Article analysis*

1. review the article and note the findings 2. What is this articles relevance to strategic management? 3. What are the main learning points / take-aways?

IOP Conference Series: Earth and Environmental Science PAPER . OPEN ACCESS You may also like Influence of External Environment Analysis on the Research on the Project-Centric Social Work Practice Base Construction Mode Xue Li, Shen Le and Jiu Liu Competitiveness of Business Operations of an SRP Annual General Meeting: Health Industrial Enterprise (Evidence from Mining and Physics Instrumentation and Analytical Techniques Edinburgh, 24-26 April 2001 Barbara Gallani, Dave Drury and Steve Metallurgical Industry) Gower - NEWS To cite this article: E P Morgunova and G I Bolkina 2021 /OP Conf. Ser.: Earth Environ. Sci. 666 062037 View the article online for updates and enhancements. Register now! ECS The Electrochemical Society Advancing solid state & electrochemical science & technology 242nd ECS Meeting ECS Plenary Lecture featuring M. Stanley Whittingham, Oct 9 - 13, 2022 . Atlanta, GA, US Binghamton University Nobel Laureate - Presenting more than 2,400 2019 Nobel Prize in Chemistry technical abstracts in 50 symposia This content was downloaded from IP address 172.56.50.240 on 07/10/2022 at 00:02International science and technology conference "Earth science" IOP Publishing IOP Conf. Series: Inuence Earth and Environmental Science 666 (2021) 062037 doi:10.1088/1755 I315/666/6/06203 7 of External Environment Analysis on the Competitiveness of Business Operations of an Industrial Enterprise (Evidence from Mining and Metallurgical Industry) E P Morgunoval, G I Bolkina1 1Ph.D., Associate Professor, Department of Industrial Economics FSBEI HPE Plekhanov Russian University of Economics 117997, Moscow, Stremyanny per. 36 E-mail: morgunova@yandex.ru Abstract. The aim of the study was to analyze the inuence of environmental factors on the effective activities of an organization. The objectives of the paper was to study environmental factors and evaluate methods and approaches to analyze the state of the external environment of the organization. An integrated and holistic mechanism of understanding the problems associated with the analysis of enterprise external environment that can be used in the practical activities of companies in various industries has been formed. Design/methodology/approach: The methodological framework of the study was the provisions of economic theory, organization economics, 3 dialectical approach to the study of the stated problem, as well as management systems in business structures in a rapidly changing external environment. The Inethods that were used in this analysis can be combined into two Inain groups: methods for collecting data on the external environment and analysis methods. The latter include the following methods: PEST analysis, EFAS, industry analysis, SNW analysis, SWOT analysis. The information framework of the study included the scientic and methodological publications of domestic and foreign authors, statistical, informational, analytical, reference sources, materials from current publications and periodicals, reporting data of enterprises in industrial entrepreneurship, expert assessments of domestic and foreign analysts. Findings: In the course of study, methods and approaches were analyzed that allow analyzing the state of enterprise external environment and draw conclusions about the competitive position of the enterprise. Based on the results of the analysis, a calculation and economic justication for increasing competitiveness was presented using the example of the activities of PI SC MMC NORILSK NICKEL. The proposed activities will allow the company to Inonitor changes in the external environment, thereby responding faster to them. That will allow the company to occupy a leading position in the market. Research/practical implications: Theoretical and practical ndings related to determining the impact of the analysis of enterprise external environment on the competitiveness of the enterprise's business can be used by industrial enterprises in the process of managing competitiveness risks, in terms of assessing and developing the competitiveness of the enterprise structures, and developing organizational mechanisms to create favorable conditions for the business environment. Methodological and practical results of the study are of scientic interest to scientists, post-graduate students, students and practitioners in assessing the factors that Content from this work may he used under the terms of the Creative Commons Attribution 3.0 licence. Any further distribution . EV of this work must maintain attribution to the author(s) and the title of the work, journal citation and D01. Published under licence by IOP Publishing Ltd 1 International science and technology conference "Earth science" IOP Publishing IOP Conf. Series: Earth and Environmental Science 666 (2021) 062037 doi:10.1088/17551315/666/6/062037 determine the competitive advantages and the competitiveness of industrial enterprises, while developing measures to identify and mobilize reserves to improve their competitive positions. Individual recommendations provided in the study were used in practice by the enterprises of mining and metallurgical industry. Originality/value: The scientic novelty of the study lies in complementing and developing scientic provisions related to the analysis of the enterprise external environment on the competitiveness of the enterprise's business. The most signicant results associated with the scientic novelty include the following: key methods for diagnosing the enterprise external environment are examined, which allow analyzing the state of the environment of the enterprise and drawing conclusions about its competitive position. A mechanism for practical application of methods through the example of a particular enterprise and a portfolio ofmanagerial decisions to minimize the risks that arise is proposed. 1. Introduction The relevance of the study is due to the fact that the modern external environment of enterprises is characterized by a high degree of uncertainty, complexity and dynamism. One of the conditions for the survival of the enterprise and its development is the ability of the enterprise to adapt to changes that occur in the external environment, i.e. the enterprise must be aware of the new nature of environmental changes and respond effectively to them. Analysis of the external environment is the initial process of strategic management, as it provides the basis for determining both the mission and goals of the organization, and for developing strategies of behavior that allow the organization to fulll the mission and achieve its goals. It gives time to predict opportunities, time to plan for unforeseen circumstances, time to develop an early warning system in case of possible threats, and time to develop strategies that can turn old threats into various kinds of protable opportunities. Determination of positions in the external environment is part of a systematic approach to the development of the enterpris e's competitive behavior. External environment of the enterprise is a set of factors (conditions and organizations) that affect the activities of the company. The external environment is divided into factors of indirect (macroenvironment) and direct (microenvironment) effects. Macroenvironment includes factors of indirect inuence on the whole on all organizations operating in a particular industry. These include factors characterizing the development of the national economy as a whole: economic environment means factors determining the development of economic processes in the national economy (GDP growth rates, external debts, etc), the inuence of the state budget and tax policy on the solvency of the population, the investment attractiveness of the national economy, the stability of the national currency, inflation, tax rates, etc.; political environment means factors determining the development of political processes, the stability of legislative norms in the national economy, political ideology that determines the government policy, the degree of social discontent with the government, etc.; technological environment (methods of converting resources into a result) involves factors that determine the development trends of scientic and technological progress and the associated changes in the technological basis of production; social environment involves factors determining the demographic structure of the population and development trends, norms, customs and values of the population, people's attitude to work and quality of life, population growth rates, etc. The social environment largely determines the state of the labor market and the number of able-bodied population. Changes in the social environment may affect certain markets for goods or services. M. Mescon identifies such environmental characteristics as complexity, mobility, uncertainty. Complexity of the external environment is the number of factors that enterprises need to respond to. Mobility of the environment is the speed with which changes occur in the environment of the enterprise. Many researchers and managers note that in modern conditions the external environment of International science and technology conference "Earth science" IOP Publishing IOP Conf. Series: Earth and Environmental Science 666 (2021) 062037 doi:10.1088/17551315/666/6/062037 organizations is changing with increasing speed, and there are organizations around which the external environment is especially mobile. Uncertainty of the external environment is a function of the amount of information that the organization has about a specic factor, as well as condence in the reliability of this information. If there is little information or there are some inaccuracies, doubts about its origin, then the environment becomes more uncertain than in a situation where there is adequate information, and there are grounds to consider it reasonable, highly reliable. There are factors that cannot be managed by one enterprise. In this regard, it is extremely important to respond to all changes in the environment in a timely manner. Responsiveness of the external environment is determined by a number of concepts that will be discussed below. lnterconnectedness of environmental factors is the level of force with which a change in one factor affects other factors. Complexity of the external environment is the number of factors that enterprises need to respond to, as well as the variability of each factor. 2. Methods and approaches to analyze the state of the external environment of the enterprise As a result of increased competition, there is a need for an adequate assessment of the competitive environment. To do this, we use the world's leading practices to assess the capabilities and weaknesses of the enterprise, analyze the strengths in the development of which the company can increase its competitiveness. To diagnose the external environment of the enterprise, there are a number of methods and approaches that allow analyzing the state of the enterprise external environment and draw conclusions about the competitive position of the enterprise. Let us consider the key methods: - PEST analysis (qualitative and quantitative) - EFAS - Industry analysis - SNW analysis. - SWOT analysis PEST analysis is used to analyze the macro environment of the enterprise, that is, the external environment. A simple and convenient method for analyzing the macro environment (external environment) of an enterprise. PEST analysis is a tool for long-term strategic planning and provides forecasts for 3-5 years in advance, with an annual update of information. The name of this technique is an acronym of four parameters of the enterprise external environment: P - Political factor; E - Economical factor; S - Social factor; T - Technological factor. Let us consider the meaning of each parameter separately. Political factor is a set of conditions determined by the state of the country in which the enterprise operates. This may include business tax treatment, government subsidies and benefits, existence or absence of protectionism policies. The situation in the international political arena is also signicant. Economical factor is quite an extensive indicator which includes all the economic aspects relating to the enterprise. Thus, this part of the PEST analysis examines the state of the economy and its impact on the enterprise. For example, the degree of saturation of the market with competitors or the currency volatility. The social factor covers the state of society and public sentiment, including in terms of the enterprise. The technological factor describes the degree of development of technology used in the industry of the enterprise or related to it. For example, the rate of emergence of innovative approaches to the production of goods or services, the possibility of improving the quality of products through innovation, the level of technological development of competitors. Depending on the tasks of the analysis, PEST analysis may be supplemented by factors. For example, legal and environmental factors may be included. These factors are useful in diagnosing companies that produce tobacco products or products that could be harmful to human health. In general, this type of analysis is quite exible and open for modications, which is both an advantage and a disadvantage. International science and technology conference "Earth science" IOP Publishing TOP Conf. Series: Earth and Environmental Science 666 (2021) 062037 doi:10.1088/17551315/666/6/062037 The complexity of PEST analysis lies in its interpretation, this technique is quite subjective and relies heavily on the human factor. The analyst conducting this analysis should be a highly qualied expert, able to independently review the maximum aspects of external environment. EF AS analysis or External Factor Analysis Summary is used to summarize the results of the analysis of strategic environmental factors. Analysis of industries and markets allows the company to: ' identify other industries in which it will be able to apply its core competencies; - study the buyers and the nature of their needs; - identify new markets in which its core competencies can be used; - identify threats from existing and potential competitors in its own industry and other industries; - identify markets in which it will obtain its resources. The next type of analysis under consideration is SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Currently, in world management practice, SWOT analysis is the most common method for developing strategies for the development of enterprises and types of economic activity based on the analysis of internal and external economic environment. This method includes the study of development trends, the analysis of resources, the possibilities of using advantages and disadvantages, the determination of goals and objectives, the study of the external environment to identify opportunities and threats. Knowing the strengths will allow using the market opportunities more effectively and avoiding threats, understanding the weaknesses will allow building protection on time, as well as planning activities to minimize them. This type of analysis is used both to assess the external and internal environment of the enterprise. It involves the ability to assess the actual situation and strategic prospects of the company, obtained as a result of studying the strengths and weaknesses of the company, its market opp ortunitics and risk factors. The internal situation of the company is reected in S and W, and the external environment is reected in O and T. SWOT analysis has managerial and strategic value if it combines the factors of the internal and external environment and shows what resources and opportunities the company will need in future. EFAS analysis or External Factor Analysis Summary is used to summarize the results of the analysis of strategic environmental factors. Analysis of industries and markets allows the company to: - identify other industries in which it will be able to apply its core competencies; - study the buyers and the nature of their needs; ' identify new markets in which its core competencies can be used; - identify threats from existing and potential competitors in its own industry and other industries; - identify markets in which it will obtain its resources. SNW analysis is an analysis of strengths, neutrals, and weaknesses of an enterprise. SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This type of analysis is used both to assess the external and internal environment of the enterprise. It involves the ability to assess the actual situation and strategic prospects of the company, obtained as a result of studying the strengths and weaknesses of the company, its market opportunities and risk factors. The internal situation of the company is reected in S and W, and the external environment is reected in O and T. SWOT analysis has managerial and strategic value if it combines the factors of the internal and external environment and shows what resources and opportunities the company will need in future. 3. Practical application of external environment analysis models We consider the methods and approaches that allow analyzing the state of the external environment in the context of operations of PI SC MMC NORILSK NICKEL, one of the global leaders in the mining and metallurgical industries producing nickel and palladium, as well as platinum and eopp er. The results of qualitative PEST analysis for PI SC MMC NORILSK NICKEL are given in Table l. International science and technology conference "Earth science" IOP Publishing IOP Conf. Series: Earth and Environmental Science 666 (2021) 062037 doi:10.1088/17551315/666/6/062037 Table 1. Qualitative PEST Analysis for PJSC MMC NORILSK NICKEL. Political factors Economical factors 1. Politically volatile 1. Increase in ination environment 2. Depreciation of ruble 2. Tighter environmental law 3. Continuing crisis in the 3. Tighter antitmst laws Russian economy 4. Introducing a tough sanctions 4. Tax increase policy by Russia and Western partners 5. Antidumping policy of foreign countries Sociocultural factors Technological factors 1. Outow of economically 1. Emergence of active population from the regions environmentally friendly methods 2. lmprovements in urban of ore mining and processing infrastructure (construction of hospitals, provision with ber optics) 3. Improving the company's image in the eyes of the population 4. Environmental degradation Comments on factors: Political: l . Politically volatile environment in Russia can change the vector of development of the company. It is no secret that Norilsk Nickel works in close cooperation with the current Russian government (obtaining special rights, licenses for the development of deposits) 2. The government has repeatedly raised the issue of toughening the legislation in ecology and environmental protection. Currently, N orilsk is recognized as the \"dirtiest\" city in Russia. At the same time, the penalty for violation of environmental laws is negligible for a company with an emission permit. 3. Tighter antitrust laws may affect this company in the first place. Indeed, N orilsk Nickel accounts for 100% of platinum, 96% of nickel, 95% of cobalt, 55% of copper mined in the Russian Federation. 4. Introduction of strict sanctions policies by Russia and Western partners actually affects the profits of N orilsk Nickel company in an ambivalent manner. On the one hand, the level of export may decrease, but on the other hand, a sharp depreciation of ruble may lead to large revenues due to the difference in the exchange rate. Economical: 1. An increase in ination rates may lead to various negative consequences, for example, to the necessity of indexing wages, to social problems, as well as to a drop in competitiveness compared to foreign companies in the global market. 2. Despite the fact that the country is affected by economic crisis, the enterprise, like the industry as a whole, feels comfortable. Norilsk Nickel exports 90% of its output abroad, with capital being converted in inbles. However. it is impossible to say that the Russian corporation will be able to maintain its position against the background of a general deterioration in the economic situation, - this is a paradox. The results of quantitative PEST analysis for PI SC MMC NORILSK NICKEL are given in Table 2. International science and technology conference "Earth science" IOP Publishing IOP Conf. Series: Earth and Environmental Science 666 (2021) 062037 doi: 10.1088/1755-1315/666/6/062037 Table 2. Quantitative PEST Analysis for PJSC MMC NORILSK NICKEL. Significan Impact on I Direction Degree of ce for the the of Significan Industry - Enterprise Influence ce X Y - Z S=X*Y* Z N N W N - - N N N W N - N WN - - N N W N W W - In general, this analysis allows assessing the risks of the enterprise and classify them. The greatest threat to the enterprise will be: Politically volatile environment; Maintaining a strict sanctions policy of the state; . . . . Tighter antitrust laws; Tighter environmental laws. Having consolidated the results, the most dangerous group is political factors. This finding can be explained by the fact that the enterprise and its activities are of strategic importance for the Russian Federation; therefore it is closely connected with political decisions and the external arena. In addition, 90% of Norilsk Nickel products are exported to countries of economic partnership (Asia, Europe). Thus, the company depends on the demand of foreign consumers. The results of EFAS - External Strategic Factors Analysis Summary for PJSC MMC NORILSK NICKEL are given in Table 3. Table 3. EFAS for PJSC MMC NORILSK NICKEL. External strategic factors Weight Score Weighted Score Opportunities 1. Improvements in urban infrastructure (construction 3 of hospitals, provision with 0.1 0.3 fiber optics) 2. Improving the company's image in the eyes of the 0 4 0.4 populationInternational science and technology conference \"Earth science" IOP Publishing IOP Conf. Series: Earth and Environmental Science 666 (2021) 062037 Analysis of industries and markets allows the company to: identify other industries in which it will be able to apply its core competencies; study the buyers and the nature of their needs; identify new markets in which its core competencies can be used; identify threats from existing and potential competitors in its own industry and other industries; identify markets in which it will obtain its resources. doi:10.1088/17551315/666/6/062037 3. Emergence of environmentally friendly methods of ore mining and processing Threats l. Politically volatile environment 2. Tighter environmental law 3. Tighter antitrust laws 4. Introducing a tough sanctions policy by Russia and Western partners 5. Increase in ination 6. Depreciation of ruble 7. Tax increase 8. Continuing crisis in the Russian economy 9. Outow of economically active population from the regions 1 0. Environmental degradation Summary Score 0.2 0.01 0.01 0.01 0.01 0.0] 0.01 0.01 0.01 0.0] 0.01 1.0 0.8 0.04 0.01 0.02 0.05 0.03 0.03 0.02 0.01 0.01 0.01 1.83 International science and technology conference "Earth science" IOP Publishing IOP Conf. Series: Earth and Environmental Science 666 (2021) 062037 doi: 10.1088/1755-1315/666/6/062037 Falconbridge Inco MK HopunbCKWA BblcoKoe Jinchuan Group Hukenb Vale do Rio Doc Sumitomo MetalMining COOTHOWeHHe LeHa / KayeCTBO CpeaHee Eramet SA Pacific Metals Oxstrata BHP Billiton Hu3Koe yakni CpeAHun Wnpoknn ACCOPTNMeHT npoAyKyuu Figure 1. Chart of Strategic Groups in Relation to Price/Quality Ratio of PJSC MMC NORILSK NICKEL. .Pacific Metals CaMOCTORTerbHbin punnan BepTukanbHan NHTerpauNA .Eramet SA BHP Billiton Vale do Jinchuan Group Rio Doce XonANHr Sumitomo Metal Falconbridge Mining Xstrata OrMK