The Arctic is undergoing an extraordinary transformation—a transformation
that will have global impact not only on wildlife, but upon many countries
and a number of industries. Some of the most significant environmental changes
are retreating sea ice, melting glaciers, thawing permafrost, increasing coastal
erosion, and shifting vegetation zones. The average temperature of the Arctic has risen
at twice the rate of the rest of the planet. According to Impacts of a Warming Arctic: Arctic
Climate Impact Assessment, a 2004 report by the eight-nation Arctic Council, the melting of the
area’s highly reflective snow and sea ice is uncovering darker land and ocean surfaces, further increasing
the absorption of the sun’s heat. Reductions in Arctic sea ice will drastically shrink marine
habitats for polar bears, ice seals, and some seabirds. The warming of the tundra will likely boost
greenhouse gases by releasing long-stored quantities of methane and carbon dioxide.
In addition to containing a large percentage of the world’s water as ice, the Arctic is a large
storehouse of natural resources. Given that the Arctic Ocean could be ice-free in the summer by
2040, countries bordering the Arctic are already positioning themselves for exploitation of these
resources. Lawson Brigham, Alaska Office Director of the U.S. Arctic Research Commission and
a former chief of strategic planning for the U.S. Coast Guard, examined how regional warming
will affect transportation systems, resource development, indigenous Arctic peoples, regional
environmental degradation and protection schemes, and overall geopolitical issues. From this,
he proposes four possible scenarios for the Arctic in 2040:
1. Globalized frontier: In this scenario, the Arctic by 2040 has become an integral component
of the global economic system, but is itself a semi-lawless frontier with participants jockeying
for control. The summer sea ice has completely disappeared for a two-week period, allowing
greater marine access and commercial shipping throughout the area. The famous
“Northwest Passage” dreamed by 16th century navigators is now a reality. Rising prices for
oil, natural gas, nickel, copper, zinc, and freshwater in conjunction with an easily accessible
and less-harsh climate have made Arctic natural resource exploitation economically viable.
Even though overfishing has reduced fish stocks, Arctic tourism is flourishing. By now, wellworn
oil and gas pipelines in western Siberia and Alaska are experiencing recurring serious
environmental
scanning and
Industry Analysis
C H A P T E R 4
95
Recognize aspects of an organization’s
environment that can influence its longterm
decisions
Identify the aspects of an organization’s
environment that are most strategically
important
Conduct an industry analysis to
understand the competitive forces that
influence the intensity of rivalry within an
industry
Understand how industry maturity affects
industry competitive forces
Categorize international industries based
on their pressures for coordination and
local responsiveness
Construct strategic group maps to assess the
competitive positions of firms in an industry
Identify key success factors and develop an
industry matrix
Use publicly available information to
conduct competitive intelligence
Know how to develop an industry scenario
Be able to construct an EFAS table that
summarizes external environmental factors
Learning Objectives
Gathering
Information
Putting Strategy
into Action
Monitoring
Performance
Societal
Environment:
General forces
Natural
Environment:
Resources and
climate
Task
Environment:
Industry analysis
Internal:
Strengths and
Weaknesses
Structure:
Chain of command
Culture:
Beliefs, expectations,
values
Resources:
Assets, skills,
competencies,
knowledge
Programs
Activities
needed to
accomplish
a plan
Budgets
Cost of the
programs Procedures
Sequence
of steps
needed to
do the job
Performance
Actual results
External:
Opportunities
and Threats
Developing
Long-range Plans
Mission
Reason for
existence Objectives
What
results to
accomplish
by when
Strategies
Plan to
achieve the
mission &
objectives
Policies
Broad
guidelines
for decision
making
Environmental
Scanning:
Strategy
Formulation:
Strategy
Implementation:
Evaluation
and Control:
Feedback/Learning: Make corrections as needed
After reading this chapter, you should be able to:
spills. By 2020, Canada, Denmark (Greenland), Norway, Russia, and the United States
had asserted their sovereignty over sea bed resources beyond 200 nautical miles—leaving
only two small regions in the central Arctic Ocean under international jurisdiction.
Environmental concerns that once fostered polar cooperation have been replaced by
economic and political interests. The protection, development, and governance of the
Svalbard Islands became a problem when Russia refused to recognize Norway’s 200-
nautical mile exclusive economic zone around the islands. Issues regarding freedom of
navigation and commercial access rights are highly contentious. The eight permanent
members of the Arctic Council have increasingly excluded outside participation in the
Council’s deliberations.
2. Adaptive frontier: In this scenario, the Arctic in 2040 is being drawn much more slowly
into the global economy. The area is viewed as an international resource. Competition
among the Arctic countries for control of the region’s resources never grew beyond a
low level and the region is the scene of international cooperation among many international
stakeholders. The indigenous peoples throughout the area have organized
and now have significant influence over decisions relating to regional environmental
protection and economic development. The exploitation of Arctic oil and gas is restricted
to the few key areas that are most cost-competitive. Air and water transportation
systems flourish throughout the area. Commercially viable fishing has continued,
thanks to stringent harvesting quotas and other bilateral agreements. The Arctic Council
is a proactive forum resolving several disputes and engaging the indigenous peoples
in all deliberations. Nevertheless, the impact of global warming on the Arctic is widespread
and serious. Contingency planning for manmade and natural emergencies is advanced
and well coordinated. Sustainable development is widely supported by most
stakeholders. The Arctic region has become a model for habitat protection. Arctic national
parks have expanded modestly and adapted to deal with increased tourism.
3. Fortress frontier: In this scenario, widespread resource exploitation and increased international
tension exist throughout the Arctic. The region is viewed by much of the
global community as a storehouse of natural resources that is being jealously guarded
by a handful of wealthy circumpolar nations. Although the Arctic is part of the global
economic system, any linkage is controlled by the most powerful Arctic countries for
their own benefit. By 2040, the Arctic is undergoing extreme environmental stress, as
global warming continues unabated. Many indigenous peoples have been displaced
from their traditional homelands due to extreme environmental events. Illegal immigration
becomes an issue in many subarctic regions. Although air and marine transportation
routes are open, foreign access has been periodically suspended for
political or security reasons. Russia and Canada, in particular, continue to tightly control
marine access through the Northern Sea Route and Northwest Passage. Fishing
rights have been suspended to all but the Arctic countries. Oil and gas exploration
and production has intensified throughout the Arctic. The Svalbard Islands, claimed
96 PART 2 Scanning the Environment
by Norway, have been a source of potential conflict over access to living and nonliving
resources. Norway, Russia, and the United States have increased military forces in
the region. Rather than dealing with sustainable development, the Arctic Council focuses
on economic and security concerns, such as illegal immigrants and controlling
the flow of exports from the Arctic consortium. Early in the 21st century, the five
countries bordering the Arctic declared their sovereignty over resources beyond
200 nautical miles to the edge of the continental shelf extensions. By 2030, the Arctic
Council unilaterally took jurisdiction over the two small regions that remained within
international jurisdiction. Arctic tourism thrives, since many other traditional destinations
are experiencing turmoil and a shortage of necessities.
4. Equitable frontier: In this scenario, the Arctic is integrated with the global economic
system by 2040, but international concern for sustainable development has slowed the
region’s economic development. Mutual respect and cooperation among the circumpolar
nations allows for the development of a respected Arctic governance system.
Even though the world is working hard to reduce greenhouse gas emissions, the Arctic
continues to warm. Transport user fees and other eco-taxes are used to support endangered
wildlife and impacted indigenous communities. The growth of the Northern
Sea Route and Northwest Passage has enabled significant efficiencies in commercial
shipping. Canada and Russia have maintained stringent marine regulations that emphasize
environmental protection. Despite differences over freedom of navigation,
the United States, Canada, and Russia have negotiated an agreement that allows a
seamless voyage around Alaska and through the routes under a uniform set of operational
procedures. The Arctic Council has created regional disaster teams to respond to
maritime and other emergencies. Boundary disputes have been resolved and fishing
rights have been allocated to various nations. The University of the Arctic has brought
quality online education to easy reach of all northern citizens. The Arctic Council has
brokered an agreement to allow 30,000 environmental refugees to settle in subarctic
territories. Oil e