External and Internal Environmental Analysis

By- Joselyn Dietrich

External and Internal Environmental Analysis

Complete the external environmental scan for your organization.

Perform an internal competitive environmental scan for your organization.

Write a summary of no more than 1,400 words that does the following:

• Identifies and analyzes the most important external environmental factor in the remote, industry, and external operating environments 

The remote external environment is the “economic, social, political, technological, and ecological factors that originate beyond … any single firm’s operating situation,” (Pearce & Robinson, 2013).The most important factors for this business is the social and technological aspects of the business. The social implications to be considered here include the privacy that most people value when it comes to their finances. Many people have expressed that they are uncomfortable with the idea of letting other people have access to their financial information. This can be a huge factor because in order to be a bookkeeper, there is no degree that is required. Hiring an accountant or a professional tax preparer, there are certain levels of certification that are needed to hold these titles, so it gives the client a sense of security. It would be in the owner of a bookkeeping business’ best interest to attain a variety of certifications or other ways to gain credibility with the potential client base.

The technological aspect of the remote environment is mostly concerned with the software the business will be using to keep track of the finances for the company, and how the financial information will physically get to the bookkeeper. Luckily, there is one main software system that most small business are willing to use or are already attempting to use. For this situation, the bookkeeping business will need to become an expert in this software and be able to have access to each different section of this program, whether it is on a hard drive or cloud based. The second factor that will need to be addressed is the fact that the bookkeeper will need to either attain the supplemental documentation (receipts, check carbon copies, etc.) physically or electronically. Many people that are running a small business on their own do not have an electronic way of tracking receipts and checks because there has not been a need for it in the past because of the small scale on which they have been doing business. This has created a sort of resistance to moving to electronically attaining the financial documentation because the business owners just have a bag of receipts. This can potentially limit the target market to owners that are physically located in the same city as the bookkeeping business.

The industry environment refers to the “general conditions for competition that influence all businesses that provide similar products and services,” (Pearce & Robinson, 2013). The most important factor within the industry of the external environment is the low barriers to entry. As stated in the previous section, because of the technological aspect of the remote environment, the industry is limited to the competitors that work within the same city of the bookkeeping business. Because of the target market, small business owners, who are the very general target market for this bookkeeping business, are very active within the city with networking groups or business coaching. The business owners, especially in business coaching, are there because they value their time and are looking for ways to maximize it, which is what this bookkeeping business is providing. The competitive aspect of this industry is fairly low, because it is so heavily word of mouth, networking oriented, and very location specific. By being involved as an owner of a small business, it creates a sort of common ground and a sense of loyalty and credibility with a huge reach not only to the people in the business coaching but also to other people that they might meet who are in a similar situation. There are, of course, other businesses that do the same type bookkeeping work, but because it is a one person job, there are much more businesses in the city than any one person can handle. So while these other businesses are considered the competition, it is also in the business’s best interest to use these other businesses for referrals of clients that they just don’t have the time to take on.

The operating environment is “the competitive situation that affects a firm’s success in acquiring needed resources or in profitably marketing its goods and services,” (Pearce & Robinson, 2013). In the case of this bookkeeping business, there are no actual resources, physical location needs, or personnel requirements because it is a single person doing the work electronically. The most important factor in this environment is the price competitiveness and knowing what the customer profiles are. The business owners are currently able to do the services the bookkeeping business is looking to provide on their own. The pricing needs to be considerate of the fact that these are small businesses, most likely on small budgets, and that the price needs to reflect the amount of income that the small business owner can bring in by spending time on their work instead of making entries in their accounting software. Also, the time spent at the end of the year to get the accounting in order to send to accountants is almost completely eliminated along with the stress that comes from the last minute scramble.

 

• Identifies and analyzes the most important internal strengths and weaknesses of your organization: include an assessment of the organization’s resources

Internally, the most important weakness is the lack of experience and clientele from the new bookkeeping business. The client is putting a lot of trust into a person keeping track of their financials and being new to the industry can be a deciding factor against a new bookkeeper for potential clients. That being said, the most important strength is the flexibility that not having a full schedule of clients provides. It is often advantageous to be able to work with a client to adapt to what their specific needs are in order to accommodate them, whereas a more established firm might not have that flexibility.

• Assesses the organization’s competitive position and possibilities 

The owner of this bookkeeping business is new to bookkeeping independently, but has worked with several different types of businesses as an employee. Through this experience, there have been a few mentors that are available and willing to help with questions, but who are also willing to pass on smaller, manageable clients that require less work than the mentor wants to take on. An example of this would be a client that only would require this mentor to work about an hour a month, which for them isn’t worth taking on a new client for, which this mentor then passes on to the new bookkeeping business. For the new bookkeeper, it might take two hours a month, but would cost less per hour since there isn’t as much experience that this owner is bringing to the table. While this seems a disadvantage at first glance, this is actually a huge selling point because it is less expensive now for the client. The owner also has the opportunity to work in an automatic yearly raise to adjust for the cost of living or inflation, plus the owner also has another year of experience under their belt. From the client’s point of view, this is reasonable because they can agree that if they are happy with the services they would be willing to pay a small amount more. In addition, each new client, however small, adds to the new bookkeeper’s client base and the more experience with a variety of businesses the better.

• Analyzes the structure of the organization and how this affects organizational performance

Due to the nature of the business, the organizational structure is fairly straightforward. There is one person as owner, manager, and employee. Beyond this, there needs to be a system of other businesses that can assist the bookkeeping business on areas that the owner is not an expert in. One major one is an accountant and tax preparer. Having another small business as a partner that will provide the necessary audits throughout the year, manage the state and federal taxes as they are due, etc. will provide the client with a complete service to handling all of their finances, as opposed to being limited by the lack of certifications.

 

We have to review this-

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 2nd one- By Dena

External and Internal Environmental Analysis

More and more Americans today are realizing that there are limitations to Western medicine and science. They are becoming increasingly concerned about the long term vulnerabilities and problems that can be created by prescribed medicines as well as cost of health care and distrust toward pharmaceutical companies. In 2012, the Nation’s health dollar was $2.8 trillion in which 32% of this total was spent on Hospital Care, 20% on Physicians and Clinical Services, and 14% to Other (Health Programs, Medical Products, Personal Care, and Government Health Activities).  (CMS.gov Centers for Medicare and Medicaid Services) Today, Americans are in search of how they can control his or her preventions, responses, and expenditures toward illnesses and medical care. In 2010, legislation passed The Affordable Care Act, effective January 1, 2014, in which allowed Title VI Transparency and Program Integrity to enable patients to have more control over his or her decision making by providing more information regarding healthcare services and providers. (DOL website) Since then the National prevention Council was created in which developed the National Prevention Strategy educating the benefits of prevention for health.

“Preventing disease requires more than providing people with information to make healthy choices. While knowledge is critical, communities must reinforce and support health, for example, by making healthy choices easy and affordable. We will succeed in creating healthy community environments when the air and water are clean and safe; when housing is safe and affordable; when transportation and community infrastructure provide people with the opportunity to be active and safe; when schools serve children healthy food and provide quality physical education; and when businesses provide healthy and safe working conditions and access to comprehensive wellness programs.” (NHS write-up)

Comprehensive medical care is moving out of the hospital environment and is becoming more personalized, focusing on proactive and prevention services through the perspective of health and wellbeing. Wellness is a concept that is described as the holistic outlook of health that is centered on an individual’s physical, social, and mental well-being which is the core capability delivered from Step of Faith Health and Wellness.

In order for Step of Faith to be both successful and competitive within the changing perspectives of healthcare, an analysis of their external and internal companies’ environment is required. The purpose of this paper is to analyze Step of Faiths most important external and internal strength and weakness, their competitive positioning, and the structure of the company and how this affects their performance.

External environmental factors are essential to identify when determining and analyzing threats, constraints, and opportunities. When researching these interrelated factors the most important to take in consideration are the social, political, and competitive positioning. These factors are more direct toward influencing Step of Faiths prospects within the health and wellness industry. The most vital threat to the company is the social impact due to the socioeconomic status (SES) of the surrounding environment. SES is best used to describe the factors of a person’s lifestyle in which includes his or her education, income, and occupation. (Website) SES studies need to be considered because there is documentation that reflect the relationship between the different levels of SES’s effects with healthy foods, medical care, and physical activity opportunities. Economic and social circumstances do affect an individual’s health status, the lower an individual is on the social ladder is more susceptible him or her are to risks of illnesses. According to Website, “Low SES may result in poor physical and/or mental health by operating through various psychosocial mechanisms such as poor or “risky” health-related behaviors, social exclusion, prolonged and/or heightened stress, loss of sense of control, and low self- esteem as well as through differential access to proper nutrition and to health and social services.” Step of Faith is based out of Cincinnati, Oh in which researching the surround areas census and demographic is essential toward understanding the potential social impacts.

Cincinnati’s total population is 296,943 in which 142,672 are males and 154,271 are females. This is an important factor because when compared, woman are 29% more likely to seek, report, and be treated for physical and mental health problems than the equated 17% of men when studied. (Better Or Worse: A Longitudinal Study Of The Mental Health Of Adults In Great Britain, National Statistics, 2003) Out of the total population for Cincinnati 50,638 of those individuals occupation is within management, business, science, and arts; 33,917 are sales and office; 28,433 are service occupations; and 16,031 are production, transportation, and material moving occupations. In the Cincinnati area, 18% are either dropouts or was not enrolled and not graduated, 82% of individuals 25 years and older have a high school diploma, and 30% of the population has a bachelor degree or higher. Research of the Cincinnati area also indicated that out of 132,591 household incomes, 22,496 are less than an annual salary of $10,000. The annual median household income within the Cincinnati area is $33, 681, whereas 72, 145 households exceed the annual median, 37,950 households are below the annual median. Lastly, the poverty status is totaled at 62,534 individuals and income in the past 12 months below poverty level was 13,738 people.

Politically, the activation of the Affordable Care Act plays an important factor when analyzing external factors for Step of Faith. The benefit of this act for Step of Faith is the fact that it influences employers to participate in wellness programs by initiating incentives for promoting healthier workplaces. According to DOL website, “The Departments of Health and Human Services (HHS), Labor and the Treasury are jointly releasing proposed rules on wellness programs to reflect the changes to existing wellness provisions made by the Affordable Care Act and to encourage appropriately designed, consumer-protective wellness programs in group health coverage. Evidence shows that workplace health programs have the potential to promote healthy behaviors; improve employees’ health knowledge and skills; help employees get necessary health screenings, immunizations, and follow-up care; and reduce workplace exposure to substances and hazards that can cause diseases and injury.”

Competitively, within the Cincinnati area, research indicates that there are six other listed dedicated health and wellness facilities. Other facilities listed are either divisions or services provided by a hospital or fitness center. Out of the other six competitors there is only one that extends holistic health and wellness services such as Step of Faith. According to Website, “The World Health Organization estimates 65% – 80% of the population use holistic naturopathic medicine as a primary form of health care.” This information is beneficial toward understanding the demand from the consumers, where Step of Faith stands against potential competitors, and using the information to create opportunities.

Step of Faith is a small business and is operated by Dr. Denise Lackey. There are advantages for operating as a small business and maintaining a small company structure. By doing this, it allows Step of Faith to have the advantage of being able to change their tactics or plans easier and faster than larger companies. Creativity and decisions are made quicker because there are fewer people involved within the process. Another advantage is that it allows Step of Faith to remain personal with their customers. Dr. Lackeys message that she shares on the company website relays her personal inspirations and motives behind her belief and commitment toward health and wellness. She relays a message of care and one on one services and education toward holistic health and wellness in which fits the small businesses advantages.

In summary, the purpose of this paper was to analyze Step of Faiths most important external and internal strength and weakness, their competitive positioning, and the structure of the company and how this affects their performance. When analyzing their external strength and weaknesses, the social factor could be seen as a weakness however; their political and competitive position is Step of Faiths strengths. Regarding internal weaknesses and strengths, being a small business could be reported as both, however; due to the message that is communicated from Dr. Lackey this is considered a strength for Step f Faith. Finally, Step of Faiths internal structure is a lean structure which has fewer employees, fewer management, more adaptability, and more flexibility which allows for more concentration on the customers than the business.

References:

http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html

http://www.acs.edu.au/info/natural-health/mental/social-influences.aspx

http://www.ohiocities.com/counties-in-ohio/hamilton-county-oh/city-of-cincinnati-ohio-census/

http://www.naturalhealers.com/natural-health-careers/article/holistic-health

-career-boom

http://www.hhs.gov/healthcare/rights/law/

http://www.surgeongeneral.gov/initiatives/prevention/strategy/report.pdf

http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-an

d-Reports/NationalHealthExpendData/Downloads/PieChartSourcesExpenditures2012

.pdf

http://www.dol.gov/ebsa/newsroom/fswellnessprogram.html

http://www.hindawi.com/journals/jcnc/2012/596749/

Pearce, J. A. & Robinson, R. B. (2013). Strategic Management: Planning for Domestic and Global Competition (13thed). New York, NY: McGraw Hill

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3rd one- By Jag

External and Internal Environmental Analysis

Every business should conduct and environmental analysis to identify the environmental factors and how these factors has a direct impact on their business.  Environmental analysis at Pfizer is the measuring how the company is doing relatively to its competitors or other businesses within the industry and identifying ways to improve the business to ensure its growth into the future. At Pfizer, an environmental analysis includes conducting an external and internal analysis of company, SWOT analysis to identify the internal strengths and weaknesses of the company including an assessment of the organization’s resources.  The environmental analysis also includes an assessment of the organization’s competitive position and possibilities along with analyzing the Pfizer’s organizational structure and performance.

Pfizer’s External Environment Analysis

There are a number of external factors that can affect the way on how a business operates.  Pearce and Robinson divided these factors into three broad categories, the remote environment, the industry environment, and the operating environment.

Remote Environment.  “The remote environment comprises factors that originate beyond, and usually irrespective of, any single firm’s operating situation: (1) economic, (2) social, (3) political, (4) technological, and (5) ecological factors” (Pearce and Robinson, 2013, p. 87).  Pfizer, a leader of research and development, needs to invest more in advanced technology so that it can bring new products into the market much quicker than its competitors.  Pfizer has great economic strength due to its size as a global company and does many mergers and acquisitions which give Pfizer greater access to market share.  Pfizer corporate social responsibility is to change the world.  Pfizer is building partnerships with communities throughout the world so that the health systems can be strengthen, increase access to medication, and finding sustainable solutions to health challenges.  Pfizer will generate competitive advantage over its competitors and thus greater market share.

Industry Environment.  Pearce and Robinson define the industry environment as “the general conditions for competition that influence all businesses and provide similar products and services” (Pearce and Robinson, 2013, p. 97).  The state of competition of the industry depends on the five forces identified by Pearce and Robinson.  These five forces are new entrants, industry competitors, substitute products, powerful suppliers, and powerful buyers.  These factors collectively determine the company’s survival and its profit potential.  Analysts estimated global biotech industry revenue for publicly-held companies at $89.8 billion in 2012, up from 83.4 billion in 2011 and $80.6 billion in 2010. Revenues of publicly-held biotech companies in the U.S. were $63.7 billion in 2012, up from $58.8 billion in 2011, and down from $61.6 billion in 2010 (Plunkett, August 2013).

Operating Environment.  “The operating environment, also called the competitive or task environment, comprises factors in the competitive situation that affect a firm’s success in acquiring needed resources or in profitably marketing its goods and service” (Pearce and Robinson, 2013, p. 111).  The most important factors identified by Pearce and Robinson are “the firm’s competitive position, the composition of its competitors, its reputation among suppliers and creditors, and its ability to attract capable employees” (p. 111).  Pharmaceutical companies such as Pfizer and more involved in genetically engineered or “biotech” drugs that represented approximately 10% of the total global prescription drugs market, and about 20% of the U.S. prescription market.  Pfizer release Sutent, a drug used to treat cancerous kidney and stomach-lining tumors in 2006.  Sutent was later found to be a treatment for pancreatic tumors and renal cell carcinoma (Plunkett, August 2013).

Internal Analysis

A SWOT analysis is used to conduct a company’s internal strength and weaknesses.  “SWOT is an acronym for the internal Strengths and Weaknesses of a firm, and the environmental Opportunities and Threats facing that firm.  SWOT analysis is a technique through which managers create a quick overview of a company’s strategic situation” (Pearce and Robinson, 2013, p. 149).

Pfizer’s Strengths.  “Strength is a resource or capability controlled by or available to a firm that gives it an advantage relative to its competitors in meeting the needs of the customers its serves” (Pearce and Robinson, 2013, p. 1151). In a SWOT analysis conducted by Pfizer, Pfizer has gained much strength large mergers and acquisition deals enable Pfizer to sustain leadership; the acquisition of King Pharmaceuticals enhancing Pfizer’s position in pain market; and strong commercial infrastructure provide Pfizer marketing partner of choice status (Pfizer Inc., 2014).

Pfizer’s Weaknesses.  “Weakness is a limitation or deficiency in one or more of the firm’s resources or capabilities relative to its competitors that create a disadvantage in effectively meeting customer needs” (Pearce and Robinson, 2013, p. 1151). In a SWOT analysis conducted by Pfizer, Pfizer has weaknesses that restricted Pfizer from growth.  Such weaknesses include heavy reliance on Lipitor affecting top-line growth and dependency on a blockbuster portfolio exposing Pfizer’s growth to generic erosion (Pfizer Inc., 2014).

Assessment of Organization’s Resources

Pfizer annual budget on research and development is approximately $7 to $8 billion for research programs with specific goals.  Major pharmaceutical companies are challenged to invest heavily in research and development in order to execute better research results while at the same time reducing costs. As of early 2013, Pfizer was down to 78 projects in development (compared to 118 projects in early 2011), and it announced plans to reduce R&D spending to between $6.5 billion and $7 billion in 2013. Previously the firm might have had hundreds of projects ongoing in its labs at any one time. This is typical of the cost-cutting going on at many of the world’s leading drug firms (Plunkett, October 2013).

Organization’s Competitive Position and Possibilities

A firm must find ways to achieve competitive advantage over its competitors.  Pfizer has many competitors in the pharmaceutical industry such as Johnson & Johnson, Roche Holding AG, Novartis, Merck, GlaxoSimthKline, Bayer, and Bristol-Meyers. Pfizer’s Chairman and CEO Ian Read describe the results of Pfizer as “solid financial performance” that gave him “confidence in the competitive position of our commercial businesses” in 2014 (SEC.Gov, 2014).

Organization’s Structure and Performance

An organizational structure is important because it defines how the organization is structured to conduct its business. The organizational structure tells you the charter of the organization and the values it believes in.  Any business needs to know the best way to organize people, tasks, and resources in order to execute the strategy more effectively.  According to Pearce and Robinson (2013) “Organization structure refers to the formalized arrangements of interaction between and responsibility for the tasks, people and resource in an organization” (p. 321).  In its first-quarter 2014 8-K report filed with the SEC, Ian Read, Chairman and Chief Executive Officer, stated, “We recently implemented our new commercial structure, and I see each segment as comprised of an attractive mix of marketed products and new product opportunities with strong management teams and financial discipline.   I believe this new commercial structure and the additional financial transparency for each segment will foster a heightened level of strategic focus and discipline within each business.  The new commercial structure will facilitate appropriate focus and investment, whether in pursuit of developing innovative new products or further strengthening brands with high physician and patient loyalty.  With this new commercial structure, our strategic priorities for the company and our shareholders remain focused on driving innovation, productively allocating capital and enhancing a strong culture of ownership and accountability” (SEC.gov, 2014).

Conclusion

Companies such as Pfizer need to conduct an environmental analysis on their businesses both the internal and external environment factors.  One way to do this is to conduct a SWOT analysis.  The SWOT analysis will identify Pfizer’s strengths and weaknesses and opportunities and threats.  Having identified these, Pfizer needs to assess it organization resources to see if the company can accommodate the necessary changes in order to take the company into the future. These changes might resulting in a new organization structure that can function more effective and efficiently.  Pfizer needs to invest in advanced technology to bring new products into the market and with its corporate social responsibility in communities will allow Pfizer to capture growth and greater market share.

References

Pearce, J. A. & Robinson, R. B. (2013). Strategic Management: Planning for Domestic and Global Competition (13thed). New York, NY: McGraw Hill

Pfizer Inc. SOWT Analysis. Web Link: http://web.a.ebscohost.com.ezproxy.apollolibrary.com/bsi/pdfviewer/pdfviewer?sid=4c477afa-0442-40b0-8088-12058fcb52a7%40sessionmgr4005&vid=6&hid=4109

Plunkett Research, Ltd. (October 2013). Market Research and Trends.  Biotech and Orphan Drugs Pick Up the Slack as Blockbuster Mainstream Drugs Age. Web Link: