Question

Environmental scanning is always conducted before strategy formulation. Discuss the importance of both the societal and task environment to strategic planning in an organization.

Answer 1

IMPORTANCE OF SOCIETAL ENVIRONMENT TO STRATEGIC PLANNING IN AN ORGANIZATION

Societal environment is the environment which shows the characters of the people in the society where the organisation is situated.

The customer's values and beliefs play a major role in purchase making decision of people in that area (society).

The customers literacy rate plays a major role in the education of the customer about the product and company.

The lifestyle and standard of living of people in the society in which the organization exists helps in deciding what are the likes and dislikes of the customer. The pricing decision is also based on lifestyle and standard of living.

The company and its people need to understand this societal pressure a society can indirectly have in policy making (decision making). The managers need to constantly keep track of the societal changes in the company's environment and plan better policies with changing society.

IMPORTANCE OF TASK ENVIRONMENT TO STRATEGIC PLANNING IN AN ORGANISATION.

Task environment is the environment outside the organization which has an impact on the organization directly. Task environment consists of customers, competitors, and suppliers.

CUSTOMERS: Customer is the king. this factor can have a major impact of the policy making of an organization. The changes in the taste, likes, dislikes of customers of the organization can bring about a major policy change in the organization. Managers need to make policies based on customer preferences.

COMPETITORS: The organisation need to keep track of the competitors who have the ability to bring loss or offer similar product and services to their customer base at attractive prices, better quality, and also new products and services. The organization needs to formulate policies to cut competition and also deal with newcomers who could be a equally dangerous threat to the organization.

SUPPLIERS: Suppliers are those providing raw materials , goods and services. The organization needs to keep good relation with the suppliers. They need to choose the best supplierswhich gives minimum cost to company and does not bring in any problems in supply of the products and services required by the organization.