Professional Documents
Culture Documents
Natural Environment
includes physical resources, wildlife and
climate that are an inherent part of
existence on Earth
form an ecological system of interrelated life
Identifying External Environmental Variables
Societal Environment
mankind’s social system that includes
general forces that do not directly touch on
the short-run activities of the organization,
but that can influence its long-term
decisions
FORCES: economic, technological, political-
legal and sociocultural
Identifying External Environmental Variables
Societal Environment
Economic forces that regulate the exchange of
materials, money, energy, and information.
Technological forces that generate problem-
solving inventories.
Political-legal that allocate power and provide
constraining and protecting laws and regulations
Sociocultural that regulate the values, mores, and
customs of society
Identifying External Environmental Variables
Task Environment
those elements or groups that directly affect
a corporation and, in turn, are affected by it
government, local communities, suppliers,
competitors, customers, creditors, unions,
special interest groups/trade associations
Identifying External Environmental Variables
Industry Analysis
an in-depth examination of key factors
within a corporation’s task environment
1.2 Scanning the Environment
Scanning the Environment
Sociocultural
Increasing environmental awareness
Growing health consciousness
Expanding seniors market
Impact of Millennials
Declining mass market
Changing pace and location of life
Changing household composition
Increasing diversity of workforce and markets
STEEP ANALYSIS
Technological
Portable information devices and electronic
networking
Alternative energy sources
Precision farming
Virtual personal assistants
Genetically altered organisms
Smart, mobile robots
STEEP ANALYSIS
Economic
Increase in interest rates
Changes in price
STEEP ANALYSIS
Ecological
The effects of climate change on companies
can be grouped into six categories of risks:
regulatory, supply chain, product and
technology, litigation, reputational and
physical.
STEEP ANALYSIS
Political-legal
Trends in this part of the societal environment
have a significant impact not only on the level
of competition within an industry but also on
which strategies might be successful.
STEEP ANALYSIS
Scanning the Environment
- Number of competitors
- Rate of industry growth
- Product or service characteristics
- Amount of fixed costs
- Capacity
- Height of exit barriers
- Diversity of rivals
Porter’s Approach to Industry Analysis
- Large purchases
- backward integration
- alternative suppliers
- low cost to change suppliers
- product represents a high percentage
of buyer’s cost
- buyer earns low profits, product is unimportant
to buyer
Porter’s Approach to Industry Analysis
Fragmented Industry
no firm has a large market share and each
firm only serves a small piece of the total
market in competition with other firms
Consolidated industry
domination by a few large firms, each
struggles to differentiate products from its
competition
Categorizing International
2.3
Industries
Categorizing International Industries
Multi-domestic industries
specific to each country or group of countries
Global industries
operate worldwide with multinational companies
making only small adjustments for country-specific
circumstances
Regional industries
multinational companies primarily coordinate their
activities within regions
Categorizing International Industries
Industry matrix
summarizes the key success factors within a
particular industry
3 COMPETITIVE INTELLIGENCE
a formal program of gathering information on a
company’s competitors, and often called Business
Intelligence
Competitive Intelligence
Extrapolation
The extension of present trends into the future
Brainstorming
A non-quantitative approach that requires simply the
presence of people with some knowledge of the
situation to be predicted
Expert Opinion
A non-quantitative technique in which experts in a
particular area attempt to forecast likely
developments
Useful Forecadting Techniques
Delphi technique
separated experts independently assess the
likelihoods of specified events
Statistical Modeling
A quantitative technique that attempts to discover
causal or at least explanatory factors that link two or
more time series together
Prediction Markets
Small-scale electronic markets, frequently open to any
employee, that tie payoffs to measurable future events,
such as sales data for a computer workstation, the number
of bugs in an application, or a product usage patterns
Useful Forecasting Techniques
Scenario Writing
- The most widely used forecasting technique
- Scenarios are focused description of different likely
futures presented in a narative form, or merely a
written descrition of some future state, in terms of
key variables and issues