Environmental Analysis

Environmental Analysis

MBA/501

Dr. Ellen Szarleta-Instructor

September 23, 2006

Environmental Analysis

Introduction

There are three factors that have principal roles in deciding the constraints, opportunities, and threats that any company will face. The remote environment is the first factor which consists of factors that originate beyond any company’s operating situation such as technological and/or economic factors. The industry environment is the second factor that influences company’s prospects originating in the environment of its industry like competitor rivalry and the bargaining power of buyers and suppliers. The third and final factor is the operating environment which consists of factors that influence a company’s competitive situation which includes factors such as competitive position, suppliers, clientele, and creditors. These three sets of factors provide the challenges that a particular company faces in its attempts to attract or acquire needed resources and to profitably market its goods and services (Pearce 2005).

Remote Environment

A factor in the remote environment for Wabtec is in the area in technology.

To avoid obsolescence and promote innovation, a company must be aware of technological changes that might have industry influence (Pearce, 2005). Creative technological adaptations can suggest possibilities for new products, for improvements in existing products, or in manufacturing and marketing techniques (Pearce, 2005). A long-term objective that Wabtec must address is in this area is product innovation. The company needs to introduce distinctive and innovative new products in 2007 and beyond to support emerging consumer trends. Wabtec faces competition in product innovation from Lockheed Martin, their largest competitor and this can have an effect on the organization in the years to come. Finding the right balance between research and development along with a low cost and price strategy will require careful planning.

Industry Environment

The degree of competition in an industry depends on factor such as the threat of new competitors and/or the magnitude of their current competitor. To establish a strategic agenda for dealing with their competitors, a company must understand how they work in its industry and how they affect the company in its particular situation (Pearce, 2005). The threat of modern products or services is one of the major concerns for Wabtec. With competitors such as Lockheed Martin gaining ground on Wabtec, the company needs to keep its products differentiated at a competitive price and improve customer satisfaction. Wabtec needs to set a long-term goal of improving its research and development so it will help accelerate growth and earning. The improvement in technology will help cut costs and improve efficiency for the company.

Operating Environment

The operating environment comprises factors in the competitive