Environmental Factors in Strategic Planning

For a business to grow and prosper it must be able to anticipate, take account of and deal with changes in its environment. Strategic planning helps the organisation to monitor these changes and to adjust its activities accordingly.

In the planning context, the term environment covers both internal and external factors which impact on the organisation.

The Internal Environment

Factors in the internal environment are factors or qualities of the organisation itself. They are to some extent controllable and changeable by the organisation through planning and management processes. Specific areas of the strategic plan may be be aimed at improving these organisation qualities and thereby positioning the organisation to take advantage of any opportunities that arise for growth and development.

Table 1: Factors in the internal environment and their affect on sport and recreation organisations Factor Staff attitudes Influence on the sport/recreation organisation The attitudes of employees and/or voluntary workers towards the organisation is a key factor. Negative attitudes can severely impact on the organisation's ability to implement strategies for development despite however thorough the planning processes. Assets It takes time for organisations to acquire assets such as equipment, vehicles, buildings and intellectual property. Organisations that are relatively young usually have to battle up hill to acquire such assets and may be unable to implement key strategies until they do. For example, a club without a headquarters may be limited in the types of events it can stage. Participation The number of members or participants is often an important factor. Organisations that

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have few members or participants tend to have greater difficulty in acquiring funding from government or commercial sponsorships. They have less people to derive income from in the form of membership fees, event revenues, fundraising schemes and sales of merchandising.

Skills of the organisation's people

Organisations are limited by the knowledge, experience and capability of its own people. In a sport and recreation organisation this might include administrators, coaches, referees, fundraisers and participants. For this reason the provision of continual opportunities for training and education all categories of participants is seen as an essential task.

Finance

Finance is a factor in its own right. Despite however good other internal factors may be, it is possible for an organisation too short of cash to implement strategies within the strategic plan, even if only on a temporary basis.

Structure

Organisations may be impeded by their structure, constitution and forms of governance. Democratic structures that allow and value a diversity of opinion are more likely to be able to embrace changes needed. The typical management committee structure, that is a President, Secretary, Treasurer and Ordinary Committee Members, tends to place responsibility on too few people. Newer management structures that include roles as function managers or co-ordinators, for example Event Co-ordinator, Promotions Coordinator and Coaching Co-ordinator, may be more able to effectively implement strategies.

The External Environment

The figure on the right illustrates some of the important factors that are part of the external environment of any organisation. For a business to grow and prosper it must be able to anticipate, take account of and deal with changes in its external environment. Strategic planning helps the organisation to monitor these changes and to adjust its activities accordingly.

The table below explains how the various factors illustrated in the figure above in the external environment influence the way which sport and recreation organisations operate.

The External Environment Factors in the external environment and their affect on sport and recreation organisations Factor Market Influence on the sport/recreation organisation An increasing variety of forms of recreation and an increasing number of providers, commercial and non-profit, means that traditional sports and long-standing sport and recreation organisations have increasing difficulty keeping their market share. Sport and recreation enterprises are forced to be increasingly innovative in methods of promotion, recruitment and services delivered to the consumer. The preferences of consumers for sport and recreation is constantly changing. Media Some sports enjoy a wealthy of publicity while others achieve almost none. Publicity can also be adverse i.e. athletes banned for doping or medical opinion stating a sport is unsafe - boxing. The influence of television on sport is undeniable. This includes prolonged exposure to American Television shows that may effect changes in consumer preferences for sport. Climate Outdoor sport and recreation events are subject to the weather. Climatic change and people's attitudes may influence which forms of sport and recreation prosper in the

future. Legal Changes in law affect sport and recreation organisations the same as any other business e.g. taxation, laws relating to gaming machines, environmental law Political Changes in government policies can mean changes to the ways government assists sport and recreations organisation with funding. Economic The amount of money spent on sport and recreation rises and falls with prevailing conditions of the nation's economy. Increases in interest rates and high unemployment levels can mean there is less spent on sport and recreation. Global economic conditions affect the number of overseas visitors and this in turn affects sport and recreation enterprises that provide services to overseas visitors. Demographic There is constant change in the make-up of the population. Some of these changes include an increasing proportion of elderly citizens, increasing number of two-income families, the age at which people marry is increasing, increasing ethnic diversity, suburbs which were once dominated by young families now have few. Technology Technological change has given rise to many new forms of recreation or provided newer and better equipment to use. Technology has also enabled some sectors of the sport and recreation market to be more active in the market place i.e. using the Internet.

INTERNAL FACTORS : Internal factors are those factors which exist within the premises of an organization and directly affects the different operations carried out in a business. These internal factors are : A. VALUE SYSTEM : It implies the culture and norms of the business. In other words, it means the regulatory framework of a business and every member of the organization has to act within the limits of

this framework. B. MISSIONS AND OBJECTIVES : Different priorities, policies and philosophies of a business is guided by the mission and objectives of a business. C. FINANCIAL FACTORS : Financial factors like financial policies, financial position and capital structure also affects a business performance and its strategies. D. INTERNAL RELATIONSHIP : Factors like the amount of support the top management enjoys from its shareholders, employees and the board of directors also affects the smooth functioning of a business. The EXTERNAL FACTORS include all those factors which exists outside the firm and are often regarded as uncontrollable.. These external forces can further be categorized as MICRO ENVIRONMENT and MACRO ENVIRONMENT. MICRO ENVIRONMENT includes the following factors. 1.SUPPLIERS : Suppliers are those people who are responsible for supplying necessary inputs to the organization and ensure the smooth flow of production. 2.COMPETITORS : Competitors can be called the close rivals and in order to survive the competition one has to keep a close look in the market and formulate its policies and strategies as such to face the competition. 3.MARKETING INTERMEDIARIES : Marketing intermediaries aid the company in promoting, selling and distribution of the goods and services to its final users. Therefore, marketing intermediaries are vital link between the business and the consumers. MACRO ENVIRONMENT includes the following factors. 1.ECONOMIC FACTORS : Economic factors includes economic conditions and economic policies that together constitutes the economic environment. These includes growth rate, infation, restrictive trade practices etc. Which have a considerable immpact on the business. 2.SOCIAL FACTORS : Social factors includes the society as a whole alongside its preferences and priorities like the buying and consumption pattern, beliefs of people their purchasing power, educational background etc. 3.POLITICAL FACTORS : The political factors are related to the management of public affairsAnd their impact on the business. It is important to have a political stability to maintain stability in the trade. 4.TECHNOLOGICAL FACTORS : Latest technologies helps in improving the marketablity of the product plus makes it more consumer friendly. Therefore, it is important for a business to keep a pace withv the changing technologies in order to survive in the long run.