This document discusses concepts related to environmental scanning, industry analysis, and strategic planning. It defines key terms like environmental uncertainty, environmental scanning, societal and task environments. It also outlines Porter's five forces model for industry analysis and discusses analyzing industries based on factors like barriers to entry, rivalry among existing competitors, bargaining power of suppliers and buyers, and threat of substitutes. Finally, it discusses evaluating external factors using tools like the issues priority matrix and external factor analysis summary.
The document discusses the external environment that affects business strategy. It describes three tiers of environmental factors and focuses on the remote and industry environments. The remote environment includes factors like economic, social, political, technological, and ecological influences grouped in PESTE/PESTLE analysis. Industry environment is defined using Porter's five forces model of competition involving factors like entry barriers, supplier/buyer power, substitutes, and rivalry that influence profitability. The operating environment refers to immediate competitive factors like competitors, customers, suppliers, and labor.
The document discusses concepts related to environmental scanning, industry analysis, and external factors analysis. It defines key terms like environmental uncertainty, environmental scanning, external environmental variables, industry analysis, Porter's five forces, and provides examples of how to conduct an external factors analysis summary (EFAS). The overall purpose is to outline frameworks and techniques for analyzing external factors and a company's industry environment.
This document summarizes key concepts from Chapter 3 of BPL 5100 related to analyzing the business environment and industry forces. It defines environmental awareness and forecasting, discusses favorable and unfavorable conditions for businesses. It then outlines the generic (macro) environment including economic, social, cultural, technological, political/legal factors. Finally, it discusses analyzing industry forces using Porter's five forces model, including rivalry, potential new entrants, supplier power, buyer power, and substitutes.
This document provides an overview of methods for assessing the external business environment, including PESTEL analysis and Porter's Five Forces model. It discusses using these tools to discover threats and opportunities, understand industry competition, and make informed strategic choices. Porter's Five Forces model analyzes five competitive forces that shape industry competition: the threat of new entrants, power of suppliers and buyers, threat of substitutes, and industry rivalry. It also discusses a sixth force of complementors. The document provides examples and outlines factors that influence the competitive forces.
The document discusses environmental scanning and analysis for strategic management. It describes how corporations monitor their external and internal environments to identify key factors. The external environment is divided into natural, societal, and task environments. Societal factors include economic, technological, political-legal, and sociocultural trends. Porter's five forces model is used to analyze industry competition and the bargaining powers of suppliers, buyers, and other stakeholders. Techniques like STEEP analysis and scenario planning help identify strategic issues and trends to forecast potential impacts on a corporation.
The document discusses various frameworks for analyzing industries and companies, including:
1. Six key questions to analyze the dominant economic traits, competitive forces, forces of change, strongest/weakest companies, likely competitive moves, and success/failure factors in an industry.
2. SWOT analysis to identify internal strengths and weaknesses and external opportunities and threats.
3. Porter's Five Forces model to analyze the intensity of rivalry between existing competitors, threat of new entrants, threat of substitutes, bargaining power of suppliers, and bargaining power of buyers.
4. Analysis of external general environment factors like sociocultural, demographic, economic, technological, and political/legal influences.
5. Analysis
chapter 4 Environmental Analysis and Appraisal.pptAddisalemTadesse
The document discusses the importance of analyzing a firm's external and internal environments. It outlines three levels of external analysis - general business environment, industry, and competitors. The purpose is to identify opportunities and threats and understand how they affect the firm. Key parts of the external analysis include analyzing the general, industry, and competitor environments. The internal analysis focuses on assessing strengths and weaknesses across functional areas like management, marketing, finance, production, R&D, and MIS. Conducting thorough external and internal analyses is important for strategic planning and decision making.
This document outlines key concepts from Chapter 2 of a strategic management textbook. It discusses the importance of analyzing a firm's external environment, including the general environment and industry environment. The general environment comprises 6 segments: demographic, economic, political/legal, sociocultural, technological, and physical. The industry environment is analyzed using Porter's 5 forces model. Competitor analysis and identifying a firm's key success factors are also important parts of external analysis. The document provides examples and definitions to explain these strategic management concepts.
The document discusses the external environment that affects business strategy. It describes three tiers of environmental factors and focuses on the remote and industry environments. The remote environment includes factors like economic, social, political, technological, and ecological influences grouped in PESTE/PESTLE analysis. Industry environment is defined using Porter's five forces model of competition involving factors like entry barriers, supplier/buyer power, substitutes, and rivalry that influence profitability. The operating environment refers to immediate competitive factors like competitors, customers, suppliers, and labor.
The document discusses concepts related to environmental scanning, industry analysis, and external factors analysis. It defines key terms like environmental uncertainty, environmental scanning, external environmental variables, industry analysis, Porter's five forces, and provides examples of how to conduct an external factors analysis summary (EFAS). The overall purpose is to outline frameworks and techniques for analyzing external factors and a company's industry environment.
This document summarizes key concepts from Chapter 3 of BPL 5100 related to analyzing the business environment and industry forces. It defines environmental awareness and forecasting, discusses favorable and unfavorable conditions for businesses. It then outlines the generic (macro) environment including economic, social, cultural, technological, political/legal factors. Finally, it discusses analyzing industry forces using Porter's five forces model, including rivalry, potential new entrants, supplier power, buyer power, and substitutes.
This document provides an overview of methods for assessing the external business environment, including PESTEL analysis and Porter's Five Forces model. It discusses using these tools to discover threats and opportunities, understand industry competition, and make informed strategic choices. Porter's Five Forces model analyzes five competitive forces that shape industry competition: the threat of new entrants, power of suppliers and buyers, threat of substitutes, and industry rivalry. It also discusses a sixth force of complementors. The document provides examples and outlines factors that influence the competitive forces.
The document discusses environmental scanning and analysis for strategic management. It describes how corporations monitor their external and internal environments to identify key factors. The external environment is divided into natural, societal, and task environments. Societal factors include economic, technological, political-legal, and sociocultural trends. Porter's five forces model is used to analyze industry competition and the bargaining powers of suppliers, buyers, and other stakeholders. Techniques like STEEP analysis and scenario planning help identify strategic issues and trends to forecast potential impacts on a corporation.
The document discusses various frameworks for analyzing industries and companies, including:
1. Six key questions to analyze the dominant economic traits, competitive forces, forces of change, strongest/weakest companies, likely competitive moves, and success/failure factors in an industry.
2. SWOT analysis to identify internal strengths and weaknesses and external opportunities and threats.
3. Porter's Five Forces model to analyze the intensity of rivalry between existing competitors, threat of new entrants, threat of substitutes, bargaining power of suppliers, and bargaining power of buyers.
4. Analysis of external general environment factors like sociocultural, demographic, economic, technological, and political/legal influences.
5. Analysis
chapter 4 Environmental Analysis and Appraisal.pptAddisalemTadesse
The document discusses the importance of analyzing a firm's external and internal environments. It outlines three levels of external analysis - general business environment, industry, and competitors. The purpose is to identify opportunities and threats and understand how they affect the firm. Key parts of the external analysis include analyzing the general, industry, and competitor environments. The internal analysis focuses on assessing strengths and weaknesses across functional areas like management, marketing, finance, production, R&D, and MIS. Conducting thorough external and internal analyses is important for strategic planning and decision making.
This document outlines key concepts from Chapter 2 of a strategic management textbook. It discusses the importance of analyzing a firm's external environment, including the general environment and industry environment. The general environment comprises 6 segments: demographic, economic, political/legal, sociocultural, technological, and physical. The industry environment is analyzed using Porter's 5 forces model. Competitor analysis and identifying a firm's key success factors are also important parts of external analysis. The document provides examples and definitions to explain these strategic management concepts.
The document discusses conducting an industry and competitor analysis. It provides an overview of what industry analysis involves, including reviewing economic, political and market factors that influence industry development. It also outlines Porter's five forces model for analyzing industry competition and lists the major factors considered in an industry analysis. The document then defines what a competitor analysis is and provides details on identifying competitors, sources of information, Porter's framework, and steps to conduct a competitor analysis.
This document provides an overview of tools and frameworks for conducting industry and competitor analysis. It introduces Porter's Five Forces model for analyzing industry structure and outlines the key forces of threat of entry, threat of substitution, buyer power, supplier power, and rivalry among existing firms. It also discusses analyzing industry dynamics over time using frameworks like life cycle analysis and D'Aveni's Four Arena Analysis model. The document provides examples and templates for tools like competitor tables, environmental scanning matrices, and scenario planning that can be used to systematically analyze factors affecting an industry.
This document outlines tools for analyzing the external business environment, including PESTEL analysis and Porter's Five Forces model. It discusses using PESTEL to analyze the macroenvironment factors of political, economic, social, technological, environmental, and legal issues. Porter's Five Forces model is then explained as a framework for industry analysis involving the competitive forces of threat of new entrants, power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. The document provides details on applying each of these tools to systematically evaluate opportunities and threats in the external environment.
1) The document discusses the importance of marketing and environmental analysis for financial institutions.
2) It covers analyzing the macro environment, market environment, and internal environment through approaches like SWOT analysis.
3) The macro environment includes political, economic, technological, and social/cultural factors, while the market environment analyzes Porter's five competitive forces of suppliers, buyers, new entrants, substitutes, and rivalry.
An analysis of the external environment is undertaken in order to discover the opportunities and threats that are evolving and that need to be addressed by the organization. A study by Diffenbach (1983) identified a number of positive consequences that stem from carrying out an organized environmental analysis. An analysis of the external environment can be broken down into three key steps, each becoming more specific to the organization. The first step is an analysis of the macro-environmental influences that the organization faces. This is followed by an examination of the competitive (micro) environment the organization operates within. Finally a specific competitive analysis is undertaken.
The document discusses analyzing a company's external environment. It describes performing a PESTEL analysis to examine political, economic, social, technological, environmental, and legal factors. It also discusses Porter's Five Forces model to analyze industry competition by examining the threat of new entrants, power of suppliers and buyers, threat of substitutes, and competitive rivalry. The purpose is to identify opportunities and threats in the external environment to help formulate business strategies.
The document discusses analyzing a company's external environment. It describes analyzing the macro environment using PESTEL factors (political, economic, social, technological, environmental, legal) and doing an industry analysis using Porter's Five Forces model to evaluate competitive rivalry and threats from new entrants, substitutes, suppliers and buyers. It provides details on each of Porter's five forces and how to assess their impact on an industry.
1. The document discusses various frameworks and techniques for strategic planning, including evaluating an organization's vision and mission, analyzing external and internal factors, and selecting strategic alternatives.
2. Key external factors that are analyzed include political, economic, social, technological, ecological, and international trends and conditions that may present opportunities or threats.
3. Internal factors analyzed include an organization's resources, capabilities, core competencies, and strengths and weaknesses.
4. Competitive profiles are developed to assess an organization's relative position compared to competitors based on important strategic factors.
5. Potential strategic alternatives are then evaluated using tools like SWOT, BCG, GE, and QSPM matrices to select strategies focused on
1. The document discusses various frameworks and techniques for strategic planning, including evaluating an organization's vision and mission, analyzing external and internal factors, and selecting strategic alternatives.
2. Key external factors that are analyzed include political, economic, social, technological, ecological, and international trends and conditions that may present opportunities or threats.
3. Internal factors analyzed include an organization's resources, capabilities, core competencies, and strengths and weaknesses.
4. Competitive profile analysis is used to assess an organization's relative position compared to competitors based on important strategic factors.
1. The document discusses various frameworks and techniques for strategic planning, including evaluating an organization's vision and mission, analyzing external and internal factors, and selecting strategic alternatives.
2. Key external factors that are analyzed include political, economic, social, technological, ecological, and international trends and conditions that may present opportunities or threats.
3. Internal factors analyzed include an organization's resources, capabilities, core competencies, and strengths and weaknesses.
4. Competitive profiles are developed to assess an organization's relative position compared to competitors based on important strategic factors.
5. Potential strategic alternatives are then evaluated using tools like SWOT, BCG, GE, and QSPM matrices to select strategies focused on
This document provides an overview of conducting an environmental analysis, which involves external and internal audits of an organization. The external audit identifies opportunities and threats in the organization's environment. Key parts of the external environment include economic, social, political, technological, and competitive forces. An External Factor Evaluation matrix is used to evaluate these external factors. The internal audit examines the organization's strengths and weaknesses. Relationships between different functional areas are also assessed. An Internal Factor Evaluation matrix summarizes findings from the internal audit. The environmental analysis provides important information for strategy formulation.
This document discusses analyzing a firm's external environment. It describes Porter's five forces model for understanding industry competition and outlines the general environment segments of demographic, economic, sociocultural, technological, political/legal, and global factors. The industry environment is analyzed using the five competitive forces of threat of new entrants, power of suppliers/buyers, threat of substitutes, and rivalry among existing competitors. Competitor analysis involves understanding competitors' objectives, strategies, assumptions, and capabilities.
The document provides an overview of performing an external assessment and industry analysis for strategic management. It discusses scanning the external environment, identifying opportunities and threats through tools like the External Factor Evaluation (EFE) Matrix. It also covers analyzing competitors using the Competitive Profile Matrix and Michael Porter's five forces model to evaluate rivalry, potential new entrants, substitutes, supplier power and buyer power. The purpose is to understand the external factors that influence a firm so it can develop strategies to capitalize on opportunities and mitigate threats from outside its control.
The document discusses analyzing an organization's external environment. It covers frameworks for understanding the macroenvironment (PESTEL), scenarios, industry competition (Porter's 5 forces), strategic groups within an industry, market segments, and identifying opportunities and threats. The goal of environmental analysis is to understand key drivers of change and sources of competition that influence strategy development.
Supermarkets have strong bargaining power over Coca-Cola as they:
- Buy in large volumes
- Control access to end customers
- Can threaten to stock substitute/competitor brands
- Have the ability to negotiate lower prices
Therefore, supermarkets can demand lower prices or better trade deals from Coca-Cola compared to smaller retail channels like convenience stores or soda shops. This gives supermarkets strong buyer power over Coca-Cola in the distribution channel. Meeting their demands impacts Coca-Cola's profits.
This document provides an overview of business environments and factors that influence strategic planning. It discusses the external environment, including general factors like sociocultural, demographic, economic, technological, and political/legal influences. The internal environment and factors under a company's control are also examined. Porter's five competitive forces of rivalry, buyer power, supplier power, threat of substitutes, and threat of new entrants that shape industry competition are summarized. The document emphasizes that predicting environmental changes is difficult but contingency planning through scenario models can help companies adapt.
david - External analysis-converted.pptxseemakamran1
This chapter discusses performing an external assessment and industry analysis. It covers environmental scanning, identifying opportunities and threats in the external environment, and using tools like the External Factor Evaluation (EFE) matrix and Competitive Profile Matrix (CPM) to evaluate a firm's external strategic situation. The chapter also explains Porter's five forces model of competition and analyzing competitive forces, technological forces, social/demographic forces, and other external factors that firms must respond to in developing strategy.
Dahua provides a comprehensive guide on how to install their security camera systems. Learn about the different types of cameras and system components, as well as the installation process.
The document discusses conducting an industry and competitor analysis. It provides an overview of what industry analysis involves, including reviewing economic, political and market factors that influence industry development. It also outlines Porter's five forces model for analyzing industry competition and lists the major factors considered in an industry analysis. The document then defines what a competitor analysis is and provides details on identifying competitors, sources of information, Porter's framework, and steps to conduct a competitor analysis.
This document provides an overview of tools and frameworks for conducting industry and competitor analysis. It introduces Porter's Five Forces model for analyzing industry structure and outlines the key forces of threat of entry, threat of substitution, buyer power, supplier power, and rivalry among existing firms. It also discusses analyzing industry dynamics over time using frameworks like life cycle analysis and D'Aveni's Four Arena Analysis model. The document provides examples and templates for tools like competitor tables, environmental scanning matrices, and scenario planning that can be used to systematically analyze factors affecting an industry.
This document outlines tools for analyzing the external business environment, including PESTEL analysis and Porter's Five Forces model. It discusses using PESTEL to analyze the macroenvironment factors of political, economic, social, technological, environmental, and legal issues. Porter's Five Forces model is then explained as a framework for industry analysis involving the competitive forces of threat of new entrants, power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. The document provides details on applying each of these tools to systematically evaluate opportunities and threats in the external environment.
1) The document discusses the importance of marketing and environmental analysis for financial institutions.
2) It covers analyzing the macro environment, market environment, and internal environment through approaches like SWOT analysis.
3) The macro environment includes political, economic, technological, and social/cultural factors, while the market environment analyzes Porter's five competitive forces of suppliers, buyers, new entrants, substitutes, and rivalry.
An analysis of the external environment is undertaken in order to discover the opportunities and threats that are evolving and that need to be addressed by the organization. A study by Diffenbach (1983) identified a number of positive consequences that stem from carrying out an organized environmental analysis. An analysis of the external environment can be broken down into three key steps, each becoming more specific to the organization. The first step is an analysis of the macro-environmental influences that the organization faces. This is followed by an examination of the competitive (micro) environment the organization operates within. Finally a specific competitive analysis is undertaken.
The document discusses analyzing a company's external environment. It describes performing a PESTEL analysis to examine political, economic, social, technological, environmental, and legal factors. It also discusses Porter's Five Forces model to analyze industry competition by examining the threat of new entrants, power of suppliers and buyers, threat of substitutes, and competitive rivalry. The purpose is to identify opportunities and threats in the external environment to help formulate business strategies.
The document discusses analyzing a company's external environment. It describes analyzing the macro environment using PESTEL factors (political, economic, social, technological, environmental, legal) and doing an industry analysis using Porter's Five Forces model to evaluate competitive rivalry and threats from new entrants, substitutes, suppliers and buyers. It provides details on each of Porter's five forces and how to assess their impact on an industry.
1. The document discusses various frameworks and techniques for strategic planning, including evaluating an organization's vision and mission, analyzing external and internal factors, and selecting strategic alternatives.
2. Key external factors that are analyzed include political, economic, social, technological, ecological, and international trends and conditions that may present opportunities or threats.
3. Internal factors analyzed include an organization's resources, capabilities, core competencies, and strengths and weaknesses.
4. Competitive profiles are developed to assess an organization's relative position compared to competitors based on important strategic factors.
5. Potential strategic alternatives are then evaluated using tools like SWOT, BCG, GE, and QSPM matrices to select strategies focused on
1. The document discusses various frameworks and techniques for strategic planning, including evaluating an organization's vision and mission, analyzing external and internal factors, and selecting strategic alternatives.
2. Key external factors that are analyzed include political, economic, social, technological, ecological, and international trends and conditions that may present opportunities or threats.
3. Internal factors analyzed include an organization's resources, capabilities, core competencies, and strengths and weaknesses.
4. Competitive profile analysis is used to assess an organization's relative position compared to competitors based on important strategic factors.
1. The document discusses various frameworks and techniques for strategic planning, including evaluating an organization's vision and mission, analyzing external and internal factors, and selecting strategic alternatives.
2. Key external factors that are analyzed include political, economic, social, technological, ecological, and international trends and conditions that may present opportunities or threats.
3. Internal factors analyzed include an organization's resources, capabilities, core competencies, and strengths and weaknesses.
4. Competitive profiles are developed to assess an organization's relative position compared to competitors based on important strategic factors.
5. Potential strategic alternatives are then evaluated using tools like SWOT, BCG, GE, and QSPM matrices to select strategies focused on
This document provides an overview of conducting an environmental analysis, which involves external and internal audits of an organization. The external audit identifies opportunities and threats in the organization's environment. Key parts of the external environment include economic, social, political, technological, and competitive forces. An External Factor Evaluation matrix is used to evaluate these external factors. The internal audit examines the organization's strengths and weaknesses. Relationships between different functional areas are also assessed. An Internal Factor Evaluation matrix summarizes findings from the internal audit. The environmental analysis provides important information for strategy formulation.
This document discusses analyzing a firm's external environment. It describes Porter's five forces model for understanding industry competition and outlines the general environment segments of demographic, economic, sociocultural, technological, political/legal, and global factors. The industry environment is analyzed using the five competitive forces of threat of new entrants, power of suppliers/buyers, threat of substitutes, and rivalry among existing competitors. Competitor analysis involves understanding competitors' objectives, strategies, assumptions, and capabilities.
The document provides an overview of performing an external assessment and industry analysis for strategic management. It discusses scanning the external environment, identifying opportunities and threats through tools like the External Factor Evaluation (EFE) Matrix. It also covers analyzing competitors using the Competitive Profile Matrix and Michael Porter's five forces model to evaluate rivalry, potential new entrants, substitutes, supplier power and buyer power. The purpose is to understand the external factors that influence a firm so it can develop strategies to capitalize on opportunities and mitigate threats from outside its control.
The document discusses analyzing an organization's external environment. It covers frameworks for understanding the macroenvironment (PESTEL), scenarios, industry competition (Porter's 5 forces), strategic groups within an industry, market segments, and identifying opportunities and threats. The goal of environmental analysis is to understand key drivers of change and sources of competition that influence strategy development.
Supermarkets have strong bargaining power over Coca-Cola as they:
- Buy in large volumes
- Control access to end customers
- Can threaten to stock substitute/competitor brands
- Have the ability to negotiate lower prices
Therefore, supermarkets can demand lower prices or better trade deals from Coca-Cola compared to smaller retail channels like convenience stores or soda shops. This gives supermarkets strong buyer power over Coca-Cola in the distribution channel. Meeting their demands impacts Coca-Cola's profits.
This document provides an overview of business environments and factors that influence strategic planning. It discusses the external environment, including general factors like sociocultural, demographic, economic, technological, and political/legal influences. The internal environment and factors under a company's control are also examined. Porter's five competitive forces of rivalry, buyer power, supplier power, threat of substitutes, and threat of new entrants that shape industry competition are summarized. The document emphasizes that predicting environmental changes is difficult but contingency planning through scenario models can help companies adapt.
david - External analysis-converted.pptxseemakamran1
This chapter discusses performing an external assessment and industry analysis. It covers environmental scanning, identifying opportunities and threats in the external environment, and using tools like the External Factor Evaluation (EFE) matrix and Competitive Profile Matrix (CPM) to evaluate a firm's external strategic situation. The chapter also explains Porter's five forces model of competition and analyzing competitive forces, technological forces, social/demographic forces, and other external factors that firms must respond to in developing strategy.
Dahua provides a comprehensive guide on how to install their security camera systems. Learn about the different types of cameras and system components, as well as the installation process.
Charging Fueling & Infrastructure (CFI) Program Resources by Cat PleinForth
Cat Plein, Development & Communications Director of Forth, gave this presentation at the Forth and Electrification Coalition CFI Grant Program - Overview and Technical Assistance webinar on June 12, 2024.
Charging Fueling & Infrastructure (CFI) Program by Kevin MillerForth
Kevin Miller, Senior Advisor, Business Models of the Joint Office of Energy and Transportation gave this presentation at the Forth and Electrification Coalition CFI Grant Program - Overview and Technical Assistance webinar on June 12, 2024.
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1. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
1
Chapter 3
Environmental Scanning and
Industry Analysis
Read Sections: 3.1, 3.2, 3.5
2. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
2
Environments
Environmental uncertainty:
The degree of complexity plus
the degree of change existing in
an organization’s external
environment.
3. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
3
Environments
Environmental scanning:
The monitoring, evaluating, and
disseminating of information from the
external and internal environments to key
people within the corporation to avoid
strategic surprise and ensure the long-
term health of the firm.
4. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
4
External Environment
External Environmental Variables:
Societal environment:
General forces that do not
directly touch on the short-run
activities but often influence its
long-run decisions.
5. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
5
External Environment
External Environmental Variables:
Task environment:
Those elements or groups that
directly affect the corporation and,
in turn, are affected by it. The task
environment is the industry within
which that firm operates.
6. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
6
External Environment
External Environmental Variables:
Industry analysis:
An in-depth examination of key
factors within a corporation’s task
environment.
10. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
10
Societal Environment
Important Variables
Economic
GDP trends
Interest rates
Money supply
Inflation rates
Unemployment levels
Wage/price controls
Devaluation/revaluation
Energy availability and
cost
Disposable and
discretionary income
Technological
Total government
spending for R&D
Total industry spending
for R&D
Focus of technological
efforts
Patent protection
New products
New developments in
technology transfer from
lab to marketplace
Productivity
improvements through
automation
Political-Legal
Antitrust regulations
Environmental protection
laws
Tax laws
Special incentives
Foreign trade regulations
Attitudes toward foreign
companies
Laws on hiring and
promotion
Stability of government
Sociocultural
Lifestyle changes
Career expectations
Consumer activism
Rate of family formation
Growth rate of population
Age distribution of
population
Regional shifts in
population
Life expectancies
Birth rates
11. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
11
External Environment
Sociocultural Trends
• Increasing environmental awareness
• Growth of the seniors market
• Impact of Generation Y boomlet
• Decline of the mass market
• Changing pace and location of life
• Changing household composition
• Increasing diversity of workforce and markets
12. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
12
External Environment
External Strategic Factors
Factors influencing the choice:
– Personal values of managers
– Functional experience of managers
– Success of current strategies
– Strategic myopia
• Willingness to reject unfamiliar as well as
negative information
13. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
13
External Environment
Issues Priority Matrix
• Identify likely trends:
– Societal and task environments
• Strategic environmental issues
• Assess probability of trends occurring
– Low to High
• Ascertain likely impact of trends on the
corporation
– Low to High
14. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
14
Issues Priority Matrix
High
Priority
High
Priority
High
Priority
Medium
Priority
Medium
Priority
Medium
Priority
Probable Impact on Corporation
Low
Priority
Low
Priority
Low
Priority
Low
Medium
High
Probability
of
Occurrence
15. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
15
External Environment
External Strategic Factors
Defined:
Key environmental trends that are
judged to have both a medium to high
probability of occurrence and a
medium to high probability of impact
on the corporation.
16. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
16
Industry Analysis
Industry
A group of firms producing a similar
product or service, such as soft drinks
or financial services.
18. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
18
Industry Analysis
Porter’s approach:
Assess the six forces --
• Threat of new entrants
• Rivalry among existing firms
• Threat of substitute products
• Bargaining power of buyers
• Bargaining power of suppliers
• Relative power of other stakeholders
19. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
19
Industry Analysis
Threat of New Entrants --
Barriers to entry:
• Economies of Scale
• Product Differentiation
• Capital Requirements
• Switching Costs
• Access to Distribution Channels
• Cost Disadvantages Independent of Size
• Government Policy
20. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
20
Industry Analysis
Rivalry Among Existing Firms --
Intense rivalry related to:
• Number of competitors
• Rate of Industry Growth
• Produce or Service Characteristics
• Amount of Fixed Costs
• Capacity
• Height of Exit Barriers
• Diversity of Rivals
21. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
21
Industry Analysis
Threat of Substitute Products/Services
Substitute Products:
Those products that appear to be
different but can satisfy the same need as
another product. To the extent that
switching costs are low, substitutes can
have a strong effect on an industry.
22. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
22
Industry Analysis
Bargaining Power of Buyers --
Buyer is powerful when:
• Buyer purchases large proportion of seller’s products
• Buyer has the potential to integrate backward
• Alternative suppliers are plentiful
• Changing suppliers costs very little
• Purchased product represents a high percentage of a
buyer’s costs
• Buyer earns low profits
• Purchased product is unimportant to the final quality or
price of a buyer’s products
23. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
23
Industry Analysis
Bargaining Power of Suppliers --
Supplier is powerful when:
• Supplier industry is dominated by a few companies but
sells to many
• Its product is unique and/or has high switching costs
• Substitutes are not readily available
• Suppliers are able to integrate forward and compete
directly with present customers
• Purchasing industry buys only a small portion of the
supplier’s goods.
24. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
24
Industry Analysis
Industry Evolution
Fragmented Industry –
No firm has large market share and each firm
serves only a small piece of the total market in
competition with others.
Consolidated Industry –
Dominated by a few large firms, each of which
struggles to differentiate its products from the
competition.
25. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
25
Continuum of International Industries
Multidomestic
Industry in which companies tailor
their products to the specific
needs of consumers in a
particular country.
• Retailing
• Insurance
• Banking
Global
Industry in which companies
manufacture and sell the
same products, with only
minor adjustments made for
individual countries around
the world.
Automobiles
• Tires
• Television sets
26. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
26
Industry Analysis
Global Industries
Industry primarily multidomestic
or primarily global based on:
–Pressure for coordination
– Within the multinationals in that industry
–Pressure for local responsiveness
– Individual country markets
27. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
27
Industry Analysis
Strategic Groups
Defined:
A set of business units or firms that
pursue similar strategies with
similar resources.
28. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
28
Industry Analysis
Strategic Types
Defined:
Category of firms based on a common
strategic orientation and a combination of
structure, culture, and processes
consistent with that strategy.
29. Prentice Hall, 2004 Chapter 3
Wheelen/Hunger
29
Industry Analysis
Strategic Types –
Categorized by one of four general strategic
orientations:
• Defenders
– Companies with a limited product line;
focus on improving efficiency of current
operations
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Industry Analysis
Strategic Types (continued)–
• Prospectors:
–Companies with fairly broad product
lines; focus on product innovation
and market opportunities.
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Industry Analysis
Strategic Types (continued)–
• Analyzers:
–Corporations that operate in at least
two different product-market areas –
one stable and one variable.
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Industry Analysis
Strategic Types (concluded)–
• Reactors:
–Corporations that lack a consistent
strategy-structure-culture
relationship.
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EFAS
Organize external factors into
opportunities and threats
How well a particular company´s
management (rating) is
responding to specific external
factors in light of the perceived
importance (weight) of these
factors to the company
36. Prentice Hall, 2004 Chapter 3
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External Factor Analysis Summary (EFAS)
Maytag Example
External Factors Weight Rating
Weighted
Score Comments
1.00
Opportunities
• Economic integration of
European Community
• Demographics favor quality
appliances
• Economic development of Asia
• Opening of Eastern Europe
• Trend to “Super Stores”
Threats
• Increasing government regulations
• Strong U.S. competition
• Whirlpool and Electrolux strong
globally
• New product advances
• Japanese appliance companies
Total Scores
.20
.10
.05
.05
.10
.10
.10
.15
.05
.10
4
5
1
2
2
4
4
3
1
2
.80
.50
.05
.10
.20
.40
.40
.45
.05
.20
Acquisition of
Hoover
Maytag quality
Low Maytag presence
Will take time
Maytag weak in this
channel
Well positioned
Well positioned
Hoover weak globally
Questionable
Only Asian presence is
Australia
3.15
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