The document discusses the environment and stakeholders of a business. It identifies key external factors such as the economy, technology, socio-cultural values, demographics, and legislation that influence a company. It also examines a company's immediate industry environment including suppliers, buyers, new entrants, and rival firms. Porter's five forces model is introduced to analyze competitive forces in an industry. Different generic competitive strategies such as cost leadership, differentiation, and focus are also outlined.

1. The Environment of Business III

2. Stakeholders Stockholders : dividend price appreciation Customers : product/service quality Employees : employment wages personal growth opportunity

3. Stakeholders Suppliers : revenue through sale growth opportunity Local community : jobs civic involvement economic development Society at large : economic health environment protection

4. The Components of a Company’s MACROENVIRONMENT Legislation and Regulation Societal Values and Lifestyles Population Demographics Technology The Economy at Large COMPANY Suppliers Substitutes Buyers New Entrants Rival Firms  IMMEDIATE INDUSTRY AND COMPETITIVE ENVIRONMENT

5. Political and Legal Deregulation Repeal of Glass-Steigall Act 1999 Tort Reform Disabilities Act

6. Economy Interest rate Exchange rate Unemployment Trend in GDP

7. Technology Reduced height of entry barrier Biotechnology Pollution/Global Warming Wireless communication Miniaturization

8. Socio-cultural Health Consciousness Postponement of family formation More women in workforce Greater concern for environment

9. Demography Aging population Rising affluence Greater disparities in income levels Geographic distribution of population

10. Global WTO Currency Exchange Rate Emergence of China and India

11. #1. Dominant Economic Traits Market Size Scope of Competition (Local, Regional, National, Global) Industry Growth Cycle (Early, Takeoff, Mature, Stagnant, Decline) Number of Rivals and their relative sizes Number of Buyers and their relative sizes Prevalence of Backward and Forward Linkage Ease of Entry and Exit Pace of Technological Change Learning Curve Effect Capital Requirement Profitability (above/below par)

12. #2 Porter’s Five Forces Substitute Products (of firms in other industries) Suppliers of Key Inputs Buyers Potential New Entrants Rivalry Among Competing Sellers

13. Bargaining Power of Buyers - Many small companies and few buyers, Large buyers - Buyers can switch orders between suppliers enabling them to play one supplier against another - Vertical integration is a feasible option

14. Suppliers - Product has few substitutes and are important to the buyers - Products are differentiated to the extent that buyers cannot easily switch - Threat of vertical integration - Buying companies cannot threaten with backward integration

15. Rivalry - Demand conditions : growing/declining - Exit barriers : high/low - Competitive structure : fragmented, consolidated

16. Substitutes - Products serving similar consumer needs sugar vs artificial sweetener taxi vs bus private vs public university

17. Threat of Entry - Brand loyalty - Economies of scale - Entry barriers - Govt. regulation

18. Generic Competitive Strategies Two basic types: - Low cost - Differentiation Three generic strategies resulting from the scope of application : - Cost - Differentiation - Focus.

19. Generic Competitive Strategies COST leadership promoted by means such as frugality, discipline and attention to details. DIFFERENTIATION facilitated by a culture of encouraging innovation, individualism and risk taking.

20. Cost OR Differentiation An organizational structure that is supportive of cost leadership can be ruinous for differentiation e.g. tight control system pursuit of scale economies dedication to learning curve.

21. Stuck in the Middle Being all things to all people can be a recipe for disaster and such firms cannot have a sustainable competitive advantage. Whatever strategy is chosen, it has to be sustainable. This can be made through making it difficult for imitators by putting up a moving target.

22. Risks Cost : imitation technology changes proximity to differentiation Differentiation : imitation loss of attraction of differentiation base Focus : imitation target segment gets unattractive new focusers arrive