CITY GOVERNMENT OF SAN PABLO

DALUBHASAAN NG LUNSOD NG SAN PABLO

CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

MODULE IN FIN M 8

CHAPTER: CHALLENGES IN THE EXTERNAL ENVIRONMENT

LEARNINGOUTCOMES
LEARNING OUT COMES
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 have proved beneficial or detrimental to an organization.

SCANNING THE ENVIRONMENT

Organizations exist to survive. Given their vision and mission statement and set goals and
objectives, it is for organization 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 entry. 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 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 an entity. The competitive environment covers competitors, supplier, 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
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
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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 organizations 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 Aguilar (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 large chunks of information
are quickly dropped from the individual’s attention. Thus, the 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
maybe 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. 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 analysis, among others. Appreciably, results of
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
ALCU Commission on Accreditation – Level 1 Accredited
Member, Association of Local Colleges and Universities
Excellence • Leadership • Service Member, Local Colleges and Universities Athletic Association, Inc.

the formal search normally provide organizations bases for decision making and courses of
action.
4. Informal Search. 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.

In summary, entitles 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.
Question 2.1
a
1. Why should organizations possess organizational intelligence?
2. How will you define environmental scanning? Explain why conducting
environmental scanning is important.
3. What are the two sources of strategic information? Differentiate one from
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

The SWOT matrix is a structured assessment tool used to evaluate an organization,

industry, a place or 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 environmental that can exploit to their
advantage.
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DALUBHASAAN NG LUNSOD NG SAN PABLO
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 Threats are challenges in the external environmental that can cause problems to
organizations.

Humphrey’s 2x2a 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 tables 2.1

Table 2.1 SWOT Analysis Matrix

Strengths (Internal) Weaknesses (Internal)

Strengths/Opportunities Weaknesses/Opportunities
 Obvious natural  Potentially attractive
priorities options
 Likely to produce  Likely to produce
greatest ROI (Return good returns if
on investment) capability and
 Likely to be quickest implementation are
and easiest to viable
implement  Potentially more
 Probably justifying exciting, stimulating,
Opportunities immediate action and rewarding that
(External) planning, feasibility S/O due to change,
study, or business challenge, surprise
plan tactics and benefits
Primary Questions: “If we from addressing and
are not yet looking at these achieving
areas and prioritizing them, improvements
then why are we not?” Primary Questions:”What is
actually stopping us from
doing these things, provided
they truly fit strategically and
are realistic and substantial?”

Strengths/Threats Weaknesses/Threats
 Easy to defend and  Potentially high risk
counter  Assessment of risks is
 Only basic awareness, crucial
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planning, and  When risk is low,

implementation are ignore these issues and
required to meet these do not be distracted by
challenges. them.
 Investment in these  When risk is high,
issues is generally safe assess capability gaps
and necessary and plan to defend or
 Primary avert in specific
Questions:”Are we controlled ways.
properly informed and  Primary Question:
organized to deal with “Have we accurately
these issues and are assessed the risks of
we certain there are no these issues and when
hidden surprises?”And risks are high, how we
“Since we are strong have specific
here, can any of these controlled reliable
threats be turned into plans to
opportunities? avoid/avert/defend?”
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’s
clearly focus on the status of an organization. As a result, logical inferences can be drawn and
corresponding strategies can be recommended.

Question 2.2

1. What is SWOT matrix analysis? Explains 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 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?
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
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The External Environment

The external environment today is highly complex. This fundamental paradigm

conspicuously characterizes 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, compromise, and survival permeates. Consequently,
knowledge of the broad environment is considered an advantage for organization 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, environmental, and legal in perspective. The confluences 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

Social 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.

Social Forces
Social Forces

 Changing Social Structures

 Aging Population/demand for
health services
 Sophisticated lifestyle of people
 Cross-cultural diversity
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 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 god 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 and
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 like homes
for 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, 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
deeper and wider perspective. They are more demanding, complicated, varied and
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DALUBHASAAN NG LUNSOD NG SAN PABLO
CHED Recognized Local College
TESDA Recognized Programs
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Member, Association of Local Colleges and Universities
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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 new
generation of people wants to own houses and live extravagantly. Once content with
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
or 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 global
environment. When we speak of multi-cultures, 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 for them to also respect the culture of their host country and adjust to its cultural
traditions 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, changing
governments, balance of power, terrorism, suicide bombings, global alliances, and chemical and
nuclear warfare. These critical problems are affecting the global political balnce.

Political Forces

 Political Independence/changing
governments
 Terrorisms/suicide bombings
 Chemical and Nuclear Threats
 Global Alliances

 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.
 CITY GOVERNMENT OF SAN PABLO
DALUBHASAAN NG LUNSOD NG SAN PABLO
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Global ideologies are the main determinants of global support while global power is the
main ingredients 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
aging 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. The
affect the very core of humanity.
 Terrorism/Suicide Bombings. The bloody and painful transition toward equality of
basic human rights and the rights to be a better life have brought about critical security
problems like terrorism, kidnapping, suicide bombings, and hijacking. News about
wounded and dead children, elderly citizens and innocent people has 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 co existence. 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 Alliance. Politically, nation 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 is true with ASEAN countries.

Economic Forces

Economic realities have concomitantly come to the forefront. Economic issues greatly
affect the growth and developments of nations are strategizing to maintain a continuum of
financial stability. Most often, trade and investments are transacted to ensure monetary security.
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Economic realities include globalization of products and services, the presence of aggressive
competitors and supplier, the fall of large and “supposedly” financially stable organizations,
increasing oil prices, economic trade agreements, increasing of new markets, and the rise of
china as a major economic player in the world.

Economic Forces

 Globalization
 Competitors and Suppliers
 Fall of financial Stable
organizations
 Increasing Trade Agreements
 Emerging Markets
 Rise of China

 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 the
Philippines offices while European-branded cell phones are everywhere, even in North
Korea. This is a millennium-manufacturing phenomenon.
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PEOPLE

PRODUCTS
IDEAS GLOBALIZATION AND
SERVICES

MONEY

FIGURE 2.1 GLOBALIZATION

Globalization likewise implies mobility of people. People migrate to countries their desire.
Although the number of global citizens is increasing, a great majority of peoples leaves 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 programmers. Similarly, monetary dealings are conveniently
transacted electronically through banks 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 Supplier. 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.
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DALUBHASAAN NG LUNSOD NG SAN PABLO
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 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 prices
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 ingredient7 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 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
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Technological Forces

 Communication Technology
 Computer-Integrated Business
 E-banking
 E-learning
 Digital Medicine
 E-security

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, 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 account receivable and
payables, and preparation of income statements and balance sheet. Thus, it can be said
that ERP has revolutionize operational activities, making computer-integrated, and
computer manufactured, thereby producing quality, more efficient, and cost effective
goods and services.
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 E-banking. Banking transaction like deposits, withdrawal, and payments can be done
online nowadays. Intra-banking operation our more efficient while international banking
transaction 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 of the most recent developments in education is distance or online
learning. It is learning from home, the office, while in vacation, or from any place outside
the four walls of the classroom. Popular among busy people, e-learning has become a
convenient way of pursuing formal education: high school, vocational, tertiary, and
graduate and doctoral levels. Furthermore, e-learning within the classroom can be
conducted since school today has access to the internet.
 Digital machine. Another surprising and most welcome development in the field of the
medicine is the use of the technology. Scientist conduct stem cells researchers from
leftover human embryos with the hope of curing illnesses like diabetes, Parkinsons
disease, and spinal cord injuries. This days, computer guided robot perform surgical
procedures using androids, surgical operation are more precise, cheaper, and less time
consuming.
 E-security. Security is another vital global issue. The use of information technology is
inevitable in manufacturing missiles and other forms of ammunition, coding military
secret, safeguarding fortified installations, monitoring enemies, securing soldiers, and
planning counter attacks. More particularly, robots can detonate bombs and operate
helicopters for reconnaissance missions. True, the age of the 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 in difference
about environment. Environmentally, no country can claim complete isolation. The safety and
survival of one should be the concern of others. After all, nations shares water boundaries

Environmental Forces

 Climate Change/Use of Biodegradable Materials

 Environmental Waste Management
 Preservation of Rainforest and Marine Life
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 Climate Change/Use of Biodegradable Materials. The effects of environmental

degradation, malpractice, neglect, and indifferences 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 may 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 waste results in the occurrence of serious and infectious illnesses, lack
of clean water contributes to unhealthy living: unhygienic surrounding are eyesores while
lack of cleanliness produces grubby citizens who are health hazard 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.
 Preservations of Rainforests and Marine Life. Rainforest are no exception. Continuous
depletion and denudations of forests explain why torrential rains are more destructive and
intense nowadays. They results in damage to properties and danger to human lives.
Irresponsible mining is slowly destroying and running down natural barriers that
otherwise provides safety of abode to people.

This form of man-made abuses and destructions are alarming. One realizes that care of
the environments is a serious concern and responsibility for everyone: individual, the
organization, the community, and the government. In short, environmental preservations
are global priority for everyone.

While some of the external environments forces do not directly affect us, they are
significantly vital to an organization. The global landscape, as earlier mention, cannot
allow an organization to run away from this reality. Somehow, the social, cross-cultural,
geopolitical, economic determinants will affect the way organizations manage themselves
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in the near future. In some instances, this force 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 relations to critical social concern today in the external environment, how do changing social
structures, the world’s aging population and great demand for health services, evolving
sophistication in the lifestyle of peoples, and cross-cultural diversities 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 affects the global
political balance?
4. In what ways do economic realities like globalization, competitors and suppliers, the fall financially
stable organization, increasing all prices, economic trade agreements, the emergence of new market,
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 field of communications, business banking,
education, medicine, and security contributes to the decision-making of organizations?
6. Environmental issues are urgent and critical today. What are these concerns and why is
environmental responsibilities the urgent appeal of the global neighborhood?