External and Internal Environmental Analysis
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Environmental analysis is the study of all internal and external factors that may affect a company??™s operating environments. Businesses will look at the economy, social conditions, competitors, legal, and ecological factors when assessing an environmental analysis. ???A host of external factors influence a firm??™s choice of direction and action and, ultimately, its organizational structure and internal processes. These factors, which constitute the external environment, can be divided into three interrelated subcategories: factors in the remote environment, factors in the industry environment, and factors in the operating environment??? (Pearce & Robinson, 2011). My target firm is Cablevision Systems Corporation. Cablevision Systems Corporation is a leading telecommunications and media company with a portfolio of operations that includes a full suite of advanced digital television, voice and high-speed Internet services, valuable local media and programming properties, and movie theatres. Cablevision is a cable company that operates in New York, New Jersey, Connecticut, and their recent expansion in Montana. In this paper, I will assess the environment in which Cablevision operates. I will discuss their SWOT analysis, external environmental analysis, competitive position analysis, and enterprise resource analysis.
Managers can create a quick overview of a company??™s strategic situation by creating a SWOT analysis. ???It is based on the assumption that, an effective strategy derives from a sound ???fit??? between a firm??™s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm??™s strengths and opportunities and minimizes its weaknesses and threats??? (Pearce & Robinson, 2011). For Cablevision, the strengths include additional services, well-trained employees, strong management, and great customer service. Cablevision trains its employees very well for greater familiarity with products and services it offers. Customer service skills are a major impact on customers and as such a lot of resources and time is dedicated towards customer service training. Additionally, the management team consists of skilled and experience managers with vast experience in the cable industry, consequently, takes great decisions in driving the company forward. Weakness or vulnerable areas of cablevision are the quality of products, company??™s size, and capital expenditures. Additional weakness of cablevision is the relative quality of services and products it offers. A lot? of customers? complain about the quality of the equipment (refurbished cable boxes or modems) and the poor clarity of high definition being transmitted from the cable box. As far as the services offered is concerned, customers complain about the wait time to speak with a representative; lateness of service technicians, not to mention their inability to complete a job, amongst others.
Opportunities at Cablevision include; expansion into new markets, triple plays service, cheaper pricing, and growth opportunities. As I mentioned earlier, Cablevision has the opportunity to expand their markets into Montana where there is no current market presence. It is also the first company to introduce the Triple Play service which includes the TV, phone, and Internet services, all under $100/ month. Under this plan, customers are able to enjoy having all 3 services with one Cable service provider instead of multiple and also at a relatively lower cost, as compared to its competitors like Verizon Fios, Comcast, Direct TV, and Time Warner Cable. Consequently, there was growth in customer base as well as their retention.
Some challenges the company faces are from other satellite providers like Comcast, Direct TV, Verizon, Dish Network, and Time Warner Cable. These cable companies provide the same services and different products as Cablevision. So it is up to the company to develop and maintain knowledge of new innovations. Another threat is our retention of customers and employees. In this economy, there are a lot of budgetary cuts and hiring freezes which are threats to the regular day- to- day functioning of the company.
External Environmental Analysis
The remote environment in which Cablevision operates is a highly regulated industry. ???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 & Robinson, 2011). In my company, the economic factor will be the economy; determining how the economy will influence the amount of money customers are willing to spend on their cable service. If the economy is in a recession, then customers are price conscious about their services and will be looking for the lowest packages on the market. Since cable is a luxury and not a necessity, most consumers have a budget on how much they are willing to spend monthly. Socially, I can say that Cablevision abides by their employees educational and religious beliefs. Our customer service department is open 24hrs/day, 7 days a week and every holiday. So if a person is Muslim and chose not to work on their holiday, the company will make adjustments for that employee. The cable industry is subject to rules and regulations set forth by the Federal Communication Commission. Politically, the FCC regulates everything from pricing to broadcasting. Technology is a very important aspect for our business. We have to develop new technology to stay competitive in the industry. A popular item was high definition TVs which has now become a common thing. Presently, one can talk about 3D Televisions. Technology is always developing so it up to us to do the same and to be aware of the new? ???I.T.??? items. Finally, ecologically, we are very Eco friendly. We are trying to get customers to electronically receive their bills rather than paper. We participate in different activities regarding the environment.
???The operating environment comprises factors that influence a firm??™s immediate competitive situation- competitive position, customer profiles, suppliers, creditors, and labor market??? (Pearce & Robinson, 2011, p. 110). I believe that Cablevision is affected by its competitors in the operating environment. There are many cable providers like Fios, Comcast, Time Warner Cable, and Direct TV who offer similar services and products. Therefore, in order for cablevision to remain profitable and competitive, they have to research into their competitor??™s products and come up with similar and better innovations.
According to Pearce and Robinson (2011), the industry environment is defined as ???the general conditions for competition that influence all businesses that provide similar products and services. The competition depends on five determinants which are: threat of entry, strength of suppliers, strength of buyers, threat of substitute products, and competitive rivalry. Since this industry is highly regulated, there are significant barriers to entry. Supplier power and buyer power are determined by the rates charged by the FCC. When talking about industry environment of Cablevision, it can be evaluated that the competition is high due to different companies offering similar services. That is why it is important for Cablevision to have product differentiation from its competitors. Having different products and new technology will increase customer satisfaction, loyalty, and retention.
Competitive Position Analysis
???Evaluating a companys competitive position within its industry assists
managers in identifying resources and creating goals that will lead to future growth and profits??? (Pearce & Robinson, 2011). Most companies use competitor profiling which is the trend that is helpful because it provides the company with the necessary tools to identify what is available and successful in the present market. Determining the competitive position of other cable providers within New York, New Jersey, Connecticut, and Montana area assist Cablevision in creating unique services and products that sets them apart from their competitors. Identifying what has and has not worked for its competitors also provides Cablevision with insight into what methods are detrimental, and which ones are successful. By conducting annual surveys regarding customer needs and wants, Cablevision is able to solve their problems, conduct research, develop new innovations, and beat their competitors.
Enterprise Resource Analysis
Enterprise resource is managing internal and external information throughout the organization, covering finance/ accounting, manufacturing, sales and services, and customer relationship management. ???The purpose of enterprise resource is, to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders??? (Wikipedia 2011). With Cablevision using the most efficient and effective software to perform each business process, there is a reduction in time-consuming projects like documentation, testing and training.
In a nutshell, it can be inferred that, for an organization to develop an edge over their rival firms, it has to apply both external and internal environment analysis. This allows the company to conduct different assessments to determine their strengths, weakness, opportunities, and threats. An analysis is very necessary for the survival and growth any business enterprise. It allows profitability, competitive advantage, customer satisfaction, and retention.
Pearce, J. A., & Robinson, R. B. (2011). Corporate Social Responsibility and Business Ethics. Strategic management: formulation, implementation, and control (12th ed., pp. 44-79). New York: McGraw-Hill/Irwin
Wikipedia (2011). Enterprise Resources: Retrieved from http://en.wikipedia.org/wiki/Enterprise_resource_planning