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Specific Forces in the Global Environment
- 1. 1 Specific Forces in the Global Environment • Specific Forces: • Forces that can directly increase or decrease a company’s sales, revenues & ultimately its profit • Internal Environment • External Environment
- 2. 2 Internal Environment • Employees • Management • Organization
- 3. 3 External Environment • Micro Environment • Macro Environment
- 4. 4 Micro External Environment • Suppliers • Distributors • Customers • Competitors
- 5. 5 Micro External Environment • Suppliers • More vs Less suppliers • Bargaining power • Suppliers for GM & Ford • Distributors • Bargaining position
- 6. 6 Micro External Environment • Customers • Customer’s need • Segmentation of customer’s according to need • Example: Dell » Individuals (Multimedia applications) » Small Companies (Workstations) » Large Companies (Powerful workstations) » Government organizations (Security) » Educational Institutions (Limited budget)
- 7. 7 Micro External Environment • Competitors • Total market divided • Market share of each competitor • Forecast & Predict competitor’s move
- 8. 8 Macro External Environment • Political & Economics Environment • Socio-cultural Environment • Demographics Environment • Technological Environment • Global Environment (Missing)
- 9. 9 Political & Economic Environment • Free Market vs Command Economy • Mix Economies • Effects on particular business
- 10. 10 Social Environment • Class structure • Culture • Customs & Beliefs • Culture: Values & Norms – Values: General guidelines – Norms: Unwritten code
- 11. 11 Social Environment • Diversity/Multicultural • Aging/Graying of America • Two-Income Families • Single-Parent Families
- 12. 12 U.S. Household Size 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Number of Persons 1900 1940 1980 2000 2004 Source: U.S. Census Bureau
- 13. 13 Demographic Environment • Changes in characteristics of country’s population according to • Age • Gender • Ethnic background • Race etc • Example: Increase in population of old age » Pharmaceutical business
- 14. 14 Americans Living Longer • U.S. life expectancy rises to a record high 77.9 years • The number of deaths dropped by 50,000 in 2004 from 2003, the steepest decline since 1938 • By 2005, about one in eight Americans will be 65 or older. By 2025, it will be nearly one in five. 0 500000 1000000 1500000 2000000 2500000 1900s 2003 2004 U.S. De Source: Investor’s Business Daily, December 8, 2003; Cumberland Times-News, April 20, 2006; U.S. Centers for Disease Control and Prevention; U.S. Census
- 15. 15 Technological Environment • How changes in technology will impact the business • Walmart vs Kroger Case • One technology taking over another • Previous becoming obsolete • Eco city concept • Future of technology » Example: IT experiment
- 16. 16 • Productivity • E-Commerce • Responsiveness to Customer Technological Environment
- 17. 17 Identity Theft • Total number of identity theft victims in 2005 – 255,565 • Top four ways how victims information was misused: 1. Credit card fraud 2. Phone/utilities fraud 3. Bank fraud 4. Employment-related fraudSource: Identity Theft: Victim Complaint Data, 2005, Federal Trade Commission; www.consumer.gov/idtheft
- 18. 18 ID Theft—Protective Steps • “Focus on the cheap and easy way to keep an eye on your accounts” –Free Credit Reports –Guard Your Number –Shred –Bug Congress • To pass ultimate protection: A credit freeze anytime you want one. Source: Money, August 2005
- 19. 19 • U.S. Bottled Water Sales in Past 15 Years Increased more than four- fold to $9.8 Billion • From October 2004 to September 2005, top bottle water flavors were: Blend, Lemon, Lime, and Apple Consumer Trends Source: Business & Economic Review, Jan.-Mar. 2002; Beverage Marketing Corporation, bottledwater.org, 2004 stats; Productscan Online; datamonitor.com, November 9, 2005
- 20. 20 Immigration • In 2005, roughly 35 million immigrants lived in the U.S. as compared to less than 25 million 10 years ago. • According to a November 2005 poll, 60 percent of Americans favor a barrier built along the US-Mexico Border. • About 49 percent believe that a child born to an illegal alien in the U.S. should be granted a US citizenship Source: Center for Immigration Studies; RasmussenReports.com
- 21. 21 Global Environment • International Competition and Free Trade • Improvements in Transportation and Communication • E- Commerce • Global Changes
- 22. 22 Disaster Costs Hurricane Katrina – 2005 (estimate)$ 200 B Kobe, Japan Earthquake -- 1995 100 B September 11, 2001 Attacks 70 B Northridge, CA Earthquake – 1994 44 B Hurricane Andrew – 1992 35 B The Economic Cost of Disaster Source: Business 2.0 , November 2002; MSNBC.com, September 10, 2005.
- 23. 23 19%19% Does Global Experience Help Your Career? 20%20% 56%56% Source: USA Today 5% Very HelpfulSomewhat Unnecessary No Response
Editor's Notes
- <number> Also available on a Transparency Acetate See Learning Goal 3: Examine how the economic environment and taxes affect businesses. See text page: 11
- <number> See Learning Goal 3: Examine how the economic environment and taxes affect businesses. See text pages: 11-12
- <number> See Learning Goal 6: Demonstrate how the social environment has changed and tell what the reaction of the business community has been. See text pages: 16-18
- <number> See Learning Goal 6: Demonstrate how the social environment has changed and tell what the reaction of the business community has been. See text pages: 16-18
- <number> Also available on a Transparency Acetate See Learning Goal 6: Demonstrate how the social environment has changed and tell what the reaction of the business community has been. U.S. Household Size 1. Households are defined as a household maintained by a family group, and include any unrelated people residing there. 2. In 1900, the average household size was 4.6 members; In the year 2000, it was 2.62 members, and in 2004 it was 2.57. (Source: U.S. Census Bureau, 6/29/05) 3. The decrease in household members from 1900 to today, is approximately 44%.
- <number> Also available on a Transparency Acetate See Learning Goal 6: Demonstrate how the social environment has changed and tell what the reaction of the business community has been. American Living Longer The U.S. life expectancy has grown from 47.3 years in 1900s to a record 77.9 years in 2004. Ask the students – why is the life expectancy increasing? (Some of the reasons would be better healthcare, modern medicine, and quality of life.) Ask the students – what does this trend mean for businesses? (Some of the answers would be aging population as a market for retail and consumer goods, more need for healthcare and government services, and more people available in the workforce for a longer timeframe.)
- <number> See Learning Goal 4: Illustrate how the technological environment has affected businesses. See text page: 12-15
- <number> See Learning Goal 4: Illustrate how the technological environment has affected businesses. See text page: 12-15
- <number> See Learning Goal 4: Illustrate how the technological environment has affected businesses. Identity Theft The number of ID theft cases are rising every year. From 2003 to 2005, the number of complaints increased by about 20%. About 29% of the victims were between the ages of 18-29 (The same age group of the students.) Top five States for identity theft (per 100,000 population): Arizona, Nevada, California, Texas, and Colorado. (Source: Identity Theft--Victim Complaint Data, 2005, Federal Trade Commission; www.consumer.gov/idtheft) Ask the students – How often do they throw mail or other documents with their personal information without shredding? (It is becoming imperative that we shred all documents with personal info and keep the sharing of private info such as credit card, bank account info, and social security numbers with very limited number of people.)
- <number> Also available on a Transparency Acetate See Learning Goal 4: Illustrate how the technological environment has affected businesses. Identity Theft As many as one in six people are now vulnerable to identity theft. Request one credit report every four months from one of the three credit bureaus. Offer your driver license number instead of your social security number. Shred any documents or records that could be discovered by other people.
- <number> Also available on a Transparency Acetate See Learning Goal 5: Identify various ways in which businesses can meet and beat competition. Consumer Trends Dynamic changes in the business environment are on-going. To remain successful, companies must study the environment to take advantage of consumer opportunities. Ask the students – why is the popularity of water increasing? (Health trends) Ask the students – What do they prefer as a drink of choice when thirsty? (Carbonated soda drinks are still number one ahead of bottled water.) How can beverage companies like Coca-cola and Pepsi compete with water? (These companies are introducing low calorie/no calorie drinks, more healthy drinks such as fruit juices, and finally each of them have also introduced their line of water. Coca-cola – Dasani water; Pepsi – Aquafina.)
- <number> Also available on a Transparency Acetate See Learning Goal 6: Demonstrate how the social environment has changed and tell what the reaction of the business community has been. Immigration This slide acknowledges the immigration issues facing America today. Immigration debate is taking the center stage and many in politics are attempting to legislate what to do about illegal immigrants. Ask the students – how do illegal immigrants affect our economy? How is it different from the legal immigrants? (Key difference between the legal and illegal immigrants can be the contribution to the economy and taxes. The illegal immigrants often take on the jobs that others do not want but they also affect the healthcare system adversely.)
- <number> See Learning Goal 7: Analyze what businesses must do to meet the global challenge, which includes war and terrorism. See text page: 18-20
- <number> See Learning Goal 7: Analyze what businesses must do to meet the global challenge, which includes war and terrorism. The Economic Cost of Disaster Disasters, natural or from terrorism, carry a significant economic cost. The 9/11 disaster alone had the following economic impact on our country: Insurance liability from the attacks; $70 Billion (estimate) Drop in consumer confidence; (-16.4%) Hotels projected change in Net Income; (-60%) Aerospace Industry forecasted change in net income; (-50%) (Source: Business 2.0, 11/01)
- <number> See Learning Goal 7: Analyze what businesses must do to meet the global challenge, which includes war and terrorism. Does Global Experience Help Your Career? Chief Financial officers have responsibility for a company’s financial health and raising capital for investment in a Global Economy. International experience is necessary to establish Banking partnerships to remain competitive in a changing global market. International experience will help a company identify business opportunities while reducing a company’s exposure to risk.