2 COURSE DESCRIPTION

This course is designed to discuss the description, analysis and synthesis of environmental factors that affect the performance of business organizations. These factors are presented in a strategic framework to facilitate responses to the complexity and dynamism in an organization’s environment. The interrelationships among environmental factors, industry forces, and business are highlighted in an effort to provide students with broad perspective and sharp vision to the future. Students will be trained to identify and analyze key environmental factors, anticipate trends and directions of those factors, understand the complex and continuously changing interrelationships among them, and identify business opportunities and threats brought by the environmental change.

This course will explore the following environmental factors:• Economic• Demography• Social-Cultural• Political (domestic and international)• Technological (information/communication and processing)• Natural• Governmental

The legal and ethical factors are, of course, very important subsets of business environment, and are discussed in separate courses.

3 Course Objectives

Upon successful completion of the course, the student should be able to:1. Describe and explain the basic conceptual themes and ideas of the

interaction of business and its environment.2. Identify relevant and important environmental factors interacting with

a business organization, analyze the patterns and trends of those factors and the interactions, and translate those patterns and trends in terms of opportunities and threats to the organization.

3. Analyze how the environmental factors affects business decisions, and understand some of the business implications of changes in the environment.

4. Develop and formulate better business strategy.The course aims at preparing students to have broader perspective, to be more visionary and more environment conscious, and to have better managerial judgment and wisdom.

Method of Instruction and Course Materials

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The learning format will be a combination of lecture, interactive discussions and case study assignments to provide student with relevant issues. Each session will consist of a discussion of the reading assignments, as well as interactive discussion of real business world situations, and case studies.

Course materials include a class binder containing weekly reading assignments and case studies for each topic of the ten class sessions (see detailed course outline). Students are encouraged to search supplemental reading materials in each topic.

The course if of multidisciplinary nature, and accordingly students and lecturers are expected to be broad-minded and have future orientation. Every topic will be discussed from the visionary perspective of the CEO.

Course Outline

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This course is topical in nature, and each topic will be delivered by an expert in the field.

Session Topics

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15 - 18

Course Overview------------------------------------------------------------------------------------Demographical Environment------------------------------------------------------------------------------------Social Environment------------------------------------------------------------------------------------Cultural Environment------------------------------------------------------------------------------------Domestic Political Environment------------------------------------------------------------------------------------International Political Environment------------------------------------------------------------------------------------Natural Environment------------------------------------------------------------------------------------Technological Environment: Information Technology------------------------------------------------------------------------------------Technological Environment: Processing Technology------------------------------------------------------------------------------------Governmental Environment------------------------------------------------------------------------------------Economic Development------------------------------------------------------------------------------------Regional Economy------------------------------------------------------------------------------------Monetary & Fiscal Policies------------------------------------------------------------------------------------Industry & Sectoral Policies------------------------------------------------------------------------------------Presentation and Class Discussion

Class Requirements

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Attendance and Participation. Students are expected to attend the class on a regular basis, faithfully complete all assignments and readings on the dates assigned, and actively participate in class activities and discussions. Active class participation is essential to do well in the class. Class participation grades will be determined on the basis of your contributions to class discussion (especially case discussion).

Written Case Reports. Each student is required to submit a case report (limited to 5 (five) pages of written text, not counting appendix items, charts, etc.) for each topic. In total, you have to submit 13 (thirteen) case reports. The purpose of this assignment is to let you learn and develop some in-depth expertise on each specialized topic in the business environment.

Research Paper. Each student will have to complete a written research report on the analysis of environmental factors affecting a business organization. You need to select a particular industry, and then focus your analyses on the impact of each environmental factors on the industry and the firm. The writing style should strictly follow standards set by the Gadjah Mada International Journal of Business. Students are seriously warned plagiarism and other forms of academic dishonesty, and therefore should pay serious attention to proper referencing. It is a good idea to have a one page executive summary at the beginning of the paper. The basis for evaluating the written report will be quality of content (quality of research and analysis, meaningful content and timely information), clarity of expression (including well designed tables and charts) and organization (all parts of the paper should fit together). The first draft of the paper is due for presentation on session 15. During the presentation, critiques and inputs from other class members and the lecturer should be utilized to improve the paper. The final report is due 3 (three) weeks after the last class session.

Grading Scheme

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The grade for this course will consist of the following elements:

13 case reports (each 5 points) 65 points

1 Individual research paper 20 points

Individual class participation 15 points

Total 100 points

The Key Environments of Indonesian Business

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The requirement today is that managers throughout an organization be continuously committed to understanding and adapting to environmental developments that can affect strategies and operations.

The Firm

Demography

Social and Cultural

Economic Development

Monetary and Fiscal Policies

Information and ProcessingTechnologiesNatural

EnvironmentRegionalEconomy

Governmental

InternationalPolitical

DomesticPolitical

Industry and Sectoral Policies

Scanning the External Business Environment:Trends and Implications

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Analysis of External EnvironmentEconomic, Sociocultural, Technological, Political, etc

Analysis of External EnvironmentEconomic, Sociocultural, Technological, Political, etc

Analysis of strategic factors• Opportunities• Threats

Analysis of strategic factors• Opportunities• Threats

GovernmentalAnalysis

Other stakeholderanalysis

Industryanalysis

Market (customer)analysis

SupplierAnalysis

CompetitorAnalysis

Interest groupAnalysis

Tasks of Managers:

•Identify a number of likely trends emerging in the external environment

•Assess the probability of these trends

•Assess the likely impact of each of these trends on the industry and the firm being examined

Basic Model of Strategy Formulation

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Strategic Vision

Analysis of Environmental Factors: Trends, events, directions and ideals

Business: Opportunities and Threats

Key Success Factors

Analysis of internal resources and capabilities

Strengths and Weaknesses of the firm

Distinctive Competence

Creation of Strategy Evaluation and Strategic planschoice of strategy

Managerial values Social responsibility

Environmental Forces are Driving Dramatic Changes

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Keydeterminants

Environmental Forces

Environmental Forces

CharacteristicsCharacteristics

Economic

Socio-cultural

Political

Natural

Technological

Governmental

Demographics

Economic

Socio-cultural

Political

Natural

Technological

Governmental

Demographics

Hypercompetitive markets

Blurring of industry boundaries

Extreme emphasis on customer values

New rules of the game

Global and competence-based competition

New competitive requirements: strategic flexibility and continuous learning

Changing career dynamics and employee expectations

Hypercompetitive markets

Blurring of industry boundaries

Extreme emphasis on customer values

New rules of the game

Global and competence-based competition

New competitive requirements: strategic flexibility and continuous learning

Changing career dynamics and employee expectations

New CompetitiveLandscape

Visionary/FuturisticView

DrivingForces

BasicStrategic

Issues

Impact

Economic Environment

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Structure and Changes inEconomic Conditions

Structure and Changes inEconomic Conditions

Economic Development

Regional Economy

Monetary and Fiscal Policies

Industry and Sectoral Policies

Industry and Trade

Cost Structure and Finance and Investment

Economic Welfare

Impact on

Business Opportunities and ThreatsBusiness Opportunities and Threats

Demographic Environment

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Demographic ProfileDemographic Profile

Structure and Changes inDemographic Variables

Structure and Changes inDemographic Variables

ByAge

ByGender

ByEthnicity

ByIncome

ByOccupation

ByEducation

ByRegion

Cost structure

Supply and demand for goods and services

Work PlaceWork Force

Impact on

Business Opportunities and ThreatsBusiness Opportunities and Threats

Social-Cultural Environment

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Basic local valuesand traditions

Social and cultural factors and institutions

Global interactions and modernization

Social and cultural changes

Individual and group/collective beliefs, values, perceptions,

attitudes, opinions, and lifestyles

Structure and patterns of social and cultural interactions and

conditions

Workplace and patterns of work and leisure, career dynamics and employee

expectations and composition

Business Opportunities and Threats

Impacts on

Domestic Political Environment

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Structure of, and changes in political forces and activities in Indonesia

Relations among executive, legislative, and yudicative

bodies

Relations among executive, legislative, and yudicative

bodies

Relations among political groups

Relations among political groups

Political systems and institutions

Political systems and institutions

Roles and Power exercised: Direction and stability of political factors

Relation between government and

private enterprise

Relation between government and

private enterprise

Legal and regulatory parameters

Legal and regulatory parameters

National planningNational planning

Roles ofbusinessRoles ofbusiness

Business Opportunities and Threats

Impacts on

International Political Environment

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Structure and Shifts in World Politics and Geopolitics

Political allies based on:• Ideology• Economic interest• Former colony ties• Stage of industrial

developments• Geographical location• Other

Changing relationship between:

• Communist and non communist

countries

• Prosperous and poor countries

(North and South)

• East and West countries

Changing roles of global

businesses and other world

economic institutions

Indonesian politics

Indonesian economy

Business opportunities and threats

Impact on

Technological Environment

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Technological Revolution: Trends, Advancement and

Development

Technological Revolution: Trends, Advancement and

Development

Areas

• Information and communication • Processing• Biotechnology• Medicine• Robotics• Metal• Other

Characteristics

• Increasing rate of technological change and diffusion

• Increasing knowledge intensity (knowledge-based business)

• E-business• Emergence of positive feedback industries• Increased mastery of energy, its

conservation, and more efficient use

Strategicissues

Product Developments and innovation

Process improvement

Manufacturing facilities automation

Improvements in marketing techniques

New market development

Changes in the nature of competition

Business opportunities and threats

Impacts on(as examples)

Natural Environment

BusinessBusiness The EcologyThe Ecology

Pollution:• Air• Water• Land• Cross-media

Increasing cost of pollution control

Regulatory demands

Public demands for environmental protection

Customer demand for clean processes and products

Competitive requirement

International trade agreement

New technologies for pollution prevention

EnvironmentalManagement

System

The greeningof management

Business opportunities and threats

Reciprocal relationship

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Governmental Environment

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Structure andBehavior of Government

• Laws• Regulations and Deregulations• Pressures• Leadership• Roles• Political agenda

• Regional autonomy• Relations between central and local

government• Privatization of state-owned

enterprises

• The nature and scope of government relations with

business• Rules of the game

Business opportunities and threats

CurrentIssues

Impacts on

THANK YOUTHANK YOU

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