Dec 31, 2015
Ch. 3 Strategic Management Assessing Opportunities and Threats
Ch. 3 Assessing Opportunities and ThreatsMarsha SwinkJonathan McLaurinPaul ShirleyExternal AnalysisWhat is External Analysis?
ThreatsOpen Systems-Two PerspectivesEnvironment as a source of InformationAmount of change- dynamic vs. stableAmount of complexity- complex vs. simple
Environment as a source of ResourcesScarce and necessary resourcesHostile= greater uncertaintyExternal Environmental SectorsSpecific Environment-Customers, competitors, suppliers and other competitive factors.
General Environment-Economic, Demographic, Sociocultural, Political-Legal, and Technological.4Specific EnvironmentPorters Five-Forces ModelRivalryEntrantsBuyersSuppliersSubstitutions
5Rivalry Among Existing FirmsCompetitors- Few or Many?
Sales Growth- Slowing or Progressing
Diversity Among Competitors.How similar is your competition to you?6Potential Entrants to the IndustryEconomies of Scale- High or Low?
Capital Requirements- Large or Small?
Government Policies- In Place to Help or Harm?7Bargaining Power of BuyersPurchases Large or Small Volumes?
Products Purchased are Standard or Unique?
Buyers Profits- High or Low?8Bargaining Power of SuppliersAre Suppliers Concentrated or Fragmented?
Importance of the Industry Being SuppliedIs our company important
Product is an Important Input to Industry.9Substitute ProductsAre There any Good Substitutes?10Specific EnvironmentIndustry ProfitabilityWhat does the company have to achieve profitability?What can it develop or create to progress?
11General EnvironmentIncludes:EconomicDemographicSocioculturalPolitical-LegalTechnological Trends positive(opportunity)/negative(threats)Some Changes have no effect on organization
EconomicRising cost of energy and fuelsRetailers- consumers lose appetite of spendingException: Wal-MartCostCos greatest struggleMacroeconomic dataInterest rates, GDP, Unemployment levelsGlobal Business analysis wont change muchBiggest challenge is reliable statisticsDemographicsAgeGenderIncomeEthnicityEducationGeographic LocationEmploymentBirth RatesCross Examine
Understand current and potential customers
Hourglass PhenomenonPeaceBaby BoomersTodayDemographicsU.S.24.7 million small businesses24.6 million people married w/childrenAvg Inc. $48,201 per personCostCoSmall BusinessesUpper/Middle Class Families Avg. Inc. Target Market100,000
Sociocultural Understand CurrentCultureLifestylesKrafts healthier food productsTraditionsTastesAttitudesWhats inApples iPods/Phones/Pads
CostCos Sociocultural ForcesU.SShopping convenient, Deliverer organic optionsAwareness of food allergensCanadaMany ethnic groupsJapanFreshnessPortabilityPolitical-LegalTaxationMinimum wageProduct labeling/safety lawsInternational businessTradingTechnologicalLook ForScientific InnovationTechnological InnovationMost AffectedProduct R&DOrganizational Work Processes Computerization
CostCos Technological FactsTrack purchases of membersKnow which products sell moreRestocking inventoryMemberships connected w/credit cards
Finding Info on External EnvironmentCustomer surveysTrade journalsGeneral newsExternal informational systemsProblemsToo much information
Responsibility for External AnalysisSmall to Mid-size organizationsAll should monitor changes
Large organizations Managers
Everyone is involved
What's the point?Align the organization with the environment
Understand what the environment has to offer
Ever increasing dynamic environment
Makes a difference in performance results
Promotion and raises
ChallengesChanges are too rapid to evaluate
Forecast aren't perfectTake Aways External EnvironmentIndustry profitability
Stay in line with environment
Continually Assess opportunity and threats