Ibm Module 2 Last Nov

7/29/2019 Ibm Module 2 Last Nov

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The objectives for this Presentation are to helpthe reader understand o the role played by each

of the 6 environments in businesso that these 6 environments can in turn influenceeach othero that being aware of changes in the

environments can help one do businesseffectively

When the reader has completed this Presentationit would expected that they could read

information about a marketing, business orinternational business situation and analyze thisin terms of what environments are involved andhow they exerted influence


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the 6 environments that effect business arenotthings you can changethey are things you react to

o Competitive Environmento Economic / Financialo Physical / Geographico Political / Legal / Regulatoryo Sociocultural / Ethnic / Linguistico Technological


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How you react to the influences of the 6environments is the key to your success.You can monitor the changes in an environmentand plan accordingly, or you can just react as

each situation develops and hope to survive.Successful companies are the ones who seetrends developing and plan in advance to dealwith the anticipated changes. Understanding the

effect of the environments, that influencebusiness, is a major part of a good marketingeducation


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environment includes considerations

such as the GDP Gross Domestic

Product the financial health of a region are companies making profits able to hire a lot of workers, so employees have money and

they can spend this money on consumer items

currency exchange rate can the currency of the country be used to purchase required imports

currency convertability (relates to "economic sovereignty")

rate of inflation / deflation rate of minimum wage

ability of the government to finance infrastructure fiscal policy (the government's use of taxation)

monetary policy (the money supply)

national balance of payments deficit / surplus

is the region attracting investment

In many countries, the economic / financial environment is heavily influenced bythe political environment in the context of government rules and regulations as tohow businesses make money, as well as how businesses are taxed.


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Political / Legal / Regulatory

environment

The Political / Legal / Regulatory environment is often a directconsequence of the political parties in power, which represents thepopular opinion of the citizens of the region. If the citizens are, forexample, pro-Big Business then probably taxation will be modestand there will not be a lot of stringent rules about environmental

considerations.If the citizens are very concerned about safetyissues, for example, then there will be a lot of rules and regulationsgoverning things such as transportation safety, which will make itmore expensive for some companies that have big shipping costs.The rules and regulations created by the politicians, have significantinfluence on the cost of running a business and the way it can

market products and services - for example in Canada there aresevere regulations about advertising for alcohol and tobacco


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Examples of influences of the political environmentinclude

regulations governing how businesses can interact withoverseas companies

regulations and laws limiting or restricting importing regulations limiting the operations of foreign

companies

how the national government is influenced by larger

governments or special interests outside the country laws and rules reflecting social/cultural changes in the

demographic make-up of the citizens


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Sociocultural / Ethnic / Linguistic

environment The Sociocultural / Ethnic / Linguistic environment is more

and more influential especially in multi-cultural urban areassuch as Toronto, New York, London, etc. For companiesselling industrial products, which are often simply marketedby dimensions (size, weight, height etc.) there is not a

strong requirement for documents and packaging materialto be "culturally sensitive".

For companies selling consumer products, particularly foodand clothing, it is increasingly important to use all thelanguages of your customers in your promotion campaigns

and communicate effectively with your target demographic.


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Examples of influences of the socialcultural environment include

regulations about language use in publications and broadcasts

rules and laws about equality based on considerations of gender,race, sexual orientation, maritial status etc.

relationships between people of difference faith, ethinicity,language etc.

how companies used people in commercials to focus on a "targetmarket segment"

cultural/demographic changes and the effect on national symbols,structures

uses of colour, slogans, music, slang expressions in marketingpromotions

business ethics is highly infleunced by changes in cultural norms

democracy vs theocracy


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When most people think of the Technologicalenvironment the first thing that comes to mind is

whether or not they "have the Internet". This isonly one part of the world of business. Thetechnological environment could be something assimple as whether or not vendors use Interac toreceive payment, or do you have to pay cash. Thetechnological environment also covers road andrail and ocean transportation as well ascommunications. The ability of a company to becompetitive also includes access to high speedcommunications - some parts of the world havehighly developed fiber optic cables, other parts

don't even have land lines for phones.


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In some parts of Africa, technology has been delayed fordecades, but when it did arrive, they skipped directly to cellphones without even bothering to put in telephone polesand land lines. One of the key characteristics of thetechnological environment is that the infrastructure is very

expensive. It is usually a national government who fundsthe projects that allow telephone and cell phone networksto be constructed. The degree to which a region has anadvanced technological environment is often related to thehealth of the economic environment which would contain

the companies that are making money, and paying taxes, tosupport the government funds spent on the infrastructure.


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The Physical / Geographic environment includeso weather and the effect on agriculture, travel,building designo distance, distance to travel, time zones

o topography - mountains, flat land and the effecton transportation systemso latitude, is it tropical or arctic, number of daysand hours of sunshine In some courses we refer

to only 5 of the environments; leaving outgeography, because most people think the Webtranscends geography. In reality, it is not sosimple.


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Geography has a big place in e-commerce, especially whenyou think about the influences of distance to ship productssold online, and when you think about how geographyinfluences the social-cultural environment (language,customs, etc.)

Geography also effects weather and weather has an effecton the internet from a technological point of view. Weathersituations can cause disruption of communication lineswhich means the "web is down" in parts of the worldeffected by a crisis. In some places effected by an

earthquake, or tsunami, it can takes days or weeks fortelecomm services to be restored and in that time periodweb based services cannot be accessed in the effectedregion.


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The geographical environment also includes topographicalchallenges and advantages. Challenges apply when the landis very steep, which limits the available acreage of arableland so you cannot grow enough crops (like n the sides ofsteep hills or old volcanoes as in the case of Japan).

Advantages take place when the land is flat, and the soil isrich in nutrients, like in our prairie provinces of Manitoba,Saskatchewan and Alberta. This land Canada has in themiddle of our country gives us an incredible advantage interms of being able to grow our own food. Countries who

have geographic environmental limitations have to importmassive quantities of food which is expensive and, to someextent, effects the national sovereignty.


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While the Competitive Environment is perhapsthe most powerful environment in terms ofinfluencing whether we do, or don't do certainthings, it should be understood that the

Geographic environment is also powerful in thesense that negative things effecting the planetcan have long term negative consequences forthe ability of companies to sustain their activity -

examples include New Orleans and the timespent recovering from the hurricane and as wellas regions in South Asia effected by the massivetsunami in December 2004


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The Competitive Environment is, perhaps, the

most important of the 6 Environments that

influence a company involved in marketing,

business, International Business or e-commerce. The degree to which one attends

to the "other" environments is a

consequence of the intensity of theCompetitive Environment.


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If the Competitive Environment is intense, meaning,you have a lot of companies trying to- copy your product and knock off your designs,- sell below your price,- use your same themes for advertising,- paying better wages to employees,- sell a slightly different product that can be substituted for your's,it will be necessary too utilize every resource in the technological environment,o attend to all the considerations of the social/cultural environmento carefully analyze trends in the economic environmento monitor political movements and upcoming changes in theregulatory environmento prepare contingencies for threats from weather extremes and thegeographic environment


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.. if the Competitive Environment is NOT

intense, then you don't have to use the latest

technology, because your customers will not

be drawn to anybody else, you do not have toworry about the language considerations of

the Social/Cultural Environment, because you

have no competition who will provide betterservice, etc.


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To assist in understanding the importance of"applying" an understanding of the 6environments, we will analyze a 2003 story in

the context of what environments areinfluencing this particular trade situation. In2003 Nov 3rd, a story appeared in The TorontoStar. The story came off the Canadian Press

feed and was about the current problemsCanadians are having resurrecting theCanadian beef export market to Japan


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Title: "Don't ship Canadian beef,

Japan to tell U.S." "TOKYO

Japanese Agriculture Minister Yukio Hattori will ask the

United States to ban the exportation of Canadian beef bound forJapan via the United States, citing continued concerns over madcow disease, according to media sources in the Japanese capital.The Japanese request comes in response to the American intentionto start importing veal from Canada early next year....According tothe sources, the Japanese Ministry of Agriculture, Forestry andFisheries will be requesting that the U.S. start certifying the originof all its beef products intended for export to ensure that nothinghas come from Canada. ...Both the United States and Japan closedtheir borders to Canadian cattle and beef products after a singleanimal was diagnosed with mad cow disease in Alberta last May[2003]. The U.S. and Canadian cattle industries were highlyintegrated up until the mad cow scare. Canada has traditionally soldmore than 70 per cent of its live cattle to the United States.


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As a result of losing export sales to U.S. processors,(because of limitations in exporting to Japan) and a highCdn dollar, Canadian cattle producers may be challenged bybeef exporters from Argentina and Australia - two othercountries which are international competitors in beef

exports. Japanese declines in importing beef may effect thecompetitiveness of other Canadian meat product exportssuch as pork or chicken since meat importers usuallyhandle all three of those products.

This is a good reminder that sometimes your ability to do

business internationally can be effected by the success orfailure of other companies in your business sector who areselling slightly different products


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Laws and regulations are a consequence of what thegovernment wants to control, which is a consequence ofpolitics - meaning what is the government doing, or notdoing, to maintain the confidence of the people and get re-elected. The Political Environment in this situation is

influencing the Canadian Beef exporters through the newregulations that the Japanese government has established.These Japanese regulations (which are a consequence ofthe Sociocultural Environment - people in Japan fear MadCow) will mean that U.S. beef producers cannot send beef

products to Japan if some of that beef came from cattlethey imported from Canada. Example - frozen hamburgerpatties manufactured in the U.S. for export to theMcDonald's outlets in Japan.


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As a result of losing export sales to U.S.processors, Canadian cattle producers will beeconomically constrained and this will have a

negative effect on the economic environmentin the province of Alberta and Saskatchewan.The high value of the Canadian dollar from Q2of 2003 through to Q3 in 2004 will make it

further challenging for Canadian beefexporters to sell their product at a competitiveprice since importers will have to pay more.


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Geographic

Environment

- distance to travel

- weather

- temperature ?

Distance - Canada is much farther way from the markets in Tokyo andOsaka than Australia. Australia's close distance to Japan gives it anadvantage in quoting prices because their shipping costs will belower and the time the product is "in transit" is less than a Canadianexport. If the time "in transit" is less, then the product is morefresh. Canadian exporters are at a disadvantage when the distanceto the customer is farther than another source in Australia or NewZealand. Canada is a northern country. We have winter!! Americancattle producers have less weather extremes to contend with thanCanadian cattle producers, therefore it is more costly for Canadiancattle producers to feed their herds. Because it is colder in Canada,you have to feed the cattle more grain because these animals burnmore calories in colder weather. Overall, it costs more to bringanimals to market due to the challenges of the weather and ourcolder climate.

Technological


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Technological

Environment

- bio-science

- hormone supplements

- DNA analysis of breeding

Agriculture products (a consequence of the richnessGeographic environment) are effected by developments inbio-sciences such as hormones which make animals maturefaster and gain muscle mass. Technological developmentsalso produce variations in breeding that allow for animals

and plants to grow faster and more quickly with varyingnutrients. For example: - Canadians have used bio-technology to develop strains of grains that will grow incolder soil and mature in a shorter growing season. Futuredevelopments in bio-sciences may mean an end to BSE -

bovine spongiform encephalopathy [Mad Cow disease] andtherefore we might see the removal of restrictions on beefexports since there would no longer be fear of this diseaseeffecting humans.

Environment


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Environment

- languages

- lifestyles

- diet and food preferences

- ways of cooking

Despite great marketing efforts by the Canadian government andthe CBEF - Canada Beef Export Federation, Japanese people still donot eat a lot of beef as part of their diet. While the youngergeneration in Japan eat western style fast foods - the per capitaconsumption of beef is not as large as in North America andEurope. Japanese protein sources are mostly from the marineproducts (fish, squid, whale meat, seaweed), pork and poultry theyeat. This is a part of Japanese culture which is hundreds of years oldand unlikely to change in a short time. Raising cattle in thegrasslands of Alberta is also part our Canadian socioculturalenvironment. If this lifestyle is lost due to problems exporting beef,it will be a big problem to the thousands of families in WesternCanada who are 2nd and 3rd generation cattle farmers. Thesepeople are not easily converted into website designers or othernew millennium workers and it would be heartless to expect themto make such a sacrifice


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