Scanning the Environment

1. Scanning the Environment

2. Why Scan the Environment? • A business derives its existence from the environment. • Scanning is necessary to develop strategy. • The environment is ever-changing -- adapt or die.

3. What Scanning Can Accomplish • Allows us to identify opportunities and threats • Can capitalize on early opportunities • Can develop plans for handling threats • Indicates changing needs and wants of customers • Provides information for formulating strategy

4. Types of Environment • Technological • recognize the limits of the company’s core technology • know which new technologies are emerging • decide when to incorporate new technology into products • Political • political parties • trend toward world government or world law system • limited wars; political terrorism • political turmoil • rise of emerging nations

5. Types of Environment (continued) • Economic • information from government (e.g., SIC manual) or private sources • key economic indicators: employment, consumer price index, housing starts, auto sales, unemployment claims, GDP, industrial production, personal income, savings rate, capacity utilization, productivity, money supply, retail sales, inventories, and durable goods orders

6. Types of Environment (continued) • Social • focus on core consumer values: • orientation toward time savings • desire for “value” • health conscious • interest in the environment • interest in the home • frugality regarding finances • diversity of lifestyles • Regulatory • legal assistance is required

7. Environmental Scanning Procedure • Monitor broad trends in the environment • Identify relevant trends • Determine if trend is threat or opportunity for a product/market • Forecast future outlook for trend • Determine how fast the trend must be acted upon • Determine if a change is eminent as a result of the trend

8. Environmental Scanning at Maytag ExternalStrategic Factors Rating Weighted Score Weight Comments Opportunities • Economic integration of European Community • Demographics favor quality appliances • Economic development of Asia • Opening of Eastern Europe • Trend to “Super Stores” Threats • Increasing government regulations • Strong U.S. competition • Whirlpool and Electrolux strong globally • New product advances • Japanese appliance companies Total Scores 1 .20 .10 .05 .05 .10 .10 .10 .15 .05 .10 2 4 5 1 2 2 4 4 3 1 2 3 .80 .50 .05 .10 .20 .40 .40 .45 .05 .20 4 Acquisition of Hoover Maytag quality Low Maytag presence Will take time Maytag weak in this channel Well positioned Well positioned Hoover weak globally Questionable Only Asian presence is Australia 5 1.00 3.15

9. 17 Trends Driving Business • Cocooning: Consumers are shielding themselves from the harsh, unpredictable realities of the outside world and retreating into safe, cozy “homelike” environments. • Clanning: Consumers seek the comfort and reinforcement of those who share their values and beliefs--or even their interests. • Fantasy Adventure: As an escape from stress and boredom, consumers crave excitement and stimulation in essentially risk-free environments. • Pleasure Revenge: Tired of being told what’s good for them, rebellious consumers are indifferent to rules and regulations. They’re cutting loose and publicly savoring forbidden fruits.

10. 17 Trends Driving Business (continued) • Small Indulgences: Busy, stressed-out consumers, seeking quick-hit gratification, are rewarding themselves with affordable luxuries. • Anchoring: Reaching back to their spiritual roots, consumers look for what was comforting, valuable, and spiritually grounded in the past, in order to be secure in the future. • Egonomics: Feeling unconnected in the depersonalized Information Age, consumers are drawn to customized, individualized products and services. • Female Think: The way women think and behave is impacting business, causing a marketing shift away from a hierarchical model toward a relational one.

11. 17 Trends Driving Business (continued) • Manciaption: Rejecting their traditional roles, men are embracing newfound freedom to be whatever they want to be. • 99 Lives: Consumers are forced to assume multiple roles to cope with the time pressures produced by ever busier lives. • Cashing Out: Stressed and spent out, consumers are searching for fulfillment in a simpler way of living. • Being Alive: Recognizing the importance of wellness, consumers embrace not only the concept of a longer life but a better overall quality of life. • Down-Aging: Nostalgic for the carefree days of childhood, consumers seek symbols of youth to counterbalance the intensity of their adult lives.

12. 17 Trends Driving Business (continued) • Icon Toppling: Skeptical consumers are ready to bring down the long-accepted monuments of business, government, celebrity, and society. • Skeptical Consumer: Frustrated, often angry consumers are manipulating the marketplace through pressure, protest, and politics. They cannot be taken for granted. • Save Our Society (S.O.S.): Concerned with the fate of the planet, consumers respond to marketers who exhibit a social conscience attuned to ethics, environment, and education. • AtmosFear: Polluted air, contaminated water, and tainted food stir up a storm of consumer doubt and uncertainty. How safe is anything? Source: Faith Popcorn and Lys Marigold (1997), Clicking. NY, NY: Harper Collins Publishing, p. 7-9.