WEBVTT 1 00:00:01.200 --> 00:00:06.200 Hi, welcome to Situational Analysis Part 2. 2 00:00:10.050 --> 00:00:12.660 So now we're gonna look at the external environment 3 00:00:12.660 --> 00:00:17.280 that which you, as a business person or organization, 4 00:00:17.280 --> 00:00:21.900 do not have a lot of control or influence over. 5 00:00:21.900 --> 00:00:26.900 It's sort of the external factors in which you operate. 6 00:00:27.420 --> 00:00:31.830 One of the models is PEST, which stands for political, 7 00:00:31.830 --> 00:00:35.040 economic, social, and technological. 8 00:00:35.040 --> 00:00:38.190 And we're gonna speak a bit more about 9 00:00:38.190 --> 00:00:41.493 how you can frame the external environment. 10 00:00:44.880 --> 00:00:47.610 So again, it's those parts which 11 00:00:47.610 --> 00:00:51.420 you don't have a lot of control over, 12 00:00:51.420 --> 00:00:54.240 and you can think of 'em as either accelerators, 13 00:00:54.240 --> 00:00:55.770 that which helps you, 14 00:00:55.770 --> 00:00:58.263 or brakes, those which impede you. 15 00:01:01.350 --> 00:01:05.550 First we'll think about social forces. 16 00:01:05.550 --> 00:01:07.650 There are many, many of them. 17 00:01:07.650 --> 00:01:09.990 Some of these might apply to you, 18 00:01:09.990 --> 00:01:12.000 and there are certainly others that won't. 19 00:01:12.000 --> 00:01:15.790 But think about, we certainly live in a time where 20 00:01:17.310 --> 00:01:21.480 there are so-called Culture Wars, 21 00:01:21.480 --> 00:01:24.060 that we've seen great advancement 22 00:01:24.060 --> 00:01:28.410 in things like LGBTQ+ rights, 23 00:01:28.410 --> 00:01:31.023 racism, sexism, et cetera, 24 00:01:32.040 --> 00:01:35.160 along with sort of strong backlash against that. 25 00:01:35.160 --> 00:01:39.157 We're seeing forces like the public health 26 00:01:40.830 --> 00:01:45.830 and opioid crisis, climate change and environmental crises, 27 00:01:47.160 --> 00:01:52.050 both sort of how that plays out 28 00:01:52.050 --> 00:01:55.170 as well as efforts to address it. 29 00:01:55.170 --> 00:02:00.170 As well as things like income inequality, housing crisis, 30 00:02:00.720 --> 00:02:04.920 and you can think of many of the social changes 31 00:02:04.920 --> 00:02:06.210 that have happened since 32 00:02:06.210 --> 00:02:11.210 and as a result of the COVID pandemic here as well. 33 00:02:16.500 --> 00:02:21.500 I think some current political forces here in the U.S., 34 00:02:22.230 --> 00:02:27.230 we certainly live in a time of extreme political 35 00:02:27.390 --> 00:02:30.303 and partisan polarization. 36 00:02:31.380 --> 00:02:34.380 I think a lot of folks are sort of feeling 37 00:02:34.380 --> 00:02:39.380 really disengaged, losing faith in our institutions, 38 00:02:39.990 --> 00:02:41.820 feeling apathetic, 39 00:02:41.820 --> 00:02:46.500 and thinking about how does that impact your business? 40 00:02:46.500 --> 00:02:49.893 How does that impact your community? 41 00:02:52.350 --> 00:02:56.223 Again, many economic forces here. 42 00:02:59.010 --> 00:03:00.450 The state of infrastructure, 43 00:03:00.450 --> 00:03:03.180 there's so much debt, including student debt. 44 00:03:03.180 --> 00:03:05.763 Again, housing inequality, 45 00:03:10.620 --> 00:03:13.620 I mean, income inequality, housing affordability 46 00:03:13.620 --> 00:03:17.730 which, you know, is really hard to like find space to work, 47 00:03:17.730 --> 00:03:21.870 find place to live here, you know, to hire folks, 48 00:03:21.870 --> 00:03:25.473 and the so-called Great Resignation. 49 00:03:28.350 --> 00:03:31.410 The overarching economic paradigm 50 00:03:31.410 --> 00:03:35.610 under which we have lived for the last 40 some years, 51 00:03:35.610 --> 00:03:37.920 imagining that's most, 52 00:03:37.920 --> 00:03:41.100 if not all of you have only lived under this, 53 00:03:41.100 --> 00:03:44.010 is called neoliberalism. 54 00:03:44.010 --> 00:03:46.443 And I'm gonna speak a bit about that. 55 00:03:48.480 --> 00:03:51.927 So note that this definition 56 00:03:55.350 --> 00:03:59.760 is from someone who opposes it, George Monbiot, 57 00:03:59.760 --> 00:04:04.760 and he talks about how it sees 58 00:04:04.830 --> 00:04:09.830 the defining characteristic of human relations 59 00:04:10.020 --> 00:04:15.020 as being sort of competitive and transactional, 60 00:04:15.360 --> 00:04:18.330 and that the best social outcome 61 00:04:18.330 --> 00:04:21.690 comes from letting markets do their work 62 00:04:21.690 --> 00:04:26.690 and to be interfered with as little as it can be. 63 00:04:29.400 --> 00:04:34.400 Again, Monbiot is a sharp critic of this mindset. 64 00:04:36.960 --> 00:04:40.230 The Nobel Laureate economist, Milton Friedman, 65 00:04:40.230 --> 00:04:44.010 I think it's fair to say, is a big proponent of it. 66 00:04:44.010 --> 00:04:47.130 And here's a quotation of his, 67 00:04:47.130 --> 00:04:50.970 which I think sort of extolled its virtues. 68 00:04:50.970 --> 00:04:55.140 And it's not my job to make you think one is right 69 00:04:55.140 --> 00:04:57.780 or one is wrong, it's good or bad. 70 00:04:57.780 --> 00:05:01.680 It's simply this is the environment in which we live 71 00:05:01.680 --> 00:05:04.110 and in which we have to operate, 72 00:05:04.110 --> 00:05:06.210 and whether it's good or bad, 73 00:05:06.210 --> 00:05:09.180 or what parts are good or what parts are bad, 74 00:05:09.180 --> 00:05:11.463 are up to you to decide. 75 00:05:13.080 --> 00:05:17.340 So here are some of the actions, 76 00:05:17.340 --> 00:05:20.703 basically minimized taxes and regulation, 77 00:05:21.570 --> 00:05:26.570 privatization, the devaluation of unions 78 00:05:26.610 --> 00:05:29.220 and most public institutions. 79 00:05:29.220 --> 00:05:33.090 And seeing that we live in a meritocracy, 80 00:05:33.090 --> 00:05:36.420 that if you work hard, if you're better at what you do, 81 00:05:36.420 --> 00:05:37.890 you'll do better. 82 00:05:37.890 --> 00:05:41.460 And that wealth is the sort of primary virtue 83 00:05:41.460 --> 00:05:46.083 and the primary way in which that is delivered. 84 00:05:50.340 --> 00:05:55.340 One of the features of neoliberalism 85 00:05:57.210 --> 00:06:02.210 is that it remakes our institution into its own image. 86 00:06:02.730 --> 00:06:05.430 It makes them all into markets. 87 00:06:05.430 --> 00:06:07.053 Religion, government, 88 00:06:08.850 --> 00:06:12.780 education are all increasingly run like a business, 89 00:06:12.780 --> 00:06:17.670 sort of managed to make 'em money 90 00:06:17.670 --> 00:06:19.533 to pay for themselves, 91 00:06:21.210 --> 00:06:25.023 and less sort of focusing on their intrinsic value. 92 00:06:26.940 --> 00:06:29.550 And there's a lot of implications 93 00:06:29.550 --> 00:06:34.550 on the various community capitals 94 00:06:35.610 --> 00:06:38.160 of how these are either built up 95 00:06:38.160 --> 00:06:41.943 or not built up under this regime. 96 00:06:44.700 --> 00:06:48.120 The next force is technological, 97 00:06:48.120 --> 00:06:51.000 and just thinking about all the ways 98 00:06:51.000 --> 00:06:54.540 that life on the internet and smartphones 99 00:06:54.540 --> 00:06:58.290 and tablets have changed our lives. 100 00:06:58.290 --> 00:07:00.150 There's many, many, many things 101 00:07:00.150 --> 00:07:04.950 that basically none of these existed 102 00:07:04.950 --> 00:07:07.920 when I was an undergrad, 103 00:07:07.920 --> 00:07:10.770 and now they just seem so normal 104 00:07:10.770 --> 00:07:14.810 due to this sort of technological revolution. 105 00:07:17.850 --> 00:07:20.940 We can think as well of the competitive environment. 106 00:07:20.940 --> 00:07:22.410 How competitive? 107 00:07:22.410 --> 00:07:27.410 How many other goods or services 108 00:07:27.570 --> 00:07:30.353 are you competing with? 109 00:07:33.690 --> 00:07:37.530 And again, this might be the single most important concept 110 00:07:37.530 --> 00:07:39.540 in this class, 111 00:07:39.540 --> 00:07:43.263 and we're gonna revisit it a lot of times. 112 00:07:46.350 --> 00:07:47.730 One way to think about 113 00:07:47.730 --> 00:07:51.370 the competitive environment of products 114 00:07:53.490 --> 00:07:55.350 is by this continuum. 115 00:07:55.350 --> 00:07:57.540 So again, this is a continuum 116 00:07:57.540 --> 00:08:02.470 with sort of these two columns represent 117 00:08:03.576 --> 00:08:05.010 the end-points or poles. 118 00:08:05.010 --> 00:08:07.740 And most things fall somewhere in-between these two, 119 00:08:07.740 --> 00:08:10.323 maybe nearer or farther than each pole. 120 00:08:11.880 --> 00:08:15.090 And so I'll go through each one. 121 00:08:15.090 --> 00:08:20.090 So perhaps the best example of a commodity 122 00:08:21.960 --> 00:08:24.840 that I can think of, or at least a very good one, 123 00:08:24.840 --> 00:08:27.600 is a plastic jug, 124 00:08:27.600 --> 00:08:32.600 a gallon jug of whole milk with a red cap. 125 00:08:32.760 --> 00:08:34.340 Probably you all have seen this 126 00:08:34.340 --> 00:08:36.633 or you have all bought it. 127 00:08:37.650 --> 00:08:39.990 It tends to be very homogeneous. 128 00:08:39.990 --> 00:08:44.220 That is no matter where you buy it or where it was grown 129 00:08:44.220 --> 00:08:48.870 or by whom, really every bottle is the same 130 00:08:48.870 --> 00:08:50.940 in sense that there's low information, 131 00:08:50.940 --> 00:08:53.190 that there really aren't a lot of attributes 132 00:08:53.190 --> 00:08:54.873 beyond that it's whole milk. 133 00:08:56.160 --> 00:08:59.220 There tends to be one price for this 134 00:08:59.220 --> 00:09:01.203 that no matter where you buy it, 135 00:09:02.490 --> 00:09:07.200 that gallon of milk costs pretty much the same. 136 00:09:07.200 --> 00:09:11.133 It's a highly-competitive environment. 137 00:09:12.496 --> 00:09:17.496 Most individuals, or there's many, many stores who sell it. 138 00:09:18.780 --> 00:09:22.563 Gas stations, convenience stores, grocery stores. 139 00:09:24.300 --> 00:09:29.190 And to make your way in the world to produce this 140 00:09:29.190 --> 00:09:31.533 you need to be fairly high-volume, 141 00:09:32.520 --> 00:09:37.520 because it's the amount that you make 142 00:09:39.540 --> 00:09:43.890 on every one that you sell tends to be quite small 143 00:09:43.890 --> 00:09:46.710 because it's such a competitive environment. 144 00:09:46.710 --> 00:09:51.183 So you need a high-volume to make it worth your while. 145 00:09:52.320 --> 00:09:57.240 On the other end is a differentiated product, 146 00:09:57.240 --> 00:10:01.320 which you're saying mine is not like the ordinary one. 147 00:10:01.320 --> 00:10:03.090 Mine, in some way, is better. 148 00:10:03.090 --> 00:10:05.580 Mine has attributes. 149 00:10:05.580 --> 00:10:08.790 So it might be organic and fair-trade 150 00:10:08.790 --> 00:10:13.410 and fair-labor treatment and grass-fed, 151 00:10:13.410 --> 00:10:17.700 and lots of other things, grown locally, 152 00:10:17.700 --> 00:10:19.110 many attributes like that. 153 00:10:19.110 --> 00:10:21.213 So you can see it's very high-information. 154 00:10:22.590 --> 00:10:26.963 Since it is seen as being slightly better 155 00:10:28.770 --> 00:10:32.940 than the commodity version, 156 00:10:32.940 --> 00:10:37.940 you can charge somewhat of a price premium for it, 157 00:10:38.160 --> 00:10:40.863 and it tends to be much more value-driven. 158 00:10:43.380 --> 00:10:46.410 The more attributes that you have, 159 00:10:46.410 --> 00:10:49.440 the more differentiated that you are, 160 00:10:49.440 --> 00:10:54.440 the fewer direct competitors that you will have. 161 00:10:54.990 --> 00:10:58.363 And hence, you don't have to produce 162 00:11:02.010 --> 00:11:03.990 in as high a volume. 163 00:11:03.990 --> 00:11:08.440 And since you're working in sort of the craft artisanal 164 00:11:09.300 --> 00:11:11.070 high-quality world, 165 00:11:11.070 --> 00:11:16.070 a low-volume approach tends to work well here. 166 00:11:20.400 --> 00:11:21.990 Another way of thinking about this 167 00:11:21.990 --> 00:11:24.480 is the red or blue ocean. 168 00:11:24.480 --> 00:11:27.900 The red ocean is shark-infested waters. 169 00:11:27.900 --> 00:11:32.900 There's lots and lots of competitors, it's highly contested. 170 00:11:32.940 --> 00:11:35.160 It's a very crowded marketplace. 171 00:11:35.160 --> 00:11:40.160 So if you sell that gallon of milk, you know, 172 00:11:42.780 --> 00:11:47.700 again, it's a very highly-contested/crowded market. 173 00:11:47.700 --> 00:11:51.090 But the more differentiated that you are, 174 00:11:51.090 --> 00:11:53.520 the more you swim in this blue ocean 175 00:11:53.520 --> 00:11:57.840 where there's fewer competitors, at least for now. 176 00:11:57.840 --> 00:12:00.270 And these tend to be things that have a new value, 177 00:12:00.270 --> 00:12:02.430 a new innovation, and a new idea. 178 00:12:02.430 --> 00:12:05.943 Something that really stands apart from the crowd. 179 00:12:08.820 --> 00:12:13.470 Thinking more about competitive forces that we can see. 180 00:12:13.470 --> 00:12:17.160 On one hand there's lots and lots of, you know, 181 00:12:17.160 --> 00:12:19.653 we live in a very globalized economy. 182 00:12:20.760 --> 00:12:22.680 At various times in recent years 183 00:12:22.680 --> 00:12:26.250 we've engaged in trade wars. 184 00:12:26.250 --> 00:12:29.160 There's a lot of outsourcing things that we buy 185 00:12:29.160 --> 00:12:33.810 or, you know, the parts are produced all over the world, 186 00:12:33.810 --> 00:12:38.100 they're put together all over the world. 187 00:12:38.100 --> 00:12:39.840 But there's also this movement 188 00:12:39.840 --> 00:12:43.993 toward this sort of buy local, locavore localization 189 00:12:46.140 --> 00:12:48.150 with more niche market things 190 00:12:48.150 --> 00:12:53.150 where there's value in supporting local businesses 191 00:12:54.000 --> 00:12:57.813 and goods from close to where you live. 192 00:12:59.880 --> 00:13:03.093 There are many, many regulatory forces. 193 00:13:04.486 --> 00:13:07.620 I might have a list here, but in many cases, 194 00:13:07.620 --> 00:13:11.490 depending on what and where you wanna sell, 195 00:13:11.490 --> 00:13:14.040 there are many regulations 196 00:13:14.040 --> 00:13:15.810 that you will need to meet. 197 00:16:25.903 --> 00:16:27.180 I want you to think as well, 198 00:16:27.180 --> 00:16:31.830 how does climate change both create 199 00:16:31.830 --> 00:16:34.713 and impede opportunity? 200 00:16:38.370 --> 00:16:41.340 The reason we look at the external environment 201 00:16:41.340 --> 00:16:46.340 is that it helps us see opportunity and overcome barriers. 202 00:16:48.300 --> 00:16:50.760 One way that we can do this, 203 00:16:50.760 --> 00:16:53.550 and this is an exercise that you can do 204 00:16:53.550 --> 00:16:57.150 if you don't have an idea yet 205 00:16:57.150 --> 00:16:59.340 for your final marketing plan 206 00:16:59.340 --> 00:17:04.340 for your business or organization, is to trendspot. 207 00:17:05.520 --> 00:17:08.430 So look at what are others doing? 208 00:17:08.430 --> 00:17:11.790 What are other people listening to, watching, 209 00:17:11.790 --> 00:17:14.640 reading, done through networking, 210 00:17:14.640 --> 00:17:16.830 it's done through self-observation? 211 00:17:16.830 --> 00:17:20.940 And it's important to challenge your own assumptions, 212 00:17:20.940 --> 00:17:25.560 to talk with potential customers 213 00:17:25.560 --> 00:17:30.560 and to move beyond the same old, same old, you know? 214 00:17:30.990 --> 00:17:33.510 Especially talk to folks who aren't like you, 215 00:17:33.510 --> 00:17:36.330 who don't have the same habits as you, 216 00:17:36.330 --> 00:17:37.893 and see what they are doing, 217 00:17:40.770 --> 00:17:44.460 because in this way you'll have sound assumptions 218 00:17:44.460 --> 00:17:49.460 and beliefs on which to base your strategies 219 00:17:52.200 --> 00:17:55.020 which will inform what your operations are, 220 00:17:55.020 --> 00:17:56.640 which will then hopefully give you 221 00:17:56.640 --> 00:17:58.563 the performance that you want. 222 00:18:00.660 --> 00:18:02.730 So we put this all together 223 00:18:02.730 --> 00:18:05.430 in what's called a SWOT analysis, 224 00:18:05.430 --> 00:18:09.240 strengths, weaknesses, opportunities and threats. 225 00:18:09.240 --> 00:18:10.740 So what are the internal 226 00:18:10.740 --> 00:18:14.800 and the external forces that work for you 227 00:18:15.935 --> 00:18:16.773 and against you? 228 00:18:19.620 --> 00:18:23.460 So we can get this through the external scan. 229 00:18:23.460 --> 00:18:26.760 What are the social and technologic 230 00:18:26.760 --> 00:18:29.010 and other forces? 231 00:18:29.010 --> 00:18:30.540 Which one work in your favor, 232 00:18:30.540 --> 00:18:32.553 which ones work not in your favor? 233 00:18:33.450 --> 00:18:36.720 And then we can map it out. 234 00:18:36.720 --> 00:18:40.884 So hopefully we will be in the top-right 235 00:18:40.884 --> 00:18:43.380 where the opportunities are greater than the threats, 236 00:18:43.380 --> 00:18:45.360 the strengths are greater than the weaknesses, 237 00:18:45.360 --> 00:18:47.523 and we can just sort of play offense. 238 00:18:48.630 --> 00:18:52.600 The worst place is to be in the bottom-left 239 00:18:53.945 --> 00:18:56.700 where we're basically playing defense. 240 00:18:56.700 --> 00:19:01.140 Or it may be that we would just wish to stop operations 241 00:19:01.140 --> 00:19:03.753 and find another thing to do. 242 00:19:04.860 --> 00:19:07.560 If the opportunities are great 243 00:19:07.560 --> 00:19:09.390 but the weaknesses are great, 244 00:19:09.390 --> 00:19:13.740 you may wish to sort of shore up those weaknesses 245 00:19:13.740 --> 00:19:18.740 and turn around to meet the opportunity. 246 00:19:18.960 --> 00:19:22.710 And if the threats are great 247 00:19:22.710 --> 00:19:25.590 but you have strengths, you may wish to diversify 248 00:19:25.590 --> 00:19:30.020 and think about other applications to devote your strengths. 249 00:19:35.220 --> 00:19:37.200 That is the end of Part 2. 250 00:19:37.200 --> 00:19:38.033 Thank you.