What is environmental scanning in strategic management

Signature Assignment: Environmental Scan Paper 2

Environmental Scan
Organizations must first scan its internal and external environment before the organization can being developing strategy formulation; it is essential for the organization to identify possible external opportunities and threats and internal strengths and weaknesses within the environment. “Environmental scanning is the monitoring, evaluation, and dissemination of information from the external and internal environments to key people within the corporation” (Wheelen & Hunger, 2012, p. 98); environmental scans help organizations eliminate strategic surprise and secure the organization’s long-term health. Within an organization’s environment are several external and internal factors, organizations should conduct environmental scans to determine projection on the external and internal factors that could possibly impact the success of the organization. Environmental scans refer to the control and use of an organization’s information regarding patterns, trends, and external and internal relationships developed within the organization. An effective, thorough, and productive scan can assist management and key people within the organization in making decisions about the organization’s future path towards success.

The following paper will evaluate the external and internal environment and use of environmental scan conducted by Apple Inc. and Samsung Electronics. The paper will also analyze the competitive advantage of each company, evaluate strategies developed and used by each company to create value and gain competitive advantage, examine measurement guidelines utilized by each company to verify the company’s strategy formulation is effective, and evaluate the effectiveness of those developed measurement guidelines.

Apple Inc.

Apple Inc. is identified as the most successful technological company, not only in the world but in the history of companies. The value of the company’s worth is $1.25 trillion with a stock price of $728.35 billion. In February 2015, the company reportedly had revenue of $74.6 billion with $18 billion in profits for a single quarter. Apple is infamous for annihilating its competition and gaining competitive advantage. Being ranked on the Forbes list as twice as valuable as Microsoft, the world’s second most valuable brand, may give the impression that the company has always been a successful leader in technology, this is far from the truth. There was once a time when Apple Inc. was at it worse point and forty-five days from bankruptcy. Apple Inc. developed remarkable strategies, along with extensive transformation to become what is now considered the largest technology company in the world.

Apple Inc. is an international corporation which develops and produces consumer electronics, computer software, and commercial servers; the products of the corporation include: iPhone, iPad, iPod, and Macintosh computers. The internal environment creative, fast-paced, and dynamic; Apple developed an environment human resource is encouraged to be part of the corporation’s brand and image. The corporation prides itself creating a culture that promotes values which support the corporation’s image, produces customer expectations to new experiences through the corporation’s products, and develops an environment employee’s love and can be creative, innovative, and productive. The internal environmental scans display Apple’s intense ability for success. Apple maintains a low amount of debt to provide access to the corporation’s capital for other use. It is committed to R&D (Research & Development) based off the access it provides the corporation to the most recent technology, which allows the corporation maintain its position and competitive advantage. The brand image advocates quality and reliability, while its marketing strategy associates the use of key celebrities in advertisements to attract consumers induced set. The multi-divisional structure of Apple allows the corporation to keep functioning at the pace best suited for the corporation in place of stretching out top management.

Apple Inc. centers external environment on two strategies: alliance and internal growth. Apple has developed powerful, beneficial alliances with key corporations such as AT&T and Microsoft for the purpose of furthering computer growth within the company and assure accessibility to software which recognizable worldwide by consumers. The second strategy focuses on the concentration of internal growth implemented through development of new products for the market. Global expansion is also substantial to the company as considerable consumers become present in countries Apple has not yet been established and serve.

When it comes to strategic development, Apple Inc. is superior when it comes to developing strategies to defend its competitive advantage; there are three key areas within the company that stand out in the company’s strategy development: hardware and software, iTunes and digital asset management, and retail strategy. Apple Inc. is considered more of software than hardware company that develops exceptional hardware they deem worthy to run the company’s software. Not only has Apple created a superb OS (operating system) that distinguishes them, but the company also designs “core” software called iLife. iLife software exceeds most third party software in regards to creating music, movies, DVD’s, etc. and will be included with each Mac in the Apple’s latest OS version. Apple Inc.’s ability to be both a software and hardware company is a huge defense mechanism due to most technologies companies are solely either a hardware company or software company. iTunes is probably the most strategic element of Apple’s strategic development. September 9th 2009, Apple announced iTunes had credit card account data for than 100 million consumers making them one of the largest digital retailers in the world. iTunes has developed a trust relationship with their consumers providing the company several promising prospective purchases from consumers. The retail strategy of Apple Inc. to create and produce their own retail stores adds immense gain to the company’s competitive advantage. Several companies have tried but failed miserably at owning their own retail store. Apple’s ability to control its own retail experience speaks volume because all of the other PC companies are restricted to the cut-throat retail battles. Apple creates and utilizes graphs and metrics as measurement guidelines to verify that the strategies implemented are effective. The success of Apple proves that not only are the measurement guidelines being used are effective they are a force to be reckoned with.

Samsung Electronics

Samsung Electronics is constituent of one of the biggest multi-billion dollar corporations in the world; whose core philosophy focuses on devoting the company’s talented people and technologies to produce the best products and services to contribute to global society. Several Samsung critics contend that the company’s success is owed to copying and then fine-tuning the innovations of others. But Samsung is known as the global leader in televisions, screen technology, chip design and batteries which leads several to conclude the company is doing something right in terms of innovation. Samsung’s ability to compete and line up against forerunners such as Apple and Google Inc. is by the company aim towards patent evasion when innovating. “From its early forays into innovation, competing against Toshiba in washing and drying machines, Samsung has chased patents in areas where its competitors appear to have protection and has oriented its innovation efforts to find new patentable ideas in its competitors’ backyard” (Shaughnessy, H, 2013).

“In a challenging environment fraught with rapid change and uncertainty…a leader must go beyond the boundaries of current markets and technologies” (Samsung, 2015). Samsung is an international corporation with an estimated 673Samsung Group global office affiliates located within 90 countries. $16.1 billion investment made in future technologies and the company was ranked number 1 global market share across 17 categories in 2013. 20 years ago, the company made a commitment to never stop improving, to always keep changing (Samsung, 2015). Since being established in 1969, that is precisely what Samsung has accomplished. Through an internal environment of relentless innovation and discovery, the company continues to transforms the worlds TVs, smartphones, tablets, PCs, cameras, home appliances, printers, LTE systems, medical devices, semiconductors, and LED solutions (Samsung, 2015). Samsung’s network extends across the world and the company takes pride in their diversely, creative, and talented employees who drive the company’s growth. Like Apple Inc., the company boldly invests and is committed to R&D and future technologies. It operates 34 R&D centers globally, with an estimated 69,000 employees devoted to R&D. Samsung believes living by core values, along with a rigorous code conduct, is key to good business and the heart of every decision made by the company (Samsung, 2015).

Samsung utilizes the STEEPLE analysis as part of the company’s strategic analysis for the medium and long term, along with the assessment of Samsung prospects. With Samsung’s recent unhappiness with operating within leading markets alone, the company’s decision to expand into new markets shows that it wants to cover as many countries as possible and requires an analysis that provides concentrated information which covers various aspects of the external environment, such as STEEPLE. The STEEPLE analysis focuses on the following 7 external environmental drivers: Social, Technological, Economic, Environmental, Political, Legal, and Ethical. Strategic analysis such as STEEPLE provides Samsung with the competitive advantage it needs to place the company in a better position than competitors like Apple and Google. The telecommunications market is extremely competitive. Samsung’s decision for expansion into new markets is a very effective strategy which builds on the company’s strength while focusing on consumers’ needs. The STEEPLE analysis guidelines prepares Samsung to navigate the global market, as well as creates value and helps the company sustain competitive advantage through innovative R&D teams with a different style and mode of working methods.

STEEPLE and Samsung’s core values and code of conduct are utilized by the company as measurement guidelines for verification that the company’s strategies are effective. The results as a networked company who emphasizes on speed and flexibility in regards to decision making and the company’s many accomplishments displays the effectiveness of its measurement guidelines. The measurement guidelines, along with continuous learning, reflects Samsung’s growth and its employees support towards each other’s growth and developing relationships through innovations and new ideas.

Conclusion

Environmental scans are extremely beneficial and effective to organizations. Through SWOT analysis environmental aid the organization with identifying its strengths and weaknesses and can used as a measurement guideline for effective competitive advantage position against competitors. According to Wheelen & Hunger (2012), before an organization can begin strategy formulation, it must scan the internal environment for strengths and weaknesses and its external environment to identify possible threats and opportunities (Wheelen & Hunger, 2012). Both Samsung and Apple, Inc. are two successful, forerunner companies who exemplify the utilization of environmental scans.

References

Wheelen, T. L., & Hunger, J. D. (2012). Concepts in Strategic Management and Business Policy: Toward Global Sustainability: Pearson Education, Inc.

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Elgan, M. (2015). ComputerWorld. Why Apple is the Most Successful Company in History. Retrieved from http://www.computerworld.com/article/2883747/why-apple-is-the-most-successful-company-in-history.html

Bajarin, B. (2011). The Daily TechPinion. Why Apple has a Strong Competitive Advantage. Retrieved from https://techpinions.com/apples-competitive-advantage/5

Etherington, D. (2013). Tech Crunch. Apple’s Retail Strategy Proves that if They Build It, You Will Come (And Spend). Retrieved from http://techcrunch.com/2013/02/14/apples-retail-strategy-proves-that-if-they-build-it-you-will-come-and-spend/

SuccessStory. (2015). Apple Inc. Success Story. Retrieved from http://successstory.com/companies/apple-inc

Makos, J. (2015). PESTLE Analysis. STEEPLE Analysis of Samsung. Retrieved from http://pestleanalysis.com/steeple-analysis-samsung/

Shaughnessy, H. (2013). Forbes.com. What Makes Samsung Such an Innovative Company?. Retrieved from http://www.forbes.com/sites/haydnshaughnessy/2013/03/07/why-is-samsung-such-an-innovative-company/

Samsung. (2015). The Way Forward. Retrieved from http://www.samsung.com/us/aboutsamsung/samsung_group/download/2014-aboutsamsung-eng.pdf

Samsung. (2015). Values & Philosophy. Retrieved from http://www.samsung.com/us/aboutsamsung/samsung_group/values_and_philosophy/