Assessment of the environmental threats and opportunity in a small consultancy firm.
The external environment is comprised of the influences as well as the outside factors that affect the functioning of the organization. The organization should react and act to maintain the flow of its operations. The external environment can be divided into two categories: the macro as well as the microenvironment. Businesses must oversee their outside factors to recognize the changes that might have an impact on its functioning. The organization should come up with a pragmatic mechanism to address and adapt to the occurring changes to enable prolonged survival of the organization.
While some aspects like government policy changes are unpredictable, it doesn’t necessarily mean that you cannot prepare for them. The business should prime itself to be adaptive and flexible to come up with a framework for conducting an environmental scan.
An environmental scan is the process of gathering, analyzing as well as interpreting data about external threats and opportunities. It’s a mechanism to collect relevant information about the outside world, your company itself and the competitors. The most popular method used to perform an environmental scan is PESTEL analysis. This model is an external aspect evaluation matrix that focuses on the following: political, economic, social, technological, environmental as well as legal.
Environmental Threats
The following are some of the environmental threats that confront the organization:
Political factor
This is the type of risk that is faced by corporations, investors, and organizations that political decision, events or conditions will significantly affect the profitability of a business actor or the expected value of a given economic action. Political threat or factor can be said to be the extent to which a government influences the economy and affects the organization in a certain industry. This includes political stability, government policy as well as the tax and trade policy (Chattopadhyay et al.,2001). Political factors influence the decision of many businesses and organization. For instance, cuts in the budgets by the governments and increasing the university fees can affect the education sector. For academic providers, they need to review how they will meet the challenges of generating income. As a result, also the students are left with making a key decision about how they intend to pursue their careers.
Economic factors
Economic factor refers to the economic conditions shift supply and demand to directly affect an organization. This comprises the economic decline or growth and variations in inflation as well as interest rates. These economic variations are sometimes difficult to predict. The economic recession has impacted greatly on how organizations conduct its operations, perhaps by minimizing wastes as well as adopting cost-saving strategies (Chattopadhyay et al., 2001). The economy is considered as an environmental threat to an organization since no matter how hard a firm works or how good its products are economic conditions predicts success as well as the profit.
Social factors
This is the changes in the sociocultural market environment that illustrates the customers’ needs and wants. This comprises of the demographics, emerging trends as well as population analytics.
Technology
With new technological advancements, this serves as a potential external threat to many organization including a law firm. The advancements can give organizations a competitive advantage leaving others behind. For instance, travel agencies were exposed to technological threat when the internet gave the clients the capability of conducting their own research without necessarily travelling by the use of travel agencies. The technological advancement or changes should be closely monitored to determine the direct threats to an organization. The major threat faced by the consultancy firm is development in technology may change this market beyond our ability to adapt.
Competitors
Competition is one of the most relevant environmental threat to an organization and it is a product to the marketplace. A competitive market requires one to know his/her competitors well. Competition is regarded as an environmental threat since the organization competes with other organization for the same customers. This can result in the flop of one company and a flourish of the other organization. The threat to our consultancy firm is that a small change in the focus of a large market might wipe out any market position we achieve.
Legal factor
This refers to how the law affects the way operation in an organization takes place and the clients behave. The legislative changes occur from time to time.in most cases, this affects the organization environment and be a threat to the survival of the business or the organization (Lang et al., 1997). The business must analyze the legal developments in respective environments if a regulatory body sets up regulations for the industries.one of the major threat that is facing this organization is the employment regulation, product regulation, health and safety regulation as well as competitive regulation.
Opportunities
Important opportunities faced by the small startup consultancy organization
Managing workforce diversity
This refers to the employing of different categories of employees who are different in terms of relation, race, gender, ethnicity among others. With the employment of this heterogeneous category, the organization taps the potentialities and talents, obtaining synergetic effect as well as harnessing the innovativeness among the diverse workforce.
Stimulating innovation and change
For a successful organization, there must be fostering of proficient art of change and innovation. With the current threat of technological advancement, stimulation of innovation and change arises as an opportunity. Victory will favour those organizations that will continually improve their quality, maintain flexibility and beat the marketplace competition with a constant stream of innovative products and services.
Another opportunity is an offering of rapid –response, good-value services to local business and to local businesses and to the local government organization. The company can likely be the first to market with the new products and services given that its competitors are slow adopters.
The question about whether the environmental threats outweighs the opportunities or opportunities outweigh the target organization threat of the consultancy firm, I would answer that the threats outweigh the opportunities but with the thorough environmental scan being used to monitor these threats in the organizations it has had not had a great impact on the income.in terms of economic threats the organization has come up with pragmatic measures to counter-attack the threats. In summary, the organization has come up with pragmatic measures and strategies to counter-attack the threats and turn them into opportunities.
The organization should respond to the active environmental threats in the following ways:
The consultancy firm should adopt the different working pattern available which allow men and women to balance work and life commitment better. The consultancy firm should increase the number of heterogeneous groups of people to increase the pool of talent since it is competing with other firms with highly talented people.
The consultancy firm should embrace the advances in the technological field to offer to its customers the most sustainable as well as the most advanced services possible.
The firm should reduce waste and look for cost-saving to deal with the economical threats that might be posed against them. Outsourcing of function to reduce on the cost should be implemented.
Exploiting opportunity
The firm should take advantage of the opportunities by auditing and monitoring of its own external environment, the firm should adapt to exploit the opportunities and maximize efficiency. This can be done by adjusting its service delivery to start utilizing an advancement in technology.
With the need to employ the heterogeneous groups in the field of work this has led to the increase of women in the workplace with can be used as an advantage to increase the number of women in the firm and other vulnerable groups (Saebi et al.,2017).
References
Chattopadhyay, P., Glick, W. H., & Huber, G. P. (2001). Organizational actions in response to threats and opportunities. Academy of Management Journal, 44(5), 937-955.
Lang, J. R., Calantone, R. J., & Gudmundson, D. (1997). Small firm information seeking as a response to environmental threats and opportunities. Journal of small business Management, 35(1), 11.
Saebi, T., Lien, L., & Foss, N. J. (2017). What drives business model adaptation? The impact of opportunities, threats and strategic orientation. Long-range planning, 50(5), 567-581.