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Strategic Management Concept_ External Assessment
- 1. Ch 3 -1 Copyright 2007 Prentice Hall Chapter 3 The External Assessment Strategic Management: Concepts & Cases 11th Edition Fred David
- 2. Ch 3 -2 Copyright 2007 Prentice Hall Identify & Evaluate factors beyond the control of a single firm – Increased foreign competition – Population shifts – Information technology External Strategic Management Audit
- 3. Ch 3 -3 Copyright 2007 Prentice Hall Competitors Suppliers Distributors Creditors Customers Employees Communities Managers Stockholders Labor Unions Special Interest Groups Products Services Key External Forces Opportunities & Threats Key External Forces & the Organization
- 4. Ch 3 -4 Copyright 2007 Prentice Hall Performing External Audit External Factors Measurable Long-term orientation Applicable to competing firms Hierarchical
- 5. Ch 3 -5 Copyright 2007 Prentice Hall Economies of Scale Industry Properties Barriers to market entry Product differentiation Level of competitiveness I/O Perspective Firm Performance
- 6. Ch 3 -6 Copyright 2007 Prentice Hall Social, Cultural, Demographic & Environmental Forces U.S. Facts •Aging population •Less Caucasian •Widening gap between rich & poor •2025 = 18.5% population >65 years •2075 = no ethnic or racial majority
- 7. Ch 3 -7 Copyright 2007 Prentice Hall Key Social, Cultural, Demographic & Environmental Variables Number of marriages & divorces Number of special interest groups Number of births & deaths Immigration & emigration rates Childbearing rates
- 8. Ch 3 -8 Copyright 2007 Prentice Hall Political, Government & Legal Forces • Worldwide trend toward similar consumption patterns • Global buyers and sellers • E-commerce • Technology for instant currency transfers Globalization of Industry
- 9. Ch 3 -9 Copyright 2007 Prentice Hall Competitive Forces •Strengths •Weaknesses •Capabilities •Opportunities •Threats •Objectives •Strategies Identifying Rival Firms
- 10. Ch 3 -10 Copyright 2007 Prentice Hall Competitive Forces 1. Market share matters 2. Understand what business you are in 3. Broke or not, fix it 4. Innovate or evaporate 7 Characteristics of most Competitive U.S. Firms:
- 11. Ch 3 -11 Copyright 2007 Prentice Hall Competitive Forces 5. Acquisition is essential to growth 6. People make a difference 7. No substitute for quality 7 Characteristics of most Competitive U.S. Firms:
- 12. Ch 3 -12 Copyright 2007 Prentice Hall The Five-Forces Model of Competition Potential development of substitute products Rivalry among competing firms Bargaining power of suppliers Potential entry of new competitors Bargaining power of consumers
- 13. Ch 3 -13 Copyright 2007 Prentice Hall The Global Challenge Faced by U.S. Firms -- •Gain & maintain exports to other nations •Defend domestic markets against imported goods
- 14. Ch 3 -14 Copyright 2007 Prentice Hall Industry Analysis: The External Factor Evaluation (EFE) Matrix Competitive Political Cultural Technological Environmental Social Governmental Demographic Economic Summarize & Evaluate
- 15. Ch 3 -15 Copyright 2007 Prentice Hall
- 16. Ch 3 -16 Copyright 2007 Prentice Hall
- 17. Ch 3 -17 Copyright 2007 Prentice Hall Total weighted score of 4.0 • Organization response is outstanding to threats and weaknesses Industry Analysis EFE Total weighted score of 1.0 • Firm’s strategies not capitalizing on opportunities or avoiding threats
- 18. Ch 3 -18 Copyright 2007 Prentice Hall Industry Analysis: Competitive Profile Matrix (CPM) Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic positions
- 19. Ch 3 -19 Copyright 2007 Prentice Hall Gateway Apple Dell CSF’s Wt Rating Wt’d Score Ratin g Wt’d Score Rating Wt’d Score Market share 0.15 3 0.45 2 0.30 4 0.60 Inventory sys 0.08 2 0.16 2 0.16 4 0.32 Fin. position 0.10 2 0.20 3 0.30 3 0.30 Prod. Quality 0.08 3 0.24 4 0.32 3 0.24 Cons. Loyalty 0.02 3 0.06 3 0.06 4 0.08 Sales Distr 0.10 3 0.30 2 0.20 3 0.30 Global Exp. 0.15 3 0.45 2 0.30 4 0.60 Org. Structure 0.05 3 0.15 3 0.15 3 0.15
- 20. Ch 3 -20 Copyright 2007 Prentice Hall Gateway Apple Dell CSF’s (cont’d) Wt Rating Wt’d Score Ratin g Wt’d Score Rating Wt’d Score Prod. Capacity 0.04 3 0.12 3 0.12 3 0.12 E-commerce 0.10 3 0.30 3 0.30 3 0.30 Customer Serv 0.10 3 0.30 2 0.20 4 0.40 Price competitive 0.02 4 0.08 1 0.02 3 0.06 Mgt. experience 0.01 2 0.02 4 0.04 2 0.02 Total 1.00 2.83 2.47 3.49