In the current business environment, competition is a normal phenomenon in the day-to-day running of the business. The global environment is composed of factors that affect the business positively or negatively. These factors affect operations at three levels in a business operation. These three levels are transactional, cross border, and cross-cultural levels (Kazmi, 2008). This paper is aimed at analyzing the effects of strategic environmental scanning on the performance of a company with special emphasis on Deloitte and IKEA Company. Through this paper, the position of company on the adoption of environmental scanning will also be determined.
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Kazmi (2008) postulates that environmental scanning process entails monitoring, evaluating and dissemination of information from both the internal and external environment to the stakeholders of an organization for tactical or strategic purposes. According to Oladele (2006), companies that practice environmental scanning have various advantages. First, the scanning process discloses the vital components such as threats and opportunities that influence the achievement of the organization’s goals and objectives.
Second, through environmental scanning, the company is able to monitor competitor’s strategies and respond to them appropriately. Third, environmental scanning provides the company with the vital inputs in the process of development and implementation of marketing strategies. Fourth, firms that practice environmental scanning stay abreast in terms change that is brought about by the dynamic business environment. Deloitte Company is a global leader in the provision of tax, audit, and business related consulting services. The company is also a global provider of IT related consultation services with worldwide operations (Deloitte Development LLC, 2012).
SWOT Analysis of Deloitte
Trusted brand: Deloitte enjoys worldwide trusted brand recognition because of its well-established relationships with CEOs. As a result of this approach, the company enjoys a perception of being a cultural-fit organization, which adds to its reputation as a leading consulting firm (Deloitte, 2010).
Value driven approach: While a majority of firms focus on customer value, Deloitte considers this as one of its day-to-day strategies. The company has put in place measures that identify opportunities among its clients for the improvement of the organization. The company has also established a value-based billing approach that facilitates the sharing of rewards and risks with the clients (Deloitte, 2010).
Engagements that are business-focused and Information Technology –enabled: The Company is business-led in its approaches to clients. According to Deloitte (2010), business consulting is focused on the part of consulting that result to implementation of IT. Therefore, this puts Deloitte in a strategic position as compared to other IT-centered providers. The company also has an IT-enabled platform that that is applied in its decision-making processes.
Ability to invest in growth: Deloitte Company has manifested that it has the financial muscle it needs to grow. This has been evidenced through the recent partial purchase of BearingPoint. Other substantial investments include establishment of the Deloitte University in Dallas, Texas (Deloitte, 2010).
Wide array of service and skills: Deloitte Company’s workforce is composed of a team with multi-disciplinary experience, therefore making it an independent institution (Deloitte, 2010).
Brand awareness: Deloitte Company has established itself as an accounting company among the top firms. This is in contrast with the other companies that lack adequate information about the company’s operations (Deloitte, 2010).
Global Association Structure: Structures as the big four that form the association of independent firms such as audit firms restrict such firms from rolling-out innovation. As such, partner firms in the association must be persuaded in order to accept any new developments in the field of consultation.
Regulations: Auditing is a highly regulated industry and in some cases, these restrictions limit the competitiveness of the company. This is because the company is restricted to offer certain services that it may wish to dispense to its customers.
Deloitte (2010) points out that the changing paradigm in world economies and business environment presents various opportunities such as tougher competition, mergers and alliances, increase in awareness about business risks, and changing regulation. Other opportunities include growth of emerging economies, increase in globalization, and the shift from analogue to digital economy.
Green agenda: With the introduction of the green purchase concept, Deloitte Company stand a good chance of growth as its operations already have their roots in this concept.
Investment opportunities: Deloitte Company will also benefit greatly from the emergence of other sectors which offer a chance for expansion such as the public sector.
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Competition: Deloitte Company is facing increasing competition from other IT focused firms because it is virtually impossible for the company to handle all the aspects of IT that are vital for the development and implementation of consulting advise. The other form of competition is from other stakeholders in the field of IT with business capability such as Accenture and IBM global business services. With the current business trends that are IT centered. Companies with a heritage in IT stand out as the best performers (Deloitte, 2010).
Software Development: According to Deloitte (2010), the emergences of new easy to use software such as Oracle and SAP which are easy to use have gained popularity among most users. Because of this, the company is slowly losing its grip in the audit market.
SWOT Analysis of IKEA
IKEA is an internationally re-known home furnisher that was established in 1943 in the UK. By August 2008, IKEA had established itself in 24 countries with 253 stores of which 32 are owned by franchisees (The Times 100, 2012).
The company enjoys worldwide brand recognition that is associated with quality and variety. The result of this has been an increase in customers. The company also has a strong vision on which its operations are based. The company has a concept of providing customers with a wide variety of products at affordable prices therefore increasing its market share (The Times 100, 2012).
According to The Times 100 (2012), IKEA has a number of opportunities that it can utilize. These include the increasing demand for affordable furniture that has a rose from the current financial conditions.
The company’s branches are spread globally and as a result face diverse challenges in terms of legislations. With the increase in demand for cheaper furniture, it has become hard for the company to balance quality and price.
Stiff competition from new entrants in the market offering cheap households and furnishings has forced IKEA to change its strategies. The slow growth of the economy has resulted in decrease in disposable income and as such, customer spending has drastically reduced.
The growth of an organization depends on the type of environment in which it exists. Environmental scanning facilitates the process of decision on whether or not to enter a foreign market. The environment in which a business exists should be flexible and focused towards achievement of the organization’s goals and objectives. Through SWOT analysis, a company is able to analyze the effectiveness of its strategies.
Deloitte Development LLC. (2012). Deloitte. Web.
Deloitte. (2012). Gartner’s SWOT report on Deloitte’s business consulting services. Web.
The Times 100. (2012). SWOT analysis and sustainable business planning. Web.