hello and welcome to our final explanation of chapter 2 of the book exploring strategy today we're going to talk about the micro environment but first we need to explain the other layers of the business environment first we have the organization this is all about the internal part of an organization secondly we've the competitors market which is surrounding the immediate surrounding of the organization after that we have the industry or sector and that makes up a next layer within this broad macro environment and finally we have the micro environment which we're going to talk about today and it consists of a broad environment factors that impact to a greater or lesser extent many organizations industries and sectors there are different tools you can use to analyze the macro environment first we have to push down which examine the macro environment environmental factors according to six key types political economical social technological Accola ecological and legal these factors include both market and non-market expect aspects moving on with forecasting forecasting aims to predict with varying degrees of precision of certainty macro-environment of forecasting draws on a style analysis and often makes use of three conceptual tools which are mega trends inflection points and weak signals the mega trends typically sets the direction for other factors inflection points are moments when trends shift in the direction for inches turning sharply upwards or downwards and weak signals are a trend signs of future trends and are particularly helpful in identifying inflection points next up we have the scenario analysis and this is a technique that develops a possible alternative view of how the environment might develop in the future scenario analysis differs from forecasting because it avoids predictions about the future it's more about learning different possible as a possibilities for environmental change these three tools are used for analyzing the macro environment the first we're going to explain is the Postell analysis and still analysis mainly focuses on 16 which are the political aspects economical aspects social aspects technological aspects the environmental aspects and lastly we have the legal aspects after conducting the pest analysis we will have to look for the key drivers for change the key driver change are the environmental factors likely to have an impact on your industry and sector and success or failure of strategies within them next up is forecast approaches there are three different forecast approaches namely single point forecasting range forecasting an alternative future forecasting and the direction of change are part of the forecast as well which we already set in the beginning which are Megatron's inflection points in weak signals first we have the single point forecast a single point forecasting is where organizations have such confidence about the future that they will provide just one forecast number as you can see on the movie next up we have arranged for a casting this is where organization have less urgency suggesting a range of possible outcomes you have unlikely outcomes possible outcomes and probable outcomes which differ from positive to negative outcomes as you can see on the movie as well and finally we have alternative future forecasting which typically involves even less certainty than the range forecasting and focus on a set of possible yet distinct futures instead of continuously graduate range of likelihoods a turn the future are discontinuous they happen or they do not with radical different outcomes finally we have the scenario analysis the scenarios of a possible alternative use of how the macro-environment might develop in the future typically in the long term the scenario process has different stuff first up defining the scenario scope the scope refers to the subject of the scenario and the analysis and the timestamp next up cliff and then define the key drives for change which as the title says we you have to identify the key drivers next up we have to develop scenarios or stories as in a film scenario or basically stories having selected opposing key drives for change it is necessary to knit together plausible stories that incorporate both key drives and the other factors into a coherent story next up we have indentifying impacts of the alternative scenarios on organization which is really important really important in scenario building and finally we have monitored the progress once the ferry scenarios are drawn up organization should monitor progress over time to alert himself to whether and how developments actually fits scenario expectations although the future can never be predicted perfectly it's clearly important that entrepreneurs and managers try to analyze their environments as carefully as they can in order to anticipate and if possible take trenches of such environmental changes we want to thank you for watching and this is the end