Chapter 2

CHALLENGES IN THE EXTERNAL ENVIRONMENT

Learning Outcomes
Particularly at the end of this chapter, the students should be able to:
1. perform environmental scanning;
2. employ SWOT analysis using a company;
3. analyze and evaluate the social, political, economic, technological, and
environmental forces affecting the country; and
4. identify external forces that may prove beneficial or detrimental to an organization

Scanning the Environment

Organizations exist to survive. Given their vision and mission statements and set
goals and objectives, it is for organizations to conduct themselves clearly, deliberately,
and strategically. To achieve this, organizations should develop “organizational
intelligence.” Organizational Intelligence refers to the expertise, insight, and wisdom
possessed by an entity. It serves as a valuable guide to its journey to becoming
competitive. Thus, organizations need to possess this capability to be able to accurately
audit the environment and come up with creative and cutting-edge strategies.
Environmental scanning is the study and interpretation of the forces existing in
the external and internal environments. The external environment includes social,
economic, political, technological, and environmental forces that may influence an
organization, an industry, or any entity. The competitive environment covers
competitors, suppliers, customers, stakeholders, culture, and the government.
Environmental scanning is carefully monitoring the surroundings with the end goal of
ascertaining early indications of prospects and challenges that may influence the
organization's present and future plans.
Conducting environmental scanning is both easy and difficult. For informal
scanning, experience and expertise will help make the process effortless and
straightforward. The competencies, skills, and intelligence of the individual will allow for
easy scanning of the environment. On the other hand, environmental scanning can be
demanding, in that there is a need for comprehensive, as well as accurate information.
it will be mostly dependent on the following: (1) the speed of the organization to conduct
scanning; (2) the presence and availability of complete information; and (3) the physical
and financial capability to do so.
Sources of Strategic Information
Strategic information consists of the facts and data used by organization to assist
them in achieving their vision, mission, and goals. Strategic information can be drawn
from both external and competitive environments. Both external and internal
environments symbiotically interplay and directly or indirectly affect organizations.
Information is either primary or secondary. Primary data are gathered through personal
experience, observation, and experimentation while secondary information are data
collected from reports, Internet sources, and other published materials.
Modes of Environmental Scanning
Scanning the environment involves two processes. The first one is looking at or
simply viewing information, and the second one is looking for or searching for
information. According to Agular, (1967), there are four ways of environmental
scanning. They are undirected viewing, conditioned viewing, informal search, and
formal search.
1. Undirected Viewing. The individual is exposed to Information with no specific
Informational need in mind. The sources of Information are wide ranging and lug.
chunks of information are quickly dropped from the Individual's attention. Thus,
the individual ends up with general information that may be helpful for him in
spotting early signals of change. it Is a significant mode of feeling the
environment as this increases awareness in the organization to undertake
needed proactive strategic moves. Accordingly, organizations should
continuously undertake undirected viewing of the environment. Many times, this
process of environmental scanning can save an organization from losing out in
the survival game or may be the reason for organizational success.

2. Conditioned Viewing. The Individual directs viewing of information to specified

facts and data to be able to assess their general Impact on the organization. it
is not an active search but a mere viewing of information. it provides a cue or
hint that more purposive scanning should be instituted if the effect is assessed
to be sufficiently significant.

3. Informal Search. The individual actively looks for information to increase

knowledge of a particular issue. It essentially involves a relatively unstructured
effort where the objective is to gather information to expound on the issue,
thus, determining whether a strategic move is needed by the organization. If a
need for a decision or action has been established, more time and resources
on a formal search will be spent by the organization.

4. Formal Search. The effort exerted by the individual is deliberate and planned.
The search is both focused and structured and the research methodology is
clearly enumerated and followed. Specific information is presented and
organizations conduct environmental scanning through varied approaches.
These search approaches can include industry analysis, market studies and
competitor and customer analyses, among others. Appreciably, results of the
formal search normally provide organizations bases for decision making and
 courses of action.
In summary, entities possess organizational intelligence. This mode of thinking
directs them to scan the environment. The importance of conducting environmental
scanning cannot be overemphasized as knowledge of the business landscape is
needed to implement one's strategies There are different modes of scanning the
environment and there are likewise different approaches to benefit from it. These
searches will depend on the needs of the organization.
QUESTIONS 2.1
1. Why should organizations possess “organizational intelligence"?
2. How will you define environmental scanning? Explain why conducting
environmental scanning is important.
3. What Am the two sources of strategic Information? Differentiate one from the
other and give your own examples.
4. Enumerate the four modes of environmental scanning. Give examples for
each type. As a manager. Is It always beneficial to conduct a formal search?
Explain your answer.
The SWOT Matrix Analysis
SWOT matrix is a structured assessment tool used to evaluate an organization,
industry, a place OI even a person in terms of set parameters like strengths,
weaknesses, opportunities, and threats Credited to Albert Humphrey in 1960, the
SWOT matrix classifies strengths and weaknesses as internal dynamics characterizing
an organization and threats and opportunities as external influences to the organization.
Specifically:
∙ Strengths are features that organizations possess, thus, giving it significant
advantage over others. ∙ Weaknesses are characteristics that place organizations at
a disadvantage relative to others. and may Just be limitations or vulnerabilities of
organizations.
∙ Opportunities are possibilities in the external environment that organizations can
exploit to their advantage.
∙ Threats are challenges in the external environment that can cause problems to
organizations.
Humphrey’s 2xZ matrix model (2005) suggests actions for issues arising from the
SWOT analysis according to four different categories. The recommended practical and
direct actions are presented in Table 2.1.
Table 2.1 SWOT Analysis Matrix
Strengths (Internal) Weaknesses (Internal)
Opportunities (External) Strengths/Opportunities Weaknesses/Opportuni
∙ Obvious natural ties ∙ Potentially
priorities attractive options
∙ Likely to produce ∙ Likely to produce
greatest ROI good returns if
(Return on capability and
Investment) implementation are
∙ Likely to be quickest viable
and easiest to ∙ Potentially more
implement exciting,
∙ Probably justifying stimulating,
immediate action and rewarding than S/0
planning, feasibility due to change,
study, or business plan challenge, surprise
tactics and benefits,
from addressing and
achieving
improvements

Threats (External) Strengths/Threats Weaknesses/Threats

∙ Easy to defend and ∙ Potentially high risk
counter ∙ Assessment of risk
∙ Only basic is crucial.
awareness, ∙ When risk is low,
planning, and ignore these
implementation are issues and do not
required to meet these be distracted by them.
challenges.

∙ Investment in these ∙ When risk is high,

issues is generally assess capability
safe gaps and plan
and necessary. to defend or avert in
∙ Primary Question: specific controlled ways.
“Are we properly ∙ Primary Question:
informed “Have we
and organized to deal accurately
with these issues and assessed
are we certain there are the risks of these issues
no hidden surprises?” and when risks are high,
 and “Since we are strong do we have specific
here, can any of these controlled reliable plans
threats be turned into to avoid/avert/defend?”
opportunities?”

Although the SWOT matrix has been considered an old process for evaluating the
strengths weaknesses, opportunities, and threats of an organization, it has constantly
proven its worth and, functionality when it comes to assessment. Divided into internal
and external environments it clearly focuses on the status of an organization. As a
result, logical inferences can be drawn and corresponding strategies can be
recommended.
QUESTIONS 2.2
1. What is SWOT Matrix Analysis? Explain its relevance to organizations.
2. What are the components of SWOT Matrix Analysis? What actions do
organizations have to do when their strengths are underutilized, their
weaknesses are not dealt L with, the threats to them are not minimized, and the
opportunities are not taken advantage of?
3. Look for a real-life case and apply SWOT analysis. Recommend corresponding
plans of actions or strategies.
The External Environment
The external environment today is highly complex. This fundamental paradigm
conspicuously characterized the global scenario Nations possess different levels of
growth and development. For example, power relationships have become dynamic,
volatile, uncertain, complex, and threatening. Multifaceted concerns, although distinct.
have become primordial issues among countries, causing differences in policies and
global interrelationships Oftentimes, an atmosphere of strategic negotiation,
compromises, and survival permeates. Consequently, knowledge of the broad
environment is considered an advantage for organizations when managers constantly
develop an audit “intelligence” of the environment.
Specifically, the external environment presents varying forces that influence
organizational direction and strategic decision-making. These forces are social, political,
technological, economic. mm and legal in perspective. The confluence of these forces
can present themselves as threats and challenges to organizations. On the other hand,
they could provide valuable opportunities. The analysis of the external environment is
referred to as PEST (Political, Economic. Social, and Technological) Analysis.
Social Forces
Special forces refer to important issues that are characteristic of global and local
societies. Society consists of individuals, families and communities, including their
beliefs, aspirations, traditions, and practices. Significant societal factors in the
environment create varying impacts on organizations. Some of the more critical social
concerns today are changing social structures, the world's aging population, the great
demand for health services, the evolving sophistication in the lifestyles of people, and
the cross cultural implications of mobility of peoples including migration, among others.
∙ Changing Social Structures. The social environment can be better understood
and analyzed in terms of broad social structures. Social structure refers to the
network of social institutions that includes the family and the community. The
family is one of the basic institutions of a social organization. it performs various
functions that include human reproduction, raising up children, and sending them
to schools to ensure a better life in the future. When bound together, families
form communities.

Today, social structures are significantly changing. Family sizes are

decreasing in developed countries like Europe and America. in China, the one-
child policy has been strictly implemented and monitored for the last decades,
although this law has now been relaxed. On the other hand, a greater number of
underdeveloped countries allow larger family sizes that bring about
accompanying social implications. As a result, there is a pressing need to provide
for a well balanced family like good education, decent housing system,
acceptable monthly incomes, safety and security in communities, and more
opportunities for livelihood. The interrelationships of these social constructs
describe today’s changing communal and shared structures, including marked
differences in universal and collective values, beliefs, morals, and religions.

∙ Aging Population/Demand for Health Services. There are more maturing and
aging individuals today. Like an inverted triangle, the baby boomers are greater
in number. Baby boomers are individuals born in the 1940s. Today, they are
precisely the people who need more medicine and health services. This reality
has fundamental social implications like the need to provide elderly people with
adequate medical care and community service.
Because of their deteriorating physical and physiological condition, senior
citizens need more doctors, nurses, and caregivers to attend to their curative
health requirements, and nutritionists to guide them in eating healthful food. They
need psychologists to tend to their emotional needs, adequate medicines to
address their therapeutic and remedial concerns, modern health equipment, and
facilities homes for the aged to provide them with comfortable welfare dwellings
and warm neighborhood centers to help them get smoothly through the aging
process.
∙ Sophisticated Lifestyles of People. Compared to the past, the lifestyles of people
today have dramatically changed, too. Their way of looking at themselves, the
 people around them, their lives and careers, their values, attitudes, philosophies,
and expectations have taken a deeper and wider perspective. They are more
demanding, complicated, varied and unique. Their priorities, as well as their
wants, are continuously changing. Whereas earlier generations were content with
having a simple abode to stay safe, today the n generation of people want to
own houses and live extravagantly. Once content W simple things, they expect
more from life and living.
∙ Cross-cultural Diversity. Similarly, the global community is getting figuratively
smaller. Workplaces are shifting and people in the global community are either
working of migrating to every part of the world. As a result, cross-cultural
diversity has become an important organizational issue; culture being a basic
component of the 910m, environment. When we speak of multicultures, we
consider the culture of the individual and the host country.

While foreigners bring with them their deep-rooted cultures, beliefs,

aspirations, values, traditions, perspectives, religion, and sense of nationalism,
there is a need to, them to also respect the culture of their host country and
adjust to its cultural tradition and idiosyncrasies. Therefore, to promote good
multicultural working interrelationships, flexibility, mutual acceptance, and
deference to intra-cultures are necessary.
Political Forces
There are crucial concerns confronting nations today. Geopolitical issues have
become the focus of major political powers. Some of these issues are political
independence, governments changing governments, balance of power, terrorism,
suicide bombing, global alliances, and chemical and nuclear warfare. These critical
problems are affecting the global political balance.
∙ Political Independence/Changing Governments. Political sustainability has
become the focus and concentration of developed and power-driven countries.
They fight wars to attain and maintain political supremacy. The call for global
political equilibrium has challenged nations to involve themselves in the
attainment of global peace and security. Global ideologies are the main
determinants of global support while glob; power is the main ingredient of global
leadership. Consequently, nations today are undergoing changes in government:
from communism to socialism to capitalism and from dictatorship to democracy.
More particularly, some colonized territories in the world are waging their own
wars to attain independence. Fighting, dissention, and mayhem characterize civil
wars. The hostilities between and among the protagonists are bloody and costly.
People are killed, families are displaced, and properties are destroyed affect the
very core of humanity.

∙ Terrorism/Suicide Bombings. The bloody and painful transition toward equality of

 basic human right; and the right to a better life have brought about critical
security problems like terrorism, kidnapping» suicide bombings, and hijackings.
News about wounded and dead children. elderly citizens, and innocent people
have become normal occurrences heard over radio and seen on television.
Kidnappings for ransom have become sure sources of finances. The fearless and
bold attacks by suicide bombers are a brazen testimony of disregard for law and
order.

∙ Chemical and Nuclear Threats. Some countries go on developing and producing

weapons with the intention of blackmailing and/or intimidating other countries.
True enough, the spread of deadly chemicals, viruses, and other forms of
microorganisms pose dangerous effects. This is likewise true with nuclear
military hardware. Nuclear threat is imminent where countries continue to beef up
their nuclear arsenals. Although nuclear plants are essentially useful in
harnessing nuclear energy, their misuse and abuse are threats to peaceful
coexistence. Danger looms and when used indiscriminately, these long range
and short range missiles can literally
erase the whole of humanity. In essence, political survival and power are the
great determinants of political decision-making and peaceful coexistence.

∙ Global Alliances. Politically, nations are aligning themselves for self-preservation

and more so, for global stability and strength. Today, no nation attempts to stand
alone because global relationships are essential to national survival. European
nations have bonded themselves as the European Union. The same ls true with
ASEAN countries.
Economic Forces
Economic realities have concomitantly come to the forefront. Economic issues greatly
affect the growth and development of a nation. Nations are strategizing to maintain a
continuum of financial stability. Most often, trade and investments are transacted to
ensure monetary security. Economic realities include globalization of products and
services, the presence of aggressive competitors and suppliers, the fall of large and
“supposedly” financially stable organizations, increasing oil prices, economic trade
agreements, the emergence of new markets, and the rise of China as a major economic
player in the world.
∙ Globalization. This is one major determinant of competition. Globalization can be
viewed from four perspectives: products, people, ideas, and money. Before,
simple and traditional goods were generally accepted but today’s consumers
demand flexibility and versatility in the products they use.

Multifaceted, multilayered, and multidimensional products and services in

the market are challenging firms to devise ways to meet these recent
 developments. Products like computers. appliances, clothes, bags, shoes, and
medicines are manufactured in one country and sold in other countries. Chinese
products “go” as far as Europe while Filipino baby dresses are sold in Africa.
Indonesian tables and chairs are fixtures in Philippine offices while European-
branded cell phones are everywhere, even in North Korea. This is a millennium-
manufacturing phenomenon.

People

Products
Ideas Money Figure 2.1 Globalization
GLOBALIZATION and
Services
Globalization likewise implies mobility of people. People migrate to count»; (1
their desire. Although the number of global citizens is increasing, a great majority a
peoples leave their own countries to work abroad. The Philippines, as a country, has
created its comparative advantage in the area of human resources, the country being
competitive when it comes to its nurses, caregivers, teachers, seafarers, and program;
Similarly, monetary dealings are conveniently transacted electronically through bank;
and other financial institutions as far as Cayman Islands. Lastly, inventions and
expertise are no longer limited to a particular nation. Indonesia has developed a cure for
bird flu, while the science of robotics is being experimented and actualized in Japan.
Everywhere, we see individuals with brilliant ideas and discoveries. Thus, we speak of
“globalized” people, money, products and services, and ideas.
∙ Competitors and Suppliers. Aggressive competitors and creative suppliers
compete to get a larger slice 'of the market, both energizing the industry and
business environments. Pricing, quality, differentiation, and innovation are the
usual criteria for business success with consumers more likely patronizing less
expensive but quality products.

Since quality is a given, it is necessary for survival. Thus, aside from

satisfying minimum quality requirements, organizations should offer differentiated
and innovative products and services to satisfy customers with discriminating
expectations. Doing this creates bargaining power and increases
competitiveness and profitability.

∙ Fall of Financially Stable Organizations. The last few years saw the downfall of a
number of financially successful organizations that were managed by
respectable and competent presidents and chief executive officers. The
 corporate fiascos of Enron, World.Com, and the Lehman brothers are but a few
examples of the more widely talked about financial catastrophes.

∙ Increasing Oil Prices. The never-ending increases in oil prices have been creating
economic instability in global communities. Characterized by unpredictability in
price and production, organizations using oil and any of its "derivative” products
find difficulty in projecting costs and profit figures. Planned strategies have
become difficult to actualize. A versatile commodity, oil is a multi-purpose raw
ingredient found in many products. Changes in oil prices are detrimental to the
survival and success of many organizations

∙ Economic Trade Agreements. Economic trade agreements among nations have

likewise become a vital bargaining power in a country’s economy. Bilateral and
multilateral economic treaties between and among economic global partners
provide trade priorities and privileges, allowing local products to reach other
markets. Examples of these products are clothes, furniture, bananas,
handicrafts, dried mangoes, fashion jewelry, and human resources. The World
Trade Organization (WTO), Asian Free Trade Organization (AFTA), North
American Trade Agreement (NAFTA), and Asia-Pacific Economic Cooperation
(APEC) are examples of these economic alliances. The implementation of zero or
near-zero tariffs on all traded products is now effective.

∙ Emerging Markets. Closely interrelated to the political, social, and economic

growth and development of a country is the emergence of different markets.
Developed, developing, and underdeveloped countries are economic markets
with unique needs, wants, demands. distinct traits. and peculiarities.
∙ Rise of China. One of the most potent economic markets in the world today is
China. It is seen both as a supplier and a big market. Constituting one-third of
the world’s population. China is a market for other countries’ products and
services. As a supplier, the country is capable of providing goods and services to
the world market. Although not apparent, the economic status of nations
indirectly affects political alliances.
Technological Forces
We live in a digital world. Another important catalyst of competition is technology. In the
1980's, information technology began its journey toward radical communication and
technology growth. Significant changes happening in the world today have been the
result of rapid developments in information technology. These technological advances
are observed in the fields of communication, business, banking, education, medicine,
security, and in all facets of everyday living.
∙ Communication Technology. Communication technology saw the proliferation of
mobile phones, popularity of text messaging, convenience of sending fax
 messages, usefulness of CCTV cameras for surveillance and simple monitoring,
and benefits of video conferencing, among others. The impact of these changes
in the area of communication technology cannot be overemphasized.

∙ Computer-integrated Business. Today, enterprise resource planning (ERP)

integrates business operations in marketing, accounting, production, operations,
and management. Computer-aided manufacturing makes production more
efficient, computer-aided design results in concise outputs while
telecommunication technology makes physical distances immaterial. Product
innovation is easier to create, product development is relatively shorter, less
cumbersome but more challenging, and fewer employees perform tasks due to
technology. In addition, enterprise resource planning is popularly applied in
supply chain activities like purchasing, inventory management, scheduling and
dispatching deliveries, distribution logistics, documentation and management of
accounts receivables and payables, and preparation of income statements and
balance sheets. Thus, it can be said that ERP has revolutionized operational
activities, making processes more precise and efficient. In production, processes
are computer-aided, computer integrated, and computer-manufactured, thereby
producing quality, more efficient, and cost effective goods and services.

∙ E-banking. Banking transactions like deposits, withdrawals, and payments can be

done online nowadays. intra-banking operations are more efficient while
international banking transactions are operated with accuracy and expediency.
Confidentiality of transactions can be largely maintained while anomalies can
easily be tracked as long as procedures for check and balance are in place.

∙ E-learning. One at the most recent developments in duration is distance or online

learning. It is learning from home, the office, while on vacation, or from any place
outside the four walls of a classroom. Popular among busy people, e-teaming has
become a convenient way of pursuing formal education: high school, vocation,
tertiary, graduate, and doctoral levels. Furthermore, e learning within the classroom
can be conducted since schools today have access to the Internet.
∙ Digital Medicine. Another surprising and most welcome development in the field of
medicines is the use of technology. Scientist conduct stem cell researches from
leftover human embryos with the hope of curing illness like diabetes, Parkinson’s
disease, and spinal and cord injuries These days, computer-guided robots
perform surgical procedures. Using androids, surgical operations are more
precise, cheaper, and less time consuming.

∙ E-security. Security is another vital global issue. The use of inflammation

technology inevitable in manufacturing missiles and other forms of ammunitions,
coding mum, secrets. safeguarding fortified installations, monitoring enemies,
securing soldiers, and planning counterattacks More particularly, robots can
 detonate bombs and opera. helicopters for reconnaissance missions. True, the
age of digital living has arrived and more changes are expected.
Environmental forces
Environmental responsibility is the urgent call of the global neighborhood.
Ecological damage is happening everywhere. There seems to be an utter disregard or
seeming Biodegradable Materials indifference about the environment. Environmentally,
no country can claim complete isolation. The safety and survival of one should be the
concern of others. After all, nations share water boundaries.
∙ Climate Change/Use of Biodegradable Materials. The effects of environmental
degradation, malpractices, neglect, and indifference are critical and serious. The
use of non-biodegradable materials emitting chlorofluorocarbons continuously
causes the widening and deepening of the hole in the ozone layer. As a result,
global warming has caused countries to experience extreme weather changes,
that is, from heat strokes on one end to extreme rainstorms on the other end like
extreme global climate changes storm surges, tsunamis, below zero-degree
climate weathers, earthquakes, volcanic eruptions, droughts, and forest fires.

∙ Environmental Waste Management. In many underdeveloped countries, noise,

air, and water pollution levels are high. Smog, fumes, and contaminants continue
to cause increasing incidents of diseases, more specifically those related to the
lungs. Mismanaged disposal of toxic wastes results in the occurrence of serious
and infectious illnesses; lack of clean water contributes to unhealthy living;
unhygienic surroundings are eyesores while lack of cleanliness produces grubby
citizens who are health hazards to others. Furthermore, the use of dynamites is
destroying marine life, disturbing the seabed, and killing aquatic plants and
corals. Oil and gas spills contaminate bodies of water and cause marine
imbalance.

∙ Preservation of Rainforests and Marine Life. Rainforests are no exception.

Continuous depletion and denudation of forests explain why torrential rains are
more destructive and intense nowadays. They result in damage to properties and
danger to human lives. Irresponsible mining is slowly destroying and running
down natural barriers that otherwise provide safety of abode to people.
These forms of man-made abuses and destructions are alarming. One realizes
that care of the environment is a serious concern and responsibility for everyone: the
individual, the organization, the community, and the government. In short,
environmental preservation is a global priority for everyone.
While some of the external environment forces do not directly affect us, they are
significantly vital to an organization. The global landscape, as earlier mentioned, cannot
allow an organization to run away from these realities. Somehow, these social, cross-
cultural, geopolitical, economic determinants will affect the way organizations manage
themselves in the near future. In some instances, these forces may be the reason for
their bankruptcy or eventual closure.
Questions 2.3
1. What is the external environment? What are the forces interplaying in the external
environment?

2. In relation to critical social concerns today in the external environment, how do

changing social structures, the world's aging population and great demand for
health services, the evolving sophistication in the lifestyle of peoples, and cross-
cultural diversity impact organizations?

3. How do geopolitical issues like political independence, changing governments,

balance of power, terrorism, suicide bombings, global alliances, and chemical
and nuclear warfare affect the global political balance?

4. In what ways do economic realities like globalization, competitors and suppliers,

the fall of financially stable organizations, increasing oil prices, economic trade
agreements, the emergence of new markets, and the rise of China as a major
economic player in the world affect the growth and development of nations?

5. How do technological advances observed in the fields of communication,

business, banking, education, medicine, and security, contribute to the decision-
making of organizations?

6. Environmental issues are urgent and critical today. What are these concerns and
why is environmental responsibility the urgent appeal of the global
neighborhood?
World’s Greatest Strategies
Jeffrey Bezos: Amazon.com
Jeffrey Bezos, 50, is relentless in pursuit of new things to sell. Amazon.com
dominates web retailing with $75 billion in annual sales. An estimate shows that the
company is offering 230 million different items and is expanding its product assortment
at a 24% annual clip. The company’s 20% plus annual revenue growth still delights Wall
Street that gives its chief a pass on profits.
Bezos takes calculated gambles, such as Amazon Web Services, which sells
computing as if it were just retail good. It has the potential to replace traditional
enterprise computing, and offers Amazon potential billions in new higher margin
revenues. “We like to go exploring, to wander into dark alleys, and see if they open up
into broad avenues," Bezos commented.
Strategies
 ∙ Customer Obsession. Leaders start with the customer and work backwards. They
work vigorously to earn and keep customer trust. Although leaders pay attention
to competitors, they “obsess" over customers.

∙ Ownership. Leaders are owners. They think long-term and do not sacrifice long-
term value for short-term results. They act on behalf of the entire company,
beyond just their own team. They never say “that’s not my job.”

∙ Invent and Simplify. Leaders expect and require innovation and invention tram
um, teams and always find ways to simplify. They are externally aware, looking
for my, ideas from everywhere, and are not limited by “not invented here.”

∙ Deliver Results. Leaders focus on the input for their business and deliver them
with the right quality and in a timely fashion.

∙ Insist on the Highest Standards. Leaders have relentlessly high standards; many
people may think these standards are unreasonably high. Leaders are
continually raising the bar and driving their teams to deliver high quality products,
services, and processes.
Source: Tiernan Ray, Barron's Special Report 2014

Strategic Guides:
1. Study the biography of Jeffrey Bezos, CEO of Amazon.com. Include his childhood,
if there is something significant, his interests, his educational attainment,
professional and career orientation, and other facts that might have contributed
to the success he is enjoying now.

2. Study the beginnings of Amazon.com. the challenges it encountered through the

years, and its journey toward success.
3. From the management, result-driven, practical, and inspirational strategies
implemented by Bezos at Amazon.com. which struck you as something worth
imitating? Explain your answer.
Multiple Choice
Directions: Read each items carefully. Choose the letter of the correct answer.
1. Primary data are collected:
a. through personal experience, observation. and experimentation
b. from researches and journals
c. from reports Internet sources, and other published materials
2. These are features that organizations possess, giving significant
advantage over others:

a. Strengths
b. Weaknesses
c. Opportunities

3. To possess organizational intelligence is:

a. To have expertise, insight, and wisdom
b. To study the minds of the employees
c. To think

4. When the individual directs viewing of information to specified facts and data
to be able to assess their general impact on the organization:
a. Informal search
b. Undirected viewing
c. Conditioned viewing

5. Social forces in the environment do not include:

a. Aging population
b. Food shortage
c. Demand for health services

6. The reality of living in global communities addresses the issue of:

a. Cultural diversity
b. Aging population
c. Sophisticated lifestyles

7. The challenge of extreme political ideologies affects the occurrence of:

a. Chemical and nuclear threats
b. Political independence
c. Suicide bombings and terrorism

8. Example of global political alliance:

a. NATO
b. Greenpeace
c. Patriot Act

9. Globalization, as a major determinant of competition, can be viewed from this

perspective: a. Religion
b. Ideas
c. Philosophy
 10. This country is seen both as a supplier and big market:
a. China
b. United states
c. Japan

11. Integrates business operations in marketing, accounting, production,

operations, and management:
a. Research and development
b. Enterprise resource planning
c. Strategic planning

12. The great and significant catalyst of competition:

a. Communication technology
b. Information technology
c. Re-engineering

13. These advances are observed in the fields of communication, business,

banking, education, medicine, security, and in all facets of everyday living:
a. Social
b. Economic
c. Technological

14. When an organization scans the environment:

a. It studies only the external environment
b. It studies only the internal environment
c. It studies both the internal and external environments

15. It consists of facts and data used by organizations to assist them in

achieving their vision, mission, and goals:
a. Strategic information
b. Strategic policy
c. Strategic research
Identification
Direction: Read each item carefully. Identify the correct terminology to complete the
given statements.

1. Refers to the network of social institutions that include the family and the
community = Social structure
2. Is the study and interpretation of the forces existing in the external and internal
environments = Environmental Scanning

3. Are data collected from reports, internet sources, and other published materials

= secondary information

4. Consists of the facts and data used by organizations to assists them in

achieving their vision, mission, and goals = strategic information

5. Is when the individual is exposed to information with no specific informational need

in mind = undirected viewing

6. Is a structured assessment tool used to evaluate an organization or industry

in terms of set parameters like strength, weaknesses, opportunities, and
threats = SWOT matrix

7. Is the effect of environmental degradation, malpractices, neglect, and

indifference = climate change

8. Refers to the expertise, insight, and wisdom possessed by an entity =

organizational intelligence

9. Is a surprising and most welcome development in the field of medicine

through the use of technology = digital medicine

10. Involves deposits, withdrawals, and payments served online = E-banking