Project 3 Content
External Factors Affecting Business
Ethnic/Cultural
Political
Globalization
Laws
Cultural Intelligence
Regulatory Agencies
Industry Associations
Consumer Groups
Taxes
External Factors Affecting Business
Social
Economic
Changing Values &
Attitudes
Changing Family Roles
Lifestyle & Fashion Trends
Demographic Shifts
Customer Spending
Business Costs
External Factors Affecting Business
Technological
Looking for Updated Technology
Meeting Customer Needs
Competitive
Increased Due to Globalization
Staying Ahead of Rivals
Factors Driving Change in Business
Globalization
Consumer Demands
Spending Trends
Industry Structure Changes
Growth of Service Businesses
Shrinking Product Life Cycles
How Businesses Adopt to Change
Flexibility
Cultural Intelligence
Strong Leadership
Open-Mindedness
Agility
Cohesiveness
Environmental Scanning
*Four Step process in which businesses:
Gather Information about their surroundings
Analyze that information
Determine the future impact of that information
Environmental Scanning
•It is EXTREMELY important to be aware of threats and
knowing their potential impact because it helps a business
with:
•Strategic planning
•Management decision making
Environmental Scanning
•A business cannot control its external environment.
•But, it can control its internal environment to meet
upcoming threats and opportunities.
Environmental Scanning
Internal environment:
Finances
Personnel
Research and development
Production
Marketing
Environmental Scanning
Categories of information to scan
1. Demographics: age, income, marital status
2. Society and culture: convenience (24 hour gyms, drive thru, etc.), changing
family roles (single parent homes, working mom’s, idea of what a family
is)
3. The Economy: inflation, unemployment
4. Competition: brand competition (Nike vs. Adidas), substitute products
(movie vs. bowling)
5. Government: minimum wage laws, environmental protection laws
Steps to conduct an Environmental Scan
•Step one: Identify participants and responsibilities.
•Step two: Carry out scanning activities.
•Step three: Identify and analyze important issues and
trends.
•Step four: Report results or select issues and trends to act
on.
ENVIRONMENTAL SCANNING ACTIVITY
ACTIVITY 1
Government’s
Original Intentions
▪ Protect business property
▪ Enforce business contracts
▪ Settle business
disagreements
▪ Set and collect
taxes
Purposes of
Government Involvement
▪ To conserve the environment
▪ To protect consumers and investors
▪ To protect competition
▪ To regulate workplace
conditions
▪ To protect business property
How Government
Regulates Business
▪ Regulatory laws
• To prohibit, to control,
to require
• Constantly being created
®
and revised
▪ Regulatory agencies
• “Watchdogs”—make sure
businesses are following
laws
• May impose fines or
punishments
More Regulations
▪ Licensing
▪ Price/Wage controls
businesses to function
• Ceilings on prices
and wages
• Government may deny
• Used only in times
of crisis
• Issuing permits to allow
or cancel if necessary
Effects of Regulation
▪
Positive:
• Protection
• Access to resources
• Patents, trademarks,
copyrights
• Clear rules to follow
▪
Negative:
• Expensive
• Inefficient
Costs of Regulation
▪ Taxes
▪ Borrowing
• From the private sector
• By issuing
bonds
Government and Business
ACTIVITY 2
Types of Trade
• Domestic
➢ Producers and buyers are
in the same country
• Global
➢ Product is purchased in
one country and
consumed in another
Global Trade
• Imports
➢ Products bought from
producers in other
countries
• Exports
➢ Products that businesses
sell to other countries
Benefits of Global Trade
• Better variety and quantity of
products
• Improved standard of living in
both countries
Benefits of Global Trade
• Access to and availability of
scarce resources
• Lower prices due to increased
competition
Benefits of Global Trade
• Exchange of ideas and
technology among countries
• Enhanced relationships
• Increased income for
shipping and airline
industries
Factors Affecting
Global Trade
• Technology
• A nation’s bank account
• Competition
• Strength of currency
• Government control and
support
Trade Barriers
• Tariffs
• Quotas
• Subsidies
• Licenses
• Product standards
GLOBAL TRADE ACTIVITY
TIME FOR ACTIVITY 3
Understanding Ethics
▪ Ethics—the basic principles that govern
your behavior
▪ Your personal code of ethics—guides you
to make the right decisions, even in tough
situations
▪ Business ethics—the basic
principles that govern a
business’s actions
Understanding Ethics
▪ A business’s code of ethics:
▪ Determines whether or not a certain action is
acceptable for that business
▪ Especially if the consequences of that action
might have a negative impact on:
• Employees
• Customers
• The community
Understanding Ethics
▪ Businesses must create their
own codes of ethics.
▪ Most industries also have
general ethical codes for
all related businesses
to follow.
Understanding Ethics
▪ Not always the easiest task
▪ Business ethics and personal ethics may not
mesh perfectly.
•
Different people within an organization
may have different personal ethics.
•
Ethics are not always clear-cut
to begin with.
Ethics and Law
▪ Not the same thing
▪ Think of them as overlapping
circles:
Ethics
Law
Ethics and Law
▪ Actions that are legal but may not be ethical
▪ Example:
•
•
A doctor’s office is not required by law to go
“above and beyond” for a patient by trying several
different treatments or recommending
a specialist.
However, most doctors would
consider it unethical not to care
for their patients to the utmost
of their abilities.
Ethics and Law
▪ Example:
•
A TV production crew filming a reality
show
•
If one of its subjects does something
dangerous, such as driving drunk, the
crew is not legally obligated to do
anything about it.
•
But, is keeping silent
in such an instance the
ethical thing to do?
Ethics and Law
▪ Actions can be illegal but still considered ethical
▪ May be more difficult to think of these actions
▪ Often actions that individuals and companies approach with
an “everybody does it—so it must be OK” attitude
▪ Example—exceeding the speed limit by one mile per hour
▪ Example—copying software onto multiple computers,
even with only one license
Ethics
Activity 3
What Is Globalization?
• Globalization is the rapid and unimpeded flow of
capital, labor, and ideas across national borders.
• Result = various regions across the globe
now have integrated societies,
cultures, and economies.
What Is Globalization?
• It has changed everything:
• The way we think
• The way we communicate
• The way we travel
• The way we live
Causes of Globalization
The introduction of new technologies
The Internet
▪ Main technological factor affecting globalization
▪ Connects people and businesses across the
globe—fast
▪ Has changed the way businesses
think and operate
Causes of Globalization
Faster and more accessible modes of transportation
Contributes to the
spread of culture and
ideas throughout the
world
Makes it easier to
conduct business on
an international level
Causes of Globalization
Lessened political barriers between countries
▪
In past decades, there was no
free flow of ideas and trade
between certain regions and
the rest of the globe.
Causes of Globalization
Lessen political barriers between countries
▪ After the fall of communism in many
countries, the lines of communication
and financial exchange became open.
▪
The world is much
more politically and
economically open
than it used to be.
Globalization: Advantages
▪ When businesses can enter
new markets, they have greater
opportunities to succeed and
to make money.
▪ Even a small business now has
the ability to sell its products all
over the world.
Globalization: Advantages
▪ Businesses can also cut costs
when they:
• Have access to a greater
variety of resources
• Can move their operations
to more affordable locations
▪ Free exchange of ideas contributes
to greater business innovation
as well.
Globalization: Advantages
▪ Globalization has brought
advantages to consumers
as well as businesses.
• A bigger and better variety of
product choices
• As the world has gotten
“smaller,” our choices have
become almost limitless.
Globalization: Disadvantages
Fierce competition
Keeps prices down
for consumers but can
make it difficult for some
businesses to succeed
Globalization: Disadvantages
Brain drain
• Refers to a country or region losing its talented
employees to other jobs overseas
• They might leave because of instability or a lack
of opportunities.
• Developing nations have
little hope of establishing
strong economies without
capable work forces.
Hofstede’s Dimensions of
National Cultures
✓ Power distance
✓ Uncertainty avoidance
✓ Individualism v. collectivism
✓ Masculinity v. femininity
✓ Long-term v. short-term orientation
Culture and Communication
Verbal communication issues:
• Different languages
• Different cultural meanings for words
Example
Manana means “tomorrow” in Spanish.
Tomorrow literally means “the next day” in non-Latino culture.
In the Latino culture, “manana” often means “sometime in the near future.”
Culture and Communication
Nonverbal communication issues:
• Different meanings of body language
Example
“Thumbs-up” in the U.S. and Canada is a
positive thing.
In Australia, however, it’s highly offensive.
Culture and Communication
Nonverbal communication issues:
• High-context cultures
• Low-context cultures
In Australia, however, it’s highly offensive.
Religion
▪ Impacts work hours,
delivery schedules,
product offerings, etc.
▪ More important in some
cultures than others
Corruption
▪ Most common form—
bribery
▪ Definition varies among
cultures
Government
Involvement
▪ May create international-trade
laws:
• Quotas
• Tariffs
• Price controls
▪ Different levels of
security/customs procedures
Negotiating
▪ Culture influences:
•
•
•
•
Styles
Goals
Attitudes
Schedules
Globalization
Activity 4