DM 214 Strategic Planning

1. The Planning Process:
Environmental
Scanning
Marlon G. Mendez, DVM

3. DEFINITION:
• Brown and Weiner (1985)
define environmental
scanning as "a kind of
radar to scan the world
systematically and
signal the new, the
unexpected, the major
and the minor".

4. DEFINITION:
Dalton, J.G. 2011. The Center for Association Leadership. http://www.asaecenter.org/Resources/ANowDetail.cfm?ItemNumber=111955

5. DEFINITION:
• In rapidly changing environments, one rule
of thumb applies: IF YOU DON'T ADAPT,
YOU DON'T ENDURE. That's the core
idea behind environmental scanning.
Dalton, J.G. 2011. The Center for Association Leadership. http://www.asaecenter.org/Resources/ANowDetail.cfm?ItemNumber=111955

6. ENVIRONMENTAL SCANNING
1. EXTERNAL (AUDIT) ANALYSIS
2. INTERNAL (AUDIT) ANALYSIS

8. MACROENVIRONMENT
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

9. MACROENVIRONMENT
The Role of Macroenvironment
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

10. MACROENVIRONMENT
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

11. ECONOMIC FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

12. ECONOMIC FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

13. ECONOMIC FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

14. MACROECONOMIC FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

15. ECONOMIC FORCES
http://www.manilatimes.net/impact-exchange-rates/118508/ viewed on 2/24/2015 7:22 PM

16. ECONOMIC FORCES
http://www.manilatimes.net/impact-exchange-rates/118508/ viewed on 2/24/2015 7:22 PM

17. Foreign Trade in the Philippines
http://atlas.media.mit.edu/profile/country/phl/ viewed on 2/24/2015 7:49 PM

18. ECONOMIC FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

19. ECONOMIC FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010

20. Philippine Statistical Figures
https://psa.gov.ph/ viewed on 2/24/2015 7:34 PM
Inflation
As of Aug 2014 4.97%
GDP
2000=100, 3rd Qtr
2014
5.3%
Exports
As of Jul 2014 $5.46B
Imports
As of Jul 2014 $4.72B

21. Philippine Statistical Figures
Per Capita
Poverty
Threshold
(Annual)
1st Sem. 2013
P9,626
Employment
As of Jul 2014 93.3%
Unemployment
As of Jul 2014 6.7%
Underemployme
nt
As of Jul 2014
18.3%
https://psa.gov.ph/ viewed on 2/24/2015 7:34 PM

22. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011
Small, large, for-profit, and
nonprofit organizations in all
industries are being
staggered and challenged
by the opportunities and
threats arising from
changes in social, cultural,
demographic, and
environmental variables.

23. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011
Social, cultural, demographic,
and environmental trends are
shaping the way peoples
live, work, produce, and
consume.
New trends are creating a
different type of consumer
and, consequently, a need for
different products, different
services, and different
strategies.

24. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011
The trend toward an older America is
good news for restaurants, hotels,
airlines, cruise lines, tours, resorts,
theme parks, luxury products and
services, recreational vehicles, home
builders, furniture producers,
computer manufacturers, travel
services, pharmaceutical firms,
automakers, and funeral homes.
Older Americans are especially
interested in health care, financial
services, travel, crime prevention,
and leisure.

25. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
http://countrymeters.info/en/Philippines viewed on 3/2/2015 12:20 PM
http://countrymeters.info/en/Philippines
(Philippine Population Clock)
102, 333 484

26. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
http://web0.psa.gov.ph/content/142-million-philippine-population-2045 viewed on 3/2/2015 12:49 PM
According to Phil.
Statistics Authority:
Around 50 million
people would be added in
a span of 35 years. The
Philippine population grew
by 1.9 percent annually
during the decade 2000-
2010.

27. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
http://census.gov.ph/content/2010-census-population-and-housing-reveals-philippine-population-9234-million viewed on 3/2/2015 10:56 AM
*As of 2010 census

28. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
http://census.gov.ph/content/2010-census-population-and-housing-reveals-philippine-population-9234-million viewed on 3/2/2015 10:56 AM
*As of 2010 census

29. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
http://census.gov.ph/content/2010-census-population-and-housing-reveals-philippine-population-9234-million viewed on 3/2/2015 10:56 AM
*As of 2010 census

30. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
http://census.gov.ph/content/2010-census-population-and-housing-reveals-philippine-population-9234-million viewed on 3/2/2015 10:56 AM
*As of 2010 census

31. SOCIAL, CULTURAL, DEMOGRAPHIC
& NATURAL ENVIRONMENT FORCES
http://www.indexmundi.com/philippines/demographics_profile.html viewed on 3/2/2015 10:18 AM
*Estimate as of July 2014

32. SOCIAL, CULTURAL, DEMOGRAPHIC & NATURAL
ENVIRONMENT FORCES
http://www.indexmundi.com/philippines/demographics_profile.html viewed on 3/2/2015 10:18 AM
SEX RATIO*
Male Female
at birth 1.05 1
0-14 years 1.04 1
15-24 years 1.04 1
25-54 years 1.01 1
55-64 years 1 1
65 years and over 0.76 1
TOTAL POPULATION 1 1
*Estimate as of July 2014

33. SOCIAL, CULTURAL, DEMOGRAPHIC & NATURAL
ENVIRONMENT FORCES
http://www.indexmundi.com/philippines/demographics_profile.html viewed on 3/2/2015 10:18 AM
*2000 census

34. POLITICAL, GOVERNMENT & LEGAL FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010
Political processes shape a society’s
laws, which constrain the operations
of organizations and managers and
thus create both opportunities and
threats.
For example, throughout much of the
industrialized world, there has been a
strong trend toward deregulation of
industries previously controlled by the
state and privatization of
organizations once owned by the
state.

35. POLITICAL, GOVERNMENT & LEGAL FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010
In the United States, deregulation of the
airline industry in 1979 allowed 29 new
airlines to enter the industry between 1979
and 1993. The increase in passenger-
carrying capacity after deregulation led
to excess capacity on many routes,
intense competition, and fare wars.

36. POLITICAL, GOVERNMENT & LEGAL FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010
To respond to this more competitive task
environment, airlines have had to look for
ways to reduce operating costs. The
development of hub-and-spoke systems, the
rise of nonunion airlines, and the
introduction of no-frills discount service
are all responses to increased competition
in the airlines’ task environment.

37. POLITICAL, GOVERNMENT & LEGAL FORCES
HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010
Despite these innovations, the airline industry still
experiences intense fare wars, which have
lowered profits and caused numerous airline
company bankruptcies. The global
telecommunications service industry is now
experiencing the same kind of turmoil following the
deregulation of that industry in the United States
and elsewhere.

38. POLITICAL, GOVERNMENT & LEGAL FORCES
https://www.youtube.com/watch?v=vmD-AGDgnPY&index=2&list=PL_jrAigJI3CPzuVd5TbrE5CsPZU1ovuhe
Published on Jan 13, 2015
IMD business school President Dominique Turpin interviews Teresita Sy-Coson of SM Investments
Corporation at the 2014 Nikkei Global Management Forum in Tokyo. The two business leaders
discuss keys for success in Asian markets.

39. TECHNOLOGICAL FORCES
McKinsey Global Institute. Disruptive technologies: Advances that will transform life, business, and the global economy. May 2013

40. TECHNOLOGICAL FORCES
McKinsey Global Institute. Disruptive technologies: Advances that will transform life, business, and the global economy. May 2013

41. TECHNOLOGICAL FORCES
12 technologies discussed in the report
could have a potential economic
impact between $14 trillion and $33
trillion a year in 2025. This estimate is
neither predictive nor comprehensive. It
is based on an in-depth analysis of key
potential applications and the value
they could create in a number of ways,
including the consumer surplus that
arises from better products, lower
prices, a cleaner environment, and
better health.
http://www.mckinsey.com/insights/business_technology/disruptive_technologies viewed on 3/2/2015 3:16 PM

43. PORTER’S FIVE FORCES MODEL
• A model designed by
Michael E. Porter
• Michael Eugene Porter
(born May 23, 1947) is the
Bishop William Lawrence
University Professor at The
Institute for Strategy and
Competitiveness, based at
the Harvard Business
School.
http://en.wikipedia.org/wiki/Michael_Porter viewed on 3/2/2015 6:50 PM

44. PORTER’S FIVE FORCES MODEL
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011
The following three steps for using
Porter’s Five-Forces Model can indicate
whether competition in a given industry is
such that the firm can make an
acceptable profit:
1.Identify key aspects or elements of
each competitive force that impact the
firm.
2.Evaluate how strong and important
each element is for the firm.
3.Decide whether the collective strength
of the elements is worth the firm entering
or staying in the industry.

45. PORTER’S FIVE FORCES MODEL:
RIVALRY AMONG COMPETING FIRMS
• Free-flowing information on the Internet is
driving down prices and inflation worldwide. The
Internet, coupled with the common currency in
Europe, enables consumers to make price
comparisons easily across countries.
• The intensity of rivalry among competing firms
tends to increase as the number of competitors
increases, as competitors become more equal in
size and capability, as demand for the industry’s
products declines, and as price cutting becomes
common.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

46. PORTER’S FIVE FORCES MODEL:
RIVALRY AMONG COMPETING FIRMS
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011
Conditions That Cause High Rivalry Among
Competing Firms

47. PORTER’S FIVE FORCES MODEL:
POTENTIAL ENTRY OF NEW COMPETITORS
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011
Whenever new firms can easily
enter a particular industry, the
intensity of competitiveness
among firms increases.

48. PORTER’S FIVE FORCES MODEL:
POTENTIAL ENTRY OF NEW COMPETITORS
• Barriers to entry, however, can include the need
to gain economies of scale quickly, the need to
gain technology and specialized know-how, the
lack of experience, strong customer loyalty,
strong brand preferences, large capital
requirements, lack of adequate distribution
channels, government regulatory policies, tariffs,
lack of access to raw materials, possession of
patents, undesirable locations, counterattack by
entrenched firms, and potential saturation of the
market.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

49. PORTER’S FIVE FORCES MODEL:
POTENTIAL ENTRY OF NEW COMPETITORS
• Despite numerous barriers to entry, new firms
sometimes enter industries with higher-quality
products, lower prices, and substantial
marketing resources.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

50. PORTER’S FIVE FORCES MODEL:
POTENTIAL ENTRY OF NEW COMPETITORS
• The strategist’s job, therefore, is to identify
potential new firms entering the market, to
monitor the new rival firms’ strategies, to
counterattack as needed, and to capitalize on
existing strengths and opportunities.
• When the threat of new firms entering the
market is strong, incumbent firms generally
fortify their positions and take actions to deter
new entrants, such as lowering prices, extending
warranties, adding features, or offering financing
specials.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

51. PORTER’S FIVE FORCES MODEL:
POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTS
• The presence of substitute products puts a
ceiling on the price that can be charged before
consumers will switch to the substitute product.
Price ceilings equate to profit ceilings and more
intense competition among rivals.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

52. PORTER’S FIVE FORCES MODEL:
POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTS
• Producers of eyeglasses and contact lenses, for
example, face increasing competitive pressures
from laser eye surgery.
• Producers of sugar face similar pressures from
artificial sweeteners.
• Newspapers and magazines face substitute-
product competitive pressures from the Internet
and 24-hour cable television.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

53. PORTER’S FIVE FORCES MODEL:
POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTS
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

54. PORTER’S FIVE FORCES MODEL:
BARGAINING POWER OF SUPPLIERS
• The bargaining power of suppliers affects the
intensity of competition in an industry, especially
when there is a large number of suppliers, when
there are only a few good substitute raw
materials, or when the cost of switching raw
materials is especially costly.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

55. PORTER’S FIVE FORCES MODEL:
BARGAINING POWER OF SUPPLIERS
• In many industries it is more economical to use
outside suppliers of component parts than to
self-manufacture the items.
• This is true, for example, in the outdoor power
equipment industry where producers of lawn
mowers, rotary tillers, leaf blowers, and edgers
such as Murray generally obtain their small
engines from outside manufacturers such as
Briggs & Stratton who specialize in such engines
and have huge economies of scale.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

56. PORTER’S FIVE FORCES MODEL:
BARGAINING POWER OF SUPPLIERS
• In more and more industries, sellers are forging
strategic partnerships with select suppliers in
efforts to:
1.reduce inventory and logistics costs (e.g.,
through just-in-time deliveries);
2.speed the availability of next-generation
components;
3.enhance the quality of the parts and
components being supplied and reduce defect
rates; and
4.squeeze out important cost savings for both
themselves and their suppliers.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

57. PORTER’S FIVE FORCES MODEL:
BARGAINING POWER OF CONSUMERS
• When customers are concentrated or large or
buy in volume, their bargaining power represents
a major force affecting the intensity of
competition in an industry.
• Rival firms may offer extended warranties or
special services to gain customer loyalty
whenever the bargaining power of consumers is
substantial.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

58. PORTER’S FIVE FORCES MODEL:
BARGAINING POWER OF CONSUMERS
• Bargaining power of consumers also is higher
when the products being purchased are
standard or undifferentiated.
• When this is the case, consumers often can
negotiate selling price, warranty coverage, and
accessory packages to a greater extent.
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

59. PORTER’S FIVE FORCES MODEL:
BARGAINING POWER OF CONSUMERS
Consumers gain increasing bargaining power
under the following circumstances:
1.If they can inexpensively switch to competing
brands or substitutes
2.If they are particularly important to the seller
3.If sellers are struggling in the face of falling
consumer demand
4.If they are informed about sellers’ products,
prices, and costs
5.If they have discretion in whether and when they
purchase the product
David, Fred R. Strategic management: concepts and cases, 13th ed. 2011

60. PORTER’S FIVE FORCES MODEL
http://www.comindwork.com/weekly/2013-09-02/productivity/five-forces-analysis-porter viewed on 3/2/2015 4:05 PM

61. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013
PORTER’S FIVE FORCES
ANALYSIS OF THE RETAIL
COFFEE AND SNACKS
INDUSTRY OF

62. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013
THREAT OF NEW
ENTRANTS:
MODERATE
THREAT OF NEW
ENTRANTS:
MODERATE
BARGAINING POWER
OF BUYERS:
MODERATE TO
LOW
BARGAINING POWER
OF BUYERS:
MODERATE TO
LOW
BARGAINING POWER
OF SUPPLIERS:
LOW TO
MODERATE
BARGAINING POWER
OF SUPPLIERS:
LOW TO
MODERATE
THREAT OF
SUBSTITUTES:
HIGH
THREAT OF
SUBSTITUTES:
HIGH
INTENSITY OF
COMPETITIVE
RIVALRY:
HIGH TO
MODERAT
E
INTENSITY OF
COMPETITIVE
RIVALRY:
HIGH TO
MODERAT
E

63. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

64. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

65. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

66. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

67. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

68. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

69. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

70. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

71. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

72. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

73. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

74. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

75. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

76. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

77. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

78. STARBUCKS CORPORATION
Geeredy, N. Strategic Analysis of Starbucks Corporation. 2013

80. (As Discussed in the previous session)

81. PHIL. DEV’T PLAN 2011-16 MID-TERM UPDATE
Posted on the NEDA website: http://www.neda.gov.ph/ viewed on 3/7/2015 10:27 AM

82. Trust in the Lord with all
your heart; do not depend
on your own
understanding. Seek his
will in all you do, and he
will show you which path
to take.
Psalm 3:5-6 NLT

83. Image used in the presentation

84. Reference:
• Dalton, J.G. 2011. The Center for Association Leadership.
• David, Fred R. Strategic management: concepts and cases, 13th ed. 2011
• HILL, C.W.L. et. al. Strategic Management Theory: An Integrated Approach, 9th
Ed. 2010
• http://www.asaecenter.org/Resources/ANowDetail.cfm?ItemNumber=111955 viewed on
2/21/2015
• http://horizon.unc.edu/courses/papers/enviroscan/ viewed on 2/21/2015
• http://www.thefuturesacademy.ie/futures/methods#sec1 viewed on 2/21/2015
• http://en.wikipedia.org/wiki/Environmental_scanning viewed on 2/21/2015
• https://books.google.com.ph/books?id=UGlqbHZDbU8C&pg=PA76&lpg=PA76&dq=kroon
%2Benvironmental+scanning&source=bl&ots=DdSWl2GoKu&sig=cIcZG_UdKEQv1chFMT64hizy
03g&hl=en&sa=X&ei=k63oVJ30KMu48gXv84HABA&ved=0CCMQ6AEwAQ#v=onepage&q=kroo
n%2Benvironmental%20scanning&f=false viewed on 2/22/2015
• http://www.indexmundi.com/philippines/economy_profile.html viewed on 2/28/2015 2:25 PM
• https://www.youtube.com/watch?v=ETqqIEHW3Qs Published on Feb 2, 2015
• http://www.indexmundi.com/philippines/demographics_profile.html viewed on 3/2/2015 10:18 AM