STRATEGIC MANAGEMENT & BUSINESS POLICY 11 TH EDITION

1. CHAPTER 4 Environmental Scanning and Industry Analysis STRATEGIC MANAGEMENT & BUSINESS POLICY11TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER

2. Environmental Scanning • Societal environment -- • Economic forces - Regulate exchange of materials, money, energy and information • Technological forces - Generate problem-solving inventions • Political-legal forces - Allocate power; provide laws and regulations • Sociocultural forces - Elements or groups that directly affect a corporation and are affected by it

3. Variables in Societal Environment

4. Task Environment • Task environment -- • Elements or groups that directly affect a corporation and are affected by it • Industry Analysis -- • In-depth examination of key factors within a corporation’s task environment

5. Demographic Trends

6. Transformational Sociocultural Trends • 8 Current Trends – • Increasing environmental awareness • Growing health consciousness • Expanding seniors market • Impact of the Generation Y boomlet • Declining mass market • Changing pace and location of life • Changing household composition • Increasing diversity of workforce & market

7. International Societal Environments

8. Scanning the Task Environment

9. External Strategic Factors WARNING! • Strategic myopia -- • Willingness to reject unfamiliar as well as negative information Concept of “Receptors” for information in an organization.

10. Issues Priority Matrix A “Portfolio” of Issues

11. Analyzing the Task Environment

12. Porter’s Approach to Industry Analysis • Threat of New Entrants – • Economies of scale • Product differentiation • Capital requirements • Switching costs • Access to distribution channels • Cost disadvantages • Government policy

13. Porter’s Approach to Industry Analysis • Rivalry Among Existing Firms – • Number of competitors • Rate of industry growth • Product or service characteristics • Amount of fixed costs • Capacity • Height of exit barriers • Diversity of rivals

14. Porter’s Approach to Industry Analysis • Threat of Substitute Products or Services • Bargaining Power of Buyers • Bargaining Power of Suppliers • Relative Power of Other Stakeholders

15. Industry Evolution • Fragmented Industry – • No dominant industry • Consolidated Industry – • Dominated by a few large firms (3 +/-)

16. International Risk Assessment Continuum of International Industries

17. Strategic Groups

18. Competitive Product Matrix Ericsson Network IQ™ IBM Tivoli Netcool Customer Experience Management SW Large (>$100M) OSI (SRIT) Service Assurance Nokia Mobile Quality Analyzer Agilent + Teradata Customer Experience Management System Medium ($10M-$100M) TTI Netrac™ Company Size Arantech touchpoint™ Nexus Netview Small (<$10M) Service Customer Network Service Quality Monitoring Viewpoint

19. Strategic Types • Defenders • Prospectors • Analyzers • Reactors General Company Approaches to Strategy

20. Competitive Intelligence • Called business intelligence • Gathering information on a company’s competitors • Product/offering – features, functionality, pricing, targets, etc. • Company – size, profitability, margins, target markets, apparent strategy, etc.

21. Forecasting • Forecasting Techniques -- • Extrapolation – “If things keep going the way they are going now…” • Brainstorming – Free-flowing ideas followed by triage • Expert opinion – Hire a consultant! • Delphi technique – Ask a lot of people. • Statistical modeling – Trending, curve-fitting, etc. • Scenario writing – Map out 3-5 scenarios

22. Synthesis of External Factors -- EFAS