Production of electric vehicles was undertaken in response to voter mandates, a factor external to the finn. Now, auto producers are introducing electric vehicles in part
to learn about customer reactions. And there is still much to learn about electric-powered
technology. Today, there are concerns
things
range, price, and refueling of
electric vehicles. This is quite a drastic change from typical customer concerns like car phones, cup holders, and other frills associated with gas-powered vehicles. A few other
facts about General Motors ' EV 1:
•
It leases for between $399 and
monthly.
•
Monthly payments on a typical pt;rchase are around $500.
• They have limited range (about 120
between changes).
•
Recharging takes several hours.
•
They are currently best as a second vehic;e.
Sources : "OM 's Ad vanced Auto Technologies Showcased at Democratic
Convention:' Finan cial
August 13,
2000; Jon Pepper, "California Mandate for Electric Cars M ean s OM Has a Lot to Explain:' The Detroit News, August 23, 2000. p. 1; Paul
"California Air Officials Want
Makers to
Electric Cars in Two Years:' San Jose Mercury
New s , September 9, 2000.
INTRODUCTION
When marketing organizations plan strategically, the key question is, " Does the strategic
planning process raise the
of the organization's effectiveness, and does it pro-
vide the new strategic direction that is required for the future?" A good strategic plan must help marketing organizations recognize the interrelationships among various forces in the
business environment. These interrelationships must be accounted for if the organization
is to be capable of implementing ils vi sion.
It is important to recognize that most existing planning processes have an internal
focus. Internal planning processes ask questions like, "What are our strengths and weak-
nesses?", "What comparative cost advantages do we
and "What product features
provide us with an advantage?"
The external planning approach asks these same questions but also attempts to under-
stand hawaII of the elements of the
relate
each other. In this chapter, we
foc us on the external environmental
that have an
on the organization, espe-
cially the marketing function . In the chapters that follow, we consider the marketplace and
its behavior.
As shown in Figure 5.1, marketing managers are confronted with many environmental
concerns, including technology: customer; competitor '. ethical/legal; and economic, polit-
ical, demographic, and social trends, All organizations should continuously appraise their situation and adjust
strategy to adapt to the environment.
One technique used by organizations
monitor the environment is known as envi-
ronmental scanning,
refers to activities
toward obtaining infonnation about
events and trends that occur outside the organization and that can influence the organiza-
tion's decision
In a sense, such data collection scanning acts as an early warning
system for the organization. It allows marketers to understand the current state of the envi-
ronment and to predict trends. A fo rmal but simple strategic inforn1ation scanning system
can enhance the effectiveness of the organization's env'ronmental scanning
An infor-
mation system (part of marketing research) organizes the scanning effort so that informa-
tion related to specific situations can be
readily obtained and used.
EXTERNAL FACTORS THAT AFFECT PLANNING
103
Financial
Technology
resources
Technical
Competition
resources
Competitive
Economic/
situation
political
Human
Ethical/
resources
legal
Product
Social
line
trends
FIGURE 5.1
Environmental factors affecting the organ ization
A good strategic plan requires careful monitoring of the marketing organization's exter-
nal environment. The external environment represents sources of opportunities and threats .
If the marketing organization is to align its capabilities and resources with opportunities
and threats, it must know what those threats are . It is important that marketing organiza-
tions have a strategy to uncover relevant strategic opportunities and threats early. As threats
and opportunities appear, marketing organizations should develop strategies to deal with
them.
Another problem is that at anyone time, there may appear to be a great many oppor-
tunities and threats looming. Marketers must be able to prioritize these opportunities and
threats according to such factors as their relevance to the organization, the cost effective-
ness of strategies to deal with the threats and opportunities, and the urgency of the threat
or opportunity. Organizations are inundated with information and must therefore have an
effective mechanism for sorting out that information which is relevant to the organization.
Only after the marketing environment is thoroughly understood can an organization
spot trends and determine whether they represent market opportunities or market threats.
EXTERNAL FACTORS THAT AFFECT PLANNING
There are many marketplace changes occurring that marketers cannot control but affect what
marketers do. Faced with these environmental uncertainties, successful marketers will be
those who recognize the changes that are occurring and who make effective adjustments.
There are a number of external factors that constitute the external environment. Our
approach is to attempt to present an all-encompassing view of the elements of the external
104