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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
organizations 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.
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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

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.

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

01 Course Overview
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02 Demographical Environment
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03 Social Environment
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04 Cultural Environment
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05 Domestic Political Environment
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06 International Political Environment
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07 Natural Environment
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08 Technological Environment: Information Technology
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09 Technological Environment: Processing Technology
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10 Governmental Environment
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11 Economic Development
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12 Regional Economy
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13 Monetary & Fiscal Policies
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14 Industry & Sectoral Policies
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15 - 18 Presentation and Class Discussion
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 Class Requirements
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.
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 Grading Scheme

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

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 The Key Environments of Indonesian Business

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.
Demography

Domestic Social and Cultural

Political

International Economic Development

Political
The Firm

Monetary and Fiscal Policies

Governmental

Industry and Sectoral

Policies
Information and Processing
Regional Natural Technologies
Economy Environment
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 Scanning the External Business Environment:
Trends and Implications
Analysis of External Environment
Economic, Sociocultural, Technological, Political, etc Tasks of Managers:

Identify a number of
Industry likely trends emerging
analysis in the external
environment

Assess the probability

Market (customer) Competitor of these trends
analysis Analysis
Assess the likely
impact of each of
Supplier Interest group these trends on the
Analysis Analysis industry and the firm
being examined

Governmental Analysis of strategic factors Other stakeholder

Analysis Opportunities analysis
Threats

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 Basic Model of Strategy Formulation
Strategic
Vision

Analysis of Environmental Factors: Analysis of internal resources and

Trends, events, directions and capabilities
ideals

Business: Strengths and Weaknesses of the

Opportunities and Threats firm

Key Success Factors Distinctive Competence

Creation of Strategy Evaluation and Strategic plans

choice of strategy

Managerial values Social responsibility

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 Environmental Forces are Driving Dramatic Changes
Environmental Characteristics
Forces

Hypercompetitive markets
Impact
Economic Blurring of industry
boundaries
New Competitive Extreme emphasis on
Socio-cultural
Landscape customer values
Visionary/ New rules of the game
Political
Futuristic Global and competence-
View based competition
Natural
New competitive
requirements: strategic
Technological Driving Basic flexibility and continuous
Forces Key Strategic
determinants learning
Governmental Issues
Changing career dynamics
and employee
Demographics expectations

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 Economic Environment

Structure and Changes in

Economic Conditions

Economic Monetary and Fiscal Regional Industry and

Development Policies Economy Sectoral Policies

Impact on

Economic Finance and Cost Structure and Industry

Welfare Investment and Trade

Business Opportunities and Threats

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 Demographic Environment

Demographic Profile
Structure and Changes in
Demographic Variables

By By By By By By By
Age Gender Ethnicity Education Income Occupation Region

Impact on

Work Force Work Place Supply and demand for Cost

goods and services structure

Business Opportunities and Threats

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 Social-Cultural Environment

Basic local values Social and cultural factors Global interactions and
and traditions and institutions modernization

Social and
cultural changes
Impacts on

Individual and group/collective Structure and patterns of social Workplace and patterns of
beliefs, values, perceptions, and cultural interactions and work and leisure, career
attitudes, opinions, and conditions dynamics and employee
lifestyles expectations and composition

Business Opportunities and Threats

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 Domestic Political Environment
Structure of, and changes in political forces
and activities in Indonesia

Relations among executive, Relations among political Political systems and

legislative, and yudicative groups institutions
bodies

Roles and Power exercised: Direction and

stability of political factors

Impacts on

Relation between Legal and regulatory National Roles of

government and parameters planning business
private enterprise

Business Opportunities and Threats

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 International Political Environment
Structure and Shifts in World
Politics and Geopolitics

Political allies based on: Changing relationship between:

Ideology
Economic interest
Former colony ties
Stage of industrial
developments
Geographical location
Other
Changing roles of global
Communist and non communist
countries businesses and other world
Prosperous and poor countries
economic institutions
(North and South)
East and West countries

Impact on

Indonesian Indonesian
politics economy
Business opportunities and
threats
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 Technological Environment
Technological Revolution:
Trends, Advancement and
Development

Areas Characteristics
Information and communication Increasing rate of technological change and
Processing diffusion
Biotechnology Increasing knowledge intensity (knowledge-
Medicine
Strategic based business)
Robotics issues E-business
Metal Emergence of positive feedback industries
Other Increased mastery of energy, its
conservation, and more efficient use
Impacts on
(as examples)

Product Process Manufacturing Improvements in New market Changes in the

Developments improvement facilities marketing development nature of
and innovation automation techniques competition

Business opportunities and threats

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 Natural Environment
Reciprocal relationship
Business The Ecology

Pollution:
Air
Water
Land
Cross-media

Increasing Regulatory Public demands Customer demand Competitive International New

cost of pollution demands for environmental for clean processes requirement trade technologies
control protection and products agreement for pollution
prevention

Environmental The greening

Management of management
System
Business opportunities
and threats
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 Governmental Environment
Structure and
Behavior of Government

Laws Current Regional autonomy

Regulations and Deregulations Issues Relations between central and local
Pressures government
Leadership Privatization of state-owned
Roles enterprises
Political agenda
Impacts on
The nature and scope of
government relations with
business
Rules of the game

Business opportunities and

threats
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THANK YOU

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