantage due to the difference in resource endowment. Forinstance newsprint uses forest products which are abundant in Canada.Canada therefore remains the largest distributor of newsprint atlower costs and supplies them to the foreign markets. The differencesin national culture, history, values and economic structures lead tocompetitive success (Hitt et al., 2014). The success of everybusiness is dependent on the challenges and dynamics that their homeenvironment is offering.
Itis argued that only businesses themselves can sustain and attaincompetitive advantage. Businesses in second and third world countriescreate value and sustain competitive advantage through businessstrategy by creating pressure for innovation. In order to sustaincompetitive advantage through business strategy, the company can usedifferentiation and cost leadership strategies (Mitchell & Coles2011). Developing world companies can use cost leadership in order tosucceed. They should ensure that they produce products of value tocustomers at low prices in order to dominate the market by takingadvantage of the economies of scale in order to reduce cost.
Themanagement of companies should seek challenges for their businessesand not avoiding them. They should establish markets for thecomplicated and demanding buyers. They should also encourage employeeeducational programs so as to upgrade the skills and productivity(Hitt et al., 2014). The other way that companies create value is byseeking capable competitors as motivators. They should also improvetheir national diamond that entails improving the home environmentfor international success. Differentiation is also an importantstrategy that helps a company create value and sustain competitiveadvantage. Developing world companies need to identify a particularproduct that is valued most in the organization (Hitt et al., 2014).Second world firms employ experts who are aware of the strategy andthis has led to success.
Acompany must have particular strategies in order to succeed in thelong run. Both the developing and second world companies adopt threeessential strategies to succeed. Most companies in the developedworld utilize the cost focused strategy. They use their competitiveadvantage in distribution channels and cost effectiveness (Hitt etal., 2014). Second world companies’ focuses on providing aparticular product to the customers making them retain theircompetitive advantage. In contrast, developing world companies try toprovide all things to all customers making them lose focus.
Theother measurement guideline is product focused. Developed worldbusinesses find it easier to penetrate the market because theydevelop products that are unique and sustain a particular group inthe market. On the other hand, developing world businesses lackexperts who can identify such opportunities and even develop newproducts that fill specific gaps in the market (Hitt et al., 2014).The strategy effectiveness of product focused is measured using newproducts in the market and the time taken to market the products.
Thethird measurement guideline is service focused. The reason for anincreased success of businesses in the second world is their focus oncustomers. They have established a close relationship with theircustomers unlike in developing world where the aim is to sellirrespective of the services offered (Mitchell & Coles 2011). Thefirm can measure the performance using customer empathy and productknowledge to verify the strategy effectiveness. It is important tomeasure the effectiveness of strategy on a timely basis so that thebusiness can work updated information. The management should alsoensure that there is a comprehensive description of strategy so as tocommunicate to the business.
Themanagement of companies whether in developed or developing world needto ascertain the effectiveness of the measurement guidelinesestablished. Leaders should define the business goals in order toensure that the measurement guidelines are directed towards achievingthem. There is also need to evaluate the leader’s ability toaddress the internal and external needs of the business (Hitt et al.,2014). They should be able to manage and improve the relationshipwith customer as well a good communication within the organization.In addition, there is a need to develop performance evaluation formsthat assess leader`s own performance in relation to the establishedobjectives. Effectiveness of the measurement guidelines is identifiedby measuring management success (Hitt et al., 2014). The measurementguideline of developing world companies is considered effective whenthey record a progress in their reports characterized by an increasein sales, production and safety results. They should also be able topenetrate other markets. Second world businesses are able to developnew products that satisfy more customers hence they continuedominating the market.
Hitt,M., Ireland, D., & Hoskisson, R. (2014). Strategic Management:Concepts: Competitiveness and Globalization. Cengage Learning.
Lesca,N. (2013). Environmental Scanning and Sustainable Development.London: Wiley.
Mitchell,D., & Coles, C. (2011). The ultimate competitive advantage:Secrets of continually developing a more profitable business model.San Francisco: Berrett-Koehler.