Business Research and Data Analysis

Factors Affecting the Business Environment—Discussion Guide

Performance Indicator: Describe factors that affect the business environment

Slide 1 THINK ABOUT IT

The environments we find ourselves in can have a big influence on our daily lives.

• While we cannot control the external environment, we can plan and respond to environmental changes as best we can.

• Businesses are also affected by the environments in which they operate.

• Several external factors influence the decisions and strategies that businesses must make.

• Learn more about these factors and what smart businesses do to respond to environmental changes appropriately.

KEY CONCEPTS

Slide #2 Businesses are affected by multiple external factors.

• No business can escape the influence of dynamic (changing) outside factors.

• At each organization’s core should be a commitment to meeting customer needs, which are continually changing due to the external environment.

• Successful businesses keep a close watch on all these factors and plan careful reactions that will help them satisfy customers and stay competitive.

• Business owners and managers must consider the following external factors:

  • Ethnic/Cultural factors

    • Because of globalization, businesses deal with customers, suppliers, and partners from all over the world.

    • Cultural differences can have a huge impact on business decisions and planning—they affect everything from product to price, promotion, and place.

    • It is important for businesses to behave ethically within the different countries and cultures where they operate.

  • Political factors

    • All businesses are subject to a variety of laws at the federal, state, and local levels.

    • Many businesses are also subject to the authority of regulatory industries.

    • Some industries take steps to regulate themselves by establishing industry associations that exert some degree of control over associated businesses, although that power is not derived from government authority.

    • Businesses must also pay their taxes.

  • Social factors

    • Social trends affect customer needs in a variety of ways, including a business’s social responsibility, changing family roles, lifestyle and fashion trends, and shifts in demographics.

  • Economic factors

    • Customers spend more or less depending on economic factors such as economic growth, inflation, interest rates, unemployment rates, and changing incomes.

    • Changes in the economy can also increase or reduce a business’s operation costs.

  • Technological factors

    • Implementing new technology can help businesses remain profitable and meet customers’ needs.

    • Businesses often turn to technology to find solutions to economic factors outside their control, such as increases in wages and taxes.

    • Successful businesses pay attention to how technology influences the specific needs of their target markets.

  • Competitive factors

    • Businesses cannot control their competition, but they certainly must strive to stay competitive—not just by keeping up with other companies in their industries, but by staying ahead of them whenever possible.

    • An organization runs the risk of failure if it does not regularly monitor the external environment to keep tabs on the competition, capitalizing on competitive opportunities and avoiding threats as much as possible.

Discussion #1: Ask students to discuss examples of external factors.

Slide #3 Businesses track and react to external factors in a few different ways.

• Successful organizations must always remain aware of their external environments.

  • Keeping track of external factors and their changes is part of a process known as environmental scanning.

  • This process brings important information to light for a business’s owners or managers, but knowledge alone is not enough—they must use their insight to react appropriately.

• Certain businesses and industries are more sensitive to certain environmental changes than others.

  • For example, businesses that operate in multiple countries are more susceptible to shifts in the global economy than small, local businesses might be.

  • Business owners and managers must be aware of which specific external factors affect their businesses the most.

• Once the people running a business know which environmental factors affect the organization most, they can plan responses to change as much in advance as possible.

  • Businesses can be proactive by adjusting products or marketing campaigns to fit upcoming social trends, budgeting for slow economic times, leveraging the newest technologies to streamline operations, filling customer needs that competitors are neglecting, and preparing for well-known scheduled events, such as the Olympics or a political convention.

• By conducting environmental scanning and being aware of which environmental factors affect their organizations the most, business owners and managers can be prepared to respond quickly and effectively to changes in the external environment.

Discussion #2: Ask students to discuss the ways in which businesses they’re familiar with have prepared and adjusted for environmental changes.

Adapting to Markets—Discussion Guide

Slide 1 THINK ABOUT IT

Businesses must adapt to continually changing environments and markets by choosing the appropriate course of action and deciding how best to respond to the changes.

• It can be hard to keep up, but it is essential for organizations that want to succeed.

• Learn more about the current business environment and the strategies that smart organizations use to survive and thrive amid rapid change.

KEY CONCEPTS

Slide #2 Various forces drive market changes.

• Before a business can prepare for or respond to change, it must know what kinds of changes it is dealing with.

• Here are some of the forces that are driving change in the current business market:

  • Globalization

    • The world has become progressively “smaller,” meaning people and businesses are more connected than ever before.

    • Some of the effects on business include higher productivity, increased competition, greater innovation, and more opportunities.

  • Consumer demands

    • Today’s consumers expect the greatest value for their money, low prices, new product features, extended services, and speedy delivery.

  • Spending trends

    • Consumer spending tends to fluctuate up and down along with changes in the economy.

    • When the economy is poor, consumers restrain their spending, and vice versa.

    • Businesses prepare for spending trends so they can scale production as necessary.

  • Industry structure changes

    • New technologies have allowed the industry to become faster and more streamlined, relying on software and robots to take over much of the more repetitive work.

    • To remain competitive, organizations must keep up with the quick pace.

  • Growth of service businesses

    • The services-producing sector encompasses several industries, such as travel, health care, education, legal services, etc.

    • In the past few decades, the services-producing sector has been steadily increasing.

  • Shrinking product life cycles

    • A product’s life cycle refers to the stages it moves through from the time it is introduced to the market until the time it is taken off the market.

    • Due to the rapid innovation in business and technology, product life cycles have become shorter.

Discussion #1: Ask students to discuss changes businesses have experienced within the last 5 years. What about 10 years ago?

Slide #3 Adaptable organizations share multiple characteristics.

• Some of the characteristics that “adaptable” organizations possess include:

  • Flexibility

    • A business’s model and structure should be designed to function within an environment and economy that are always changing.

    • A business must be willing to adjust its products, promotions, and prices to suit new or changing consumer groups.

  • Cultural intelligence

    • Because of globalization, most businesses and employees deal with associates and customers from a variety of cultural backgrounds.

    • Cultural awareness and sensitivity are crucial for any business operating in today’s global marketplace.

  • Strong leadership

    • Today’s businesses need leaders who understand current market demands and are willing to adapt as necessary.

    • Successful leaders focus on maximizing organizational resources and tapping the full potential of all employees.

  • Open-mindedness

    • A successful business is willing to constantly reappraise its goals, processes, and target markets, and is willing to make changes when necessary.

    • Businesses stay on top of trends by monitoring economic changes and conducting focus groups.

  • Agility

    • This is the ability to change quickly, and includes visibility, speed, and scalability.

  • Cohesiveness

    • A cohesive organization is one that runs smoothly.

    • Its operations are streamlined, and all employees have fast, easy access to important information.

    • It uses flexible technologies that can grow and change along with the company.

Discussion #2: Ask students to brainstorm additional characteristics of adaptable organizations. What are some examples of successful organizations that have adapted well to market changes? What characteristics do they share?

Slide #4 Businesses use a few different strategies to stay flexible.

• An organization’s leaders may recognize the need for adaptability, and the organization may display many of the desirable characteristics for adapting, but in what practical ways does the organization undertake necessary change?

• Here are some of the strategies businesses use to stay flexible:

  • Proactive management

    • Proactive management means anticipating and planning in advance for change, rather than reacting to outside events when they occur.

    • Managers in proactive organizations try to stay ahead of potential problems, opportunities, and trends.

  • Innovative management

    • Innovative management is more participative than traditional forms of management.

    • Employees work under less rigid job descriptions and are usually included in decision-making processes.

    • Under innovative management, company leaders take roles that are more facilitative than controlling, and they focus more on outcomes.

  • Competitive aggression

    • Businesses cannot afford to wait and see what the competition will do.

    • Competitive aggression can be positive when companies compete responsibly.

  • Organizational learning

    • Organizational learning refers to a firm’s ability to accept and respond to change appropriately, becoming as effective and efficient as it can be.

    • Key aspects of organizational learning include systems thinking, team learning, shared organizational vision, mental modeling, and personal mastery.

  • Marketing orientation

    • A strong focus on meeting customer needs and wants is a marketing orientation.

    • A business with a marketing orientation is constantly listening to customers to determine how it can serve them best and is poised to act as soon as the market changes.

  • Slack resources

    • Resources above and beyond what are needed to operate an organization are known as slack resources.

    • They can be monetary, human resources, or equipment.

Discussion #3: Ask students to debate the positive and negative elements of competitive aggression. How can businesses engage in competitive aggression responsibly?

Business Trends—Discussion Guide

Performance Indicator: Describe current business trends

Slide 1 THINK ABOUT IT

Think about bell-bottoms, mullets, low-rise jeans, and mohawks.

• Much like various haircuts and clothing styles that have emerged over the years, companies also go through different business trends.

• These ever-evolving trends offer new opportunities for businesses to innovate and improve profitability, efficiency, and productivity, and gain a competitive market advantage.

KEY CONCEPTS

Slide #2 Companies track business trends to innovate and stay ahead of the competition.

• Studying business trends involves looking for consistent increases, decreases, or constancy in a set of statistical data that can be applied to future long-term effects.

• Businesses place a large focus on identifying trends, or patterns of behavior, then analyzing the effects of that behavior and evaluating the implications on future strategic business decisions.

• Companies pay attention to financial, market, and industry trends, which are multidimensional and have far-reaching effects.

• Businesses gather information on trends by conducting interviews with customers, employees, suppliers, and business experts; facilitating workshops with stakeholders; organizing studies; attending industry trade shows; following consumer spending habits and lifestyle changes; visiting other companies; and reviewing industry trend reports.

• After collecting this information, businesses can cluster the trends thematically, assess relevance and scope, determine priority, and prepare for the future.

• Companies use analytical and creative thinking to consider the impact of trends on the business itself, its industry, its environment, and its customers.

• In playing a proactive role, businesses can help shape the future by creating products that meet the newest demands and staying ahead of potentially damaging market fluctuations.

Discussion #1: Ask students to discuss the difference between a trend and a fad. How does a business determine when a trend is truly a trend? What are the consequences of mistakenly adapting to a fad?

Slide #3 There are numerous current business trends.

• Current business trends contain the following categories:

  • Going green

    • Companies are focusing on alternate, clean energy sources and overall sustainability.

    • Customers who are increasingly concerned about the environment are pressuring businesses for earth-friendly solutions to reduce consumption.

  • Technology

    • The rise of the Internet means information is free, readily available, and constantly changing, so companies must always be learning and unlearning skills and ways of doing business.

    • Mobile-friendly websites, search engine optimization, online learning, and intelligent advertisements are common.

    • Brick-and-mortar retailers are closing or moving online.

    • Augmented intelligence has been democratized, and companies are integrating artificial intelligence into all elements of their organizations.

    • Technology adaptability and innovation is key.

  • Customer focus

    • With the rise of social broadcasting, companies have more opportunities to listen to customer feedback, focus on reputation management, and build brand authenticity.

    • The rise of shared values means customers are drawn to support companies that share a higher purpose, boosting loyalty and fostering relationships.

    • The emergence of the experience economy highlights customers’ focus on events or experiences instead of products: people enjoy storytelling and want an emotional connection with a brand.

  • Quality of life

    • Companies are increasingly offering a wide range of benefits to support employees’ desire for work-life balance.

    • Businesses are targeting advertisements to improve customers’ well-being and fight disease with health and energy products with the goal to ensure people look and feel good as the average life expectancy increases.

  • Business/Marketing

    • Businesses are employing precise, specific marketing strategies to attract the best customers.

    • Sales and marketing strategies are tightly integrated, and salespeople have evolved to subject-matter experts.

    • Customers are more frugal and cautious with their financial decisions, so the focus has shifted to offer products with true value.

    • Companies are offering more consistent training opportunities for employees.

Discussion #2: Ask students to brainstorm and discuss additional business trends. How are companies adapting to these trends?

Slide #4 Business trends have a large impact.

• Trends have a wide-reaching impact on the business environment.

• Trends redefine how business is conducted, restructure profitability processes, and reshape how companies interact with their suppliers, stakeholders, customers, and other businesses.

• Business trends transform markets and industries, and businesses must be agile and adaptable to succeed and improve operations.

Slide #5 Business trends are very important.

• It is vital for businesses to monitor, understand, plan, and adapt to current and emerging business trends.

• Recognizing how these trends affect a business and industry enables those businesses to redefine their processes and take advantage of new opportunities.

• Companies track trends in order to better develop corporate strategy, optimize returns on innovation, and gain a competitive advantage in their industries.

• By identifying and keeping up with current business trends, businesses can improve profitability, efficiency, and productivity.

Discussion #3: Ask students to think about where trends come from. Do they pop up organically or are they manufactured? Who sets trends? How do businesses determine the right time to act on a trend?

Conducting an Environmental Scan—Discussion Guide

Performance Indicator: Conduct an environmental scan to obtain business information

Slide 1 THINK ABOUT IT

It’s important for mountain climbers and businesses alike to observe their surroundings so they can take advantage of opportunities and prepare for challenges ahead.

• Successful businesses, much like individuals, regularly scan their environments to recognize potential opportunities and threats, and adjust strategic planning and decision-making accordingly.

KEY CONCEPTS

Slide #2 Environmental scanning allows businesses to identify challenges and opportunities.

• Businesses that regularly perform environmental scanning can identify and address challenges and opportunities.

• This valuable information can help them adapt to changing business climates and succeed in the short and long term.

• Environmental scanning (sometimes called environmental monitoring or environmental analysis) is a three-step process in which businesses:

• Gather information about their surroundings.

• Analyze that information.

• Determine the future impact of that information.

• Environmental scanning is important because businesses must constantly be aware of potential threats and opportunities, which helps with strategic planning and management decision-making.

• A business cannot control its external environment, but it can control its internal environment and prepare to meet upcoming threats and opportunities.

  • A business’s internal environment consists of elements such as finances, personnel, research and development, production, and marketing.

    • This area plays a large role in determining how a business will respond to opportunities and threats.

• A business’s environment is always changing.

  • Changes in customer attitudes, the economy, and technology—all of these and more affect the important decisions that owners and managers must make.

• Because businesses cannot control the external environment, they are faced with a choice—adapt or fail.

  • To adapt successfully, they rely on environmental scanning.

Discussion #1: Ask students to discuss the potential consequences of a business’s inadequate application or lack of environmental scanning. What are the short- and long-term effects?

Slide #3 An environmental scan has six main categories.

• When reviewing the information gathered during environmental scanning, businesses must remember these factors are dynamic, interrelated, and affect certain industries differently.

• There are six main categories included in an environment scan:

  • Demographics

    • Demographics are the physical and social characteristics of the population, including age, gender, education, race, etc.

  • Society and culture

    • Social trends that affect business decision-making include changing family roles, need for convenience, concern for fitness and health, and going green.

  • The economy

    • Economic factors that businesses should pay attention to during an environmental scan include stage of the business cycle (prosperity, recession, recovery, etc.), inflation, interest rates, unemployment rates, tax rates, and currency exchange rates.

  • Competition

    • Businesses should keep tabs on brand competition, substitute products, and general competition both domestically and internationally.

  • Government

    • Many political factors come into play, including changing laws and regulations, monetary and fiscal policies, import/export restrictions, and state and local laws.

  • Technology

    • Advances in communication, new products, and new manufacturing processes can drastically change a business’s decisions and plans.

Discussion #2: Ask students to discuss and compare which categories will affect particular businesses or industries more than others.

Slide #4 An environmental scan has five steps.

• There are five steps to conduct an environmental scan:

1. Identify participants and responsibilities.

   • On a certain level, all employees should be participating in environmental scanning.

   • Everyone should be aware of the environment and how it affects the business as well as her/his particular job.

2. Carry out scanning activities.

   • Some of the tools you can use to gather information include surveys, focus groups, informal conversations, newspapers, and market research studies.

   • When carrying out scanning activities, it’s important to focus only on what’s relevant.

3. Identify and analyze important issues and trends.

   • Look at the information you’ve gathered and identify specific trends that will affect strategic planning and decision-making.

   • Ask critical questions, such as, “How does this trend affect demand for our goods or services?”

4. Report results or select issues and trends to act on.

   • You may be responsible for reporting environmental scan results, or you may be part of a team that decides which issues the business should act on.

   • Not all trends can be addressed immediately or all at once.

5. Scan on a continuous basis.

Discussion #3: Ask students to discuss the importance of conducting environmental scans on a regular basis.

Data Analysis—Discussion Guide

Performance Indicator: Explain the principles of data analysis

Slide 1 THINK ABOUT IT

Data analysis isn’t just numbers, formulas, and statistics for scientists, researchers, and mathematicians.

• Businesses use data analysis to improve efficiency, spot and adapt to market trends, optimize operations, provide foresight for the future, and make better-informed business decisions.

KEY CONCEPTS

Slide #2 Businesses use data analysis for a variety of reasons.

• Data analysis is the process of gathering and evaluating information, or data, to draw conclusions about it.

  • Data analysis can reveal trends that might otherwise be lost due to information overload.

  • Data analysts quantify and verify the strength of evidence supporting one hypothesis, or proposed explanation for an event, by choosing and then utilizing the appropriate analytical method.

  • The process used in data analysis involves the following steps:

    • Decide how the data is grouped or separated.

    • Collect the data.

    • Organize the data so it can be analyzed efficiently.

    • Clean it up by checking for errors or duplicates.

• Businesses use data analysis to optimize processes and performance, reduce costs by detecting more efficient ways to do business, help identify problems, and increase the overall efficiency of the business.

  • Data analysis enables businesses to identify challenges and adapt to them, anticipate customer needs by analyzing trends, and gain clear insight to make better-informed business decisions.

• When conducting data analysis, it is important to have a clear objective in mind: the purpose of the analysis must be well defined and precise in order to be accurately measured, analyzed, and optimized.

  • It is also key to determine the value and usefulness of the data by observing it from multiple perspectives to gain a comprehensive viewpoint.

  • Analysts should form a detailed understanding of the specific methods in which the data was generated, utilize a consistent technique to provide structure and support to the analysis, and maintain a healthy level of skepticism throughout the analysis.

Discussion #1: Why is it important to start with a clear, well-defined question or hypothesis?

Slide #3 There are multiple methods and types of data analysis.

• There are two main methods of data analysis:

  • Qualitative

    • Qualitative data analysis is categorical and described with text.

    • Narrative data is collected by observations, documents, and interviews, and is open to interpretation.

    • The three basic principles of qualitative data are summarized as notice things, collect things, and think about things.

  • Quantitative

    • Quantitative data analysis is numerical and involves the use of statistical modeling, including mean, standard deviation, and frequency distribution.

    • These factors determine the degree of consensus and consistency within responses.

• There are three types of data analysis:

  • Descriptive

    • Descriptive analytics are the simplest category of analytics.

    • Their purpose is to summarize what happened over a given time period by condensing large chunks of data into more useful pieces of information.

  • Predictive

    • Predictive analytics uses the data that you do have to predict that data you don’t have.

    • Their purpose is to forecast what might likely occur in the future.

  • Prescriptive

    • Prescriptive analytics suggests or recommends the best course of action by showing the most likely outcome for multiple future decisions.

Discussion #2: Ask students to describe examples of qualitative and quantitative data.

Slide #4 Data analysis comes with a few common difficulties.

• It is important to distinguish between correlations and causations, coincidences, and biases when conducting data analysis.

• Correlation is often mistaken for causation—this is the assumption that since two actions happened at the same time, one event caused the other event.

  • However, many events occur simultaneously without a cause and effect relationship.

  • Analysts should attempt to eliminate any variables they think could be causing this event.

• Confirmation bias frequently occurs when analysts are committed to noticing patterns that support one particular hypothesis and discount data that refutes their theory.

  • The solution is to analyze data with an objective team, and remember the goal is to disprove a hypothesis, not prove it.

• Data analysts sometimes wrestle with the issue of irrelevant data, especially in the digital age.

  • This highlights the need to clearly define and focus on specific variables and goals for analysis.

  • It’s important to start with a clear plan and adjust accordingly.

Discussion #3: Ask students to describe examples of correlation being mistaken for causation. What consequences could businesses face if they make faulty assumptions about data?

Actionable Business Recommendations—Discussion Guide

Performance Indicator: Translate research findings into actionable business recommendations

Slide 1 THINK ABOUT IT

Businesses can be overwhelmed with data, information, and statistics.

• Data analysts are responsible for translating this data into insights, but these recommendations must be actionable to enable businesses to effectively identify trends, address shortcomings, optimize performance, and chart new courses of action.

KEY CONCEPTS

Slide #2 Actionable business insights exhibit multiple characteristics.

• Insights are the conclusions generated by evaluating data, and they are typically presented in reports, visualizations, and dashboards.

• Actionable insights provide an accurate understanding of a business performance element and drive stakeholders to take a specific course of action.

  • Actionable insights are the valuable output of comprehensive data collection and analysis.

  • They allow businesses to boost productivity and optimize content, and can point companies in new directions.

• Actionable business recommendations typically exhibit the following characteristics:

  • Alignment

    • Insights are more actionable when they are closely linked to key business goals and performance indicators.

  • Context

    • Having a comparison or benchmark provides context and often enriches data’s distinctiveness.

  • Relevance

    • Insights need to be delivered to the correct decision maker at the right time to be effectively implemented.

  • Specificity

    • A detailed insight can help explain exactly why something happened.

  • Novelty

    • Compelling, original findings can challenge current beliefs and prompt inquisition into new areas.

  • Clarity

    • Insights should be communicated effectively so people can clearly understand their importance and potential benefits.

Discussion #1: Ask students to brainstorm additional characteristics of actionable business recommendations.

Slide #3 There are a few challenges associated with making business recommendations actionable.

• Challenges associated with making business recommendations actionable can occur when recipients do not understand the suggestions, and when recipients do not clearly see the connection between the data and the recommendations.

• Companies often understand the importance of data, but can struggle with taking a direct course of action.

• It is the responsibility of data analysts to clearly communicate recommendations that are simple, specific, and actionable.

Discussion #2: Ask students to discuss the benefits of data visualization.

Slide #4 Data analysts use a variety of data visualization methods.

• Data visualization enables audiences to more easily see and understand trends, patterns, and relationships.

  • It efficiently organizes data to provide instant insights.

  • Data visualization also surfaces abnormalities and removes a layer of noise, making it easier to tell data stories.

  • Businesses utilize a variety of visualization methods, including:

    • Charts

    • Graphs

    • Tables

    • Maps

    • Rankings

    • Series

    • Plots

    • Infographics

  • These tools are typically merged and presented on a dashboard.

• Data analysts can determine the most effective visualization type based on relationship, distribution, composition, or comparison of data.

  • Matching the best-suited visualization starts with asking:

    • “What data relationship am I trying to understand?”

    • “Am I assessing the distribution of the data and looking
      for outliers?”

    • “Do I want to analyze trends in the data sets?”

Slide #5 Analysts should implement multiple techniques when creating actionable business recommendations.

• When translating research findings into actionable business recommendations, analysts should avoid statistics jargon, and use high-quality, aesthetically pleasing charts that are easily understandable and reinforce conclusions from the analysis.

• Analysts should adhere to SMART business goals, ensuring their results are specific, measurable, actionable, relevant, and time-based.

• It is important the conclusions drawn from the research findings clearly answer the original questions the analysts set out to resolve.

• By utilizing a framework, businesses can organize insights into a clear, actionable narrative that is explicitly tied to key business goals.

  • Frameworks involve grouping and segmenting the data, then bringing the data to life by telling a simple story and making recommendations for the next course of action.

Discussion #3: Ask students to discuss why analysts should avoid overly detailed statistics jargon.