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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.

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.

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

Topics

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Course Overview
-----------------------------------------------------------------------------------Demographical Environment
-----------------------------------------------------------------------------------Social Environment
-----------------------------------------------------------------------------------Cultural Environment
-----------------------------------------------------------------------------------Domestic Political Environment
-----------------------------------------------------------------------------------International Political Environment
-----------------------------------------------------------------------------------Natural Environment
-----------------------------------------------------------------------------------Technological Environment: Information Technology
-----------------------------------------------------------------------------------Technological Environment: Processing Technology
-----------------------------------------------------------------------------------Governmental Environment
-----------------------------------------------------------------------------------Economic Development
-----------------------------------------------------------------------------------Regional Economy
-----------------------------------------------------------------------------------Monetary & Fiscal Policies
-----------------------------------------------------------------------------------Industry & Sectoral Policies
-----------------------------------------------------------------------------------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

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
Social and Cultural

Domestic
Political

Economic Development

International
Political
The Firm

Monetary and Fiscal Policies

Governmental
Industry and Sectoral
Policies
Regional
Economy

Natural
Environment

Information and Processing

Technologies
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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
likely trends emerging
in the external
environment

Industry
analysis

Market (customer)
analysis

Competitor
Analysis

Interest group
Analysis

Supplier
Analysis

Governmental
Analysis

Assess the probability

of these trends

Analysis of strategic factors

Opportunities
Threats

Assess the likely

impact of each of
these trends on the
industry and the firm
being examined

Other stakeholder
analysis

Basic Model of Strategy Formulation

Strategic
Vision
Analysis of Environmental Factors:
Trends, events, directions and
ideals

Analysis of internal resources and

capabilities

Business:
Opportunities and Threats

Strengths and Weaknesses of the

firm

Key Success Factors

Distinctive Competence

Creation of Strategy

Managerial values

Evaluation and
choice of strategy

Strategic plans

Social responsibility
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Environmental Forces are Driving Dramatic Changes

Environmental
Forces

Economic

Socio-cultural

Political

Natural
Technological

Governmental

Demographics

Characteristics

Impact
New Competitive
Landscape
Visionary/
Futuristic
View

Driving
Forces

Key
determinants

Basic
Strategic
Issues

Hypercompetitive markets

Blurring of industry
boundaries

Extreme emphasis on
customer values

New rules of the game

Global and competencebased competition

New competitive
requirements: strategic
flexibility and continuous
learning

Changing career dynamics

and employee
expectations
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Economic Environment
Structure and Changes in
Economic Conditions

Economic
Development

Monetary and Fiscal

Policies

Regional
Economy

Industry and
Sectoral Policies

Impact on
Economic
Welfare

Finance and
Investment

Cost Structure and

Industry
and Trade

Business Opportunities and Threats

12

Demographic Environment
Demographic Profile
Structure and Changes in
Demographic Variables

By
Age

By
Gender

By
Ethnicity

By
Education

By
Income

By
Occupation

By
Region

Impact on
Work Force

Work Place

Supply and demand for

goods and services

Cost
structure

Business Opportunities and Threats

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Social-Cultural Environment
Basic local values
and traditions

Social and cultural factors

and institutions

Global interactions and

modernization

Social and
cultural changes
Impacts on
Individual and group/collective
beliefs, values, perceptions,
attitudes, opinions, and
lifestyles

Structure and patterns of social

and cultural interactions and
conditions

Workplace and patterns of

work and leisure, career
dynamics and employee
expectations and composition

Business Opportunities and Threats

14

Domestic Political Environment

Structure of, and changes in political forces
and activities in Indonesia

Relations among executive,

legislative, and yudicative
bodies

Relations among political

groups

Political systems and

institutions

Roles and Power exercised: Direction and

stability of political factors
Impacts on
Relation between
government and
private enterprise

Legal and regulatory

parameters

National
planning

Roles of
business

Business Opportunities and Threats

15

International Political Environment

Structure and Shifts in World
Politics and Geopolitics

Political allies based on:

Ideology
Economic interest
Former colony ties
Stage of industrial
developments
Geographical location
Other

Changing relationship between:

Communist and non communist

Changing roles of global

businesses and other world

countries
Prosperous and poor countries
(North and South)

economic institutions

East and West countries

Impact on
Indonesian
politics

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

Information and communication

Processing
Biotechnology
Medicine
Robotics
Metal
Other

Characteristics

Strategic
issues

Impacts on
(as examples)

Product
Developments
and innovation

Process
improvement

Manufacturing
facilities
automation

Increasing rate of technological change and

diffusion
Increasing knowledge intensity (knowledgebased business)
E-business
Emergence of positive feedback industries
Increased mastery of energy, its
conservation, and more efficient use

Improvements in
marketing
techniques

New market
development

Changes in the
nature of
competition

Business opportunities and threats

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Natural Environment
Business

Reciprocal relationship

Increasing
cost of pollution
control

Regulatory
demands

Public demands
for environmental
protection

Environmental
Management
System

The Ecology

Pollution:
Air
Water
Land
Cross-media

Customer demand
for clean processes
and products

Competitive
requirement

International
trade
agreement

New
technologies
for pollution
prevention

The greening
of management
Business opportunities
and threats
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Governmental Environment
Structure and
Behavior of Government

Laws
Regulations and Deregulations
Pressures
Leadership
Roles
Political agenda

Current
Issues

Regional autonomy
Relations between central and local
government
Privatization of state-owned
enterprises

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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