This document discusses the strategic planning process and environmental analysis. It outlines examining the remote, industry, and local environments to understand challenges and opportunities. The remote environment considers economic, social, political, and technological issues. Industry analysis looks at the five competitive forces. The local environment analyzes issues specific to an individual organization. The document also discusses profiling an organization by identifying major areas of strength and weakness.

1. CHAPTER 3, Challenges and
Opportunities
• Figure 3.1 The Planning Model
1

2. what do we have,
what do we need?
Figure 3.2 , Matching the Profile to the Environment
Examining the Examining the
environment Matching organizational profile
what needs to
be done
What do we need to
With what What do we have to offer?
succeed?
can be done
In all aspects What strengths do I have,
What makes the
of the and what weakness must I
industry work?
business overcome?
2

3. Examining the Environment
• Figure 3.3,
• The three levels
• of the environment
3

4. Examining the Remote
Environment
• To understand the remote environment we
must gather information about a variety of
issues, such as:
• Economic Issues
• Social Issues
• Political Issues
• Technological Issues
4

5. Sources of information
• government publications
• university research papers
• trade association articles
• economic and social forecasts
• publications by consulting firms and
financial institutions
5

6. Figure 3.4 the remote environment
for a ski area
Remote Environment for a Ski Area
Type of
Description Possible Impact
Issue
The amount of disposable income As available income increases,
Economic available for recreation, in the demand for expensive holidays
hands of customers. will improve.
The perception of people
As the personal need for exercise
regarding health and wellness and
Social increases, demand for skiing
the use of recreation to achieve
should also increase.
those ends.
6

7. Figure 3.4 the remote environment
for a ski area
If we already have a ski area,
government could protect our
Government regulations
competitive position by not
regarding development of park
allowing development permits,
Political land and the environmental
or it could harm our competitive
impact of the development of
advantage by opening
recreation areas.
opportunities for new ski areas
to join the market.
Internet based advertising We could attract a more
Technological systems and reservation diversified market from global
systems. sources.
7

8. Examining the Industry
Environment
• From the definition described previously,
the Industry Environment:
– Contains issues that directly impact the entire
industry and all of the competitors in the
industry. Those issues could be influenced by
the collective efforts of all organizations in the
industry.
8

9. Figure 3.5 The Five forces That Impact
Competition in an Industry.
Substitute
products from New entrants to the
other industries industry wanting to
wanting to take join and share the
away the market market
Buyers and Rivalries among Suppliers
customers existing organizations wanting higher
wanting lower as they compete with prices and more
prices each other business
9

10. Figure 3.6 What makes the forces
powerful?
Characteristics That Make The Forces Powerful
Demand is high for the total industry relative to
Threat of supply
Substitute
Products Customers are not product sensitive
Profits are high
Small capital investment is required
Threat of
New
Entrants Customers are not brand sensitive
Demand exceeds supply in the industry for the
product or service
10

11. Figure 3.7 What makes the forces
powerful?
Buying groups are formed
The product doesn’t add value
The buyers are not brand sensitive
Power of Buyers
They could integrate backward
A small number of suppliers
The product supplied is important to
Power of Suppliers the quality of the buyer’s product
Low profits are earned by suppliers
They could integrate forward
Industry profits are low
Rivalries Among Existing Customer growth rate is low
Organizations Customers are not brand sensitive
11
Switching costs are high

12. Examining the Local
Environment
From the definition described previously,
the Local Environment:
• Contains issues that impact each individual
organization in the industry in terms of
how the organizations deal with each
other. Those issues could be influenced by
the direct efforts of a particular
organization.
12

13. Figure 3.10, Characteristics of the
local environment.
Analyzing the local Environment
Issue Question to be answered
Geographic
Customers Demographic
Psychographic
Market Share
Breadth of the product line
Product Quality
Competitive Advertising effectiveness
Position
Production Efficiencies
Financial Efficiencies
13

14. Characteristics of the local
environment.
Creditors Financial Claims
Quality
Employees Availability
Cost
Quality
Quantity
Suppliers
Timeliness
Cost
Ecological Impact
issues Predictability
14

15. Examining the Organizational
Profile
• As a starting point, identify the “Major
areas” of the organization where strengths
and weaknesses might be found.
15

16. Step 1, in profiling an
Figure 3.12,
organization.
Identify the “Major Areas”
Major areas
Strategic planning
Marketing
Financial and accounting
Production, operations and
technical
Human resource management
Organization and management
16

17. Step 2, in profiling an organization.,
Figure 3.13,
develop a complete list of potential issues.
Major areas Potential issues
Quality of long and short range objectives
Strategic Degree of buy in from employees
planning Degree of buy in from directors and senior management
Can the organization act on the objectives?
Breadth of the product line
Ability to gather and use information about the market
Brand loyalty
Customer service, before and after sale
Marketing
Product image
Market share
Channels of distribution
Effectiveness of promotions
17

18. Closing Remarks
Where to from here?
• At this point in the strategic planning process the
organization has defined its industry and has
defined itself in the industry.
• The next step is to organize these issues in to
opportunities and challenges (threats) in the
industry and strengths and weaknesses in the
organization, and then match them all together in
one process that will point the way to the best
possible decision.
18