This document provides an overview of topics to be covered in the section on strategic management, including envisioning strategy, external analysis, industry and competitive analysis, and analyzing company resources and capabilities. For external analysis, it will cover PEST analysis and its impact. PEST analysis examines the political, economic, social, and technological factors of the external environment. It also provides examples of using PEST analysis and the PEST impact matrix to identify opportunities and threats from external changes.

1. What you will learn in this section :
• Envisioning Strategy
– Definition
– Framework
– Visual Models
• External Analysis
– PEST
– PEST Impact Analysis
• Industry and Competitive Analysis
– Industry Structure
– Evolution of Industries
– Industry Supply Chain
– Potential Industry Earnings
– Porter’s 5 Forces Analysis
– Competitive Intensity
– Strategies for minimizing competitive forces
– Perceptual Map
– Barriers to Entry/Incumbency advantages
– DSIR effect
• Company Resources and Capabilities
– ARC Analysis/HR
– SWOT Analysis
– Value Creating Processes/Core Competencies
– Strategic Gameboard
– Balanced Scorecard
– Change Management © Sunil Mehrotra

2. Understanding Strategic Management is
like pealing an onion

3. Analyzing the External Environment:
PEST Analysis GDP
GDP growth
External Exchange rate
Fiscal Policy
Monetary Policy Environment Unemployment rate
Skilled labor
Tax laws
ic Education levels
Intellectual Property protection
Poli om Trade unions
Copyright laws tica
l on nge
Ec h a
Infrastructure
Securities Laws Cha
Business climate ng e C
Healthcare costs
Raw materials
Opportunities
Opportunities
New technologies l Threats
Threats
Materials technologies
g ic a So Demographics
Process technologies
n o l o ge c
Ch ial
Income Distribution
Information technologies
Communication technologies e
ch han ang Social stability
T C e Ethnic patterns
Government incentives Consumerism
Energy costs Discretionary income
Broadband penetration Fashions/fads
Technology incubation Consumer trends
© Sunil Mehrotra

4. PEST Analysis using the Internet
http://delicious.com/smehro/mbam619+PEST+Politics%20
PEST Politics
http://www.nytimes.com/interactive/2008/10/18/business/20081019-metrics-graphic.html
Can Presidents tame business cycles
http://harvardbusiness.org/flatmm/hbextras/200805/recessions/
HBR Interactive graphics on recessions
http://delicious.com/smehro/mbam619+PEST+economy%20
PEST Economy
http://www.fedstats.gov/?cm_sp=ExternalLink-_-Federal-_-DOC
Fed Stats all in one place
http://www.allbusiness.com/marketing-advertising/market-research-analysis-market/11469816-
1.html
Collection of resources and links to free data
http://delicious.com/smehro/mbam619+PEST+Social%20
PEST Social
http://delicious.com/smehro/mbam619+PEST+Technology%20
PEST Technology

5. PEST Analysis: Example
Federal Deficit as % of GDP

6. Example of fiscal policy :
Visualizing federal budget

7. Example of fiscal policy:
National Debt: 1940 to present

8. Who is funding our debt?

10. Citigroup's role in CDOs and the financial crisis

11. Auto worker wages
http://www.nytimes.com/imagepages/2008/12/10/business/20081210_LEONHARDT_GRAPHIC.html

12. Economy at a glance
Economic Indicators
Real Economic Grow th
Existing Home Sales
Consumer Prices Sept. 2008
Oct. 2008
Unemployment
Productivity
-3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%
% change from previous period

14. World map:Population

15. New technologies are being adopted faster today

16. Change Will Be Relentless:
Wireless industry example
Micro Fuel Cells
Light Emitting Polymer Displays
Mesh
Networks WCDMA
Visibility
802.11b Wi-Fi
GPRS
UWB EDGE
4G Wireless
MIMO MEMS Wireless Broadband
Smart Dust As of 2Q03
Technology Peak of Trough of Slope of Plateau of
Trigger Inflated Disillusionment Enlightenment Productivity
Expectations
Maturity 16

17. Gartner Predicts: Hot Spots Explode …
75,000,000 Users
167,000 Hot Spots
Hot Spot
Users/
Hot Spots
30,000 Users
1,000 Hot Spots
2001 2008
17

18. How the Web has grown and evolved

19. Two Key Forces Driving Business Change
Faster Economic Pace Impatient Customers
“Time Tortured”
Emerge Threats Appear
Triennial Strategy Rolling
Windows Opportunity Keyholes
Forecast Demand Chaotic Demand Convenience
This Is the
“Now Economy” 19

20. Culture: Innovation in art
20

21. 21

22. Analyzing the External Environment:
PEST Analysis GDP
GDP growth
External Exchange rate
Fiscal Policy
Monetary Policy Environment Unemployment rate
Skilled labor
Tax laws
ic Education levels
Intellectual Property protection
Poli om Trade unions
Copyright laws tica
l on nge
Ec h a
Infrastructure
Securities Laws Cha
Business climate ng e C
Healthcare costs
Raw materials
Opportunities
Opportunities
New technologies l Threats
Threats
Materials technologies
g ic a So Demographics
Process technologies
n o l o ge c
Ch ial
Income Distribution
Information technologies
Communication technologies e
ch han ang Social stability
T C e Ethnic patterns
Government incentives Consumerism
Energy costs Discretionary income
Broadband penetration Fashions/fads
Technology incubation Consumer trends
© Sunil Mehrotra

23. Political Change Impact
Fiscal Policy
Monetary Policy
Tax laws
Intellectual Property
protection
Copyright laws
Securities Laws
Business climate
International Trade

24. “Economy” Change Impact
GDP
GDP growth
Exchange rate
Unemployment rate
Skilled labor
Education levels
Trade unions
Infrastructure
Healthcare costs
Raw materials

25. It is crucial to describe the subject for
PEST Impact Matrix
the PEST analysis clearly so that
people, contributing to the analysis,
and those interpreting the results
from PEST analysis, could
understand the purpose of the PEST
assessment and its implications
Impact of Opportunities Threats
Threats Strategic
Nature of
change response
change
Political Change
Economic
Change
Social
Change
Technological
Change
© Sunil Mehrotra

26. PEST Impact example:
Impact of Opportunities Threats
Threats Strategic
Nature of
change response
change
Political Change
Economic
Change
Social
Change
Technological
Change
© Sunil Mehrotra

27. PEST Analysis Example:
ic
om
Poli on nge
tica
Ec h a
Infrastructure Emerging
l Ch Technologies Markets
ang C
e
Digital
Connections
Originations
Opportunities
Opportunities
Environmental Demographics
Solutions
l
ic a So
log e c
Ch ial
no
ch hang ang
Te C e
© Sunil Mehrotra

28. PEST Impact example:
Impact of Opportunities Threats
Threats Strategic
Nature of
change response
change
Political Change
Economic
Change
Social
Change
Technological
Change
© Sunil Mehrotra

29. PEST Impact example:
Demographics
© Sunil Mehrotra

30. PEST Impact example:
© Sunil Mehrotra

31. Student Examples: Pest Analysis
Breanne Hayes
April 2008 MBA
Graziadio School of Business and Management
Pepperdine University
Elizabeth Passeretti
April 2008 MBA Candidate
Graziadio School of Business and
Management
Pepperdine University

32. PEST example:
Impact of Opportunities Threats
Threats Strategic
Nature of
change response
change
Shorten
More
Political Change FDA Longer time Product
approval process conservative to market Development
Cycle
Economic US economic Consumer Generic Evaluate
drugs more acquisitions
Change downturn spending
accepted
down
Identify
Social Caring for
Aging New growth product/market
the elderly
Population opportunities
Change needs to serve
the elderly
New New New
Technological Potential
materials for cost/quality products Invest in
new promising
Change joint frontier competitors start-ups
replacement
© Sunil Mehrotra

33. PEST Impact example:
Impact of Opportunities Threats
Threats Strategic
Nature of
change response
change
Operational
Democratic party More
Political Change in power government
Pressure on Efficiency to
prices reduce costs
control
Economic $100+ crude oil Commodity Pressure Focus on
Operational
Change price prices on costs
Efficiency
increasing
Identify
Social Caring for
Aging New growth product/market
the elderly
Population opportunities
Change needs to serve
the elderly
Breakthrough New science New start- Potential Invest
Technological in science. and new ups. new in/acquire
Process technologies Disruptive competitors promising
Change improvement imminent technologies start-ups
technologies
© Sunil Mehrotra

34. Contemplating the Future

35. Scenario Planning
http://strategicframing.com/strategic-planning-workshop/

38. Nappies 1-6?
What is visual thinking?
What is Strategic Management?
-strategic planning framework
What is the role of the CEO/Leader?
-Leadership styles
What is PEST Analysis?
Using the Internet for PEST Analysis
-Data sources and web resources
Identifying business Opportunities and Threats
through PEST Impact analysis framework

39. Mnemonic 2