STRATEGIC MANAGEMENT & BUSINESS POLICY 12 TH EDITION

1. STRATEGIC MANAGEMENT & BUSINESS POLICY 12TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER

3. Environmental scanning- the monitoring, evaluation and dissemination of information from the external and internal environments to key people within the corporation.

4. Identifying External Environmental Variables

5. Identifying External Environmental Variables Natural environment • Physical resources • Wildlife • Climate

6. Trends in Natural environment: • Diminishing oil resource • Increasing environmental awareness-global warming

7. Increasing environmental awareness – • Global Warming Issue • Recycling glass, metal, paper and plastic. • Conservation of forest, water and energy-> using the other side of used paper; promote the use of energy-saving lamps, #5 energy-saving appliances-. • Eliminate disposable styrofoam trays->washing • and reusing plastic trays. • Eliminate plastic bags->using cloth bags. REDUCE----REUSE----RECYCLE

8. Identifying External Environmental Variables Societal environment-social systems that influence long-term decisions. • Sociocultural forces • Technological forces • Economic forces • Political-legal forces

9. Trends in Sociocultural Forces: Regulate values, mores, and customs of society • Demographics • Growing health consciousness • Expanding seniors market • Declining mass market • Changing pace and location of life • Changing household composition • Increasing diversity of workforce and markets

10. Demographics Trends – • World’s population growth • 3.71 billion in 1970 to 6.82 billion in 2010. • Most of growth will be in developing nations. • Population in developed nations will fall from 14% in 2000 to only 10% in 2050. • Developing nations will continue to have more young than old people. • Developed nations will have more old people.

11. Growing Health Consciousness – • Physical fitness • Aerobic dance • Thais with no belly • Fitness centers • Healthier living • Vegetarian food • Eat more vegetable and less meat • Eat less fast-food and sugar-laden food • Non GMO food • Herb gains popularity

12. Expanding seniors market – • Increasing seniors care centers • Increasing seniors condominiums • Adult products, ie napkin, milk • Pet care industry growth

13. Declining mass market – • Moving from mass market to • Targeted market • Niche market • individual market  Dell, Gateway and Pantip

14. Changing pace and location of life – • E-mail, internet and cell phones enhance • efficiency • Work from home • Move from urban areas to small towns

15. Changing household composition – • Less married-couple household • More single person household • More single woman with children • household • More married-couple with no children • household

16. Trends in Technological Forces: Generate problem-solving inventions • Portable information devices and electronic networking • Alternative energy sources • Precision farming • Virtual personal assistants • Genetically altered organisms • Smart, mobile robots

17. Trends in Economic Forces: Regulate exchange of materials, money, energy and information • Interest rates • Exchange Rate • Inflation • Financial Crisis • Home sales • Oil prices • Emerging markets • BRIC countries • Eastern Europe

18. Trends in Political-Legal Forces: Allocate power; provide laws and regulations • Enforcement of U.S. antitrust laws • Taxation and labor laws • Lower business tax • Reduce real estate sales tax form 3.0% to .01% • Reduce real estate registration fees to 0.1% • Lower Petroleum Excise Tax • Government bureaucracy • No calls while driving • FTA/AFTA • World Trade Organization

21. Industry- a group of firms that produces a similar product or service Porter’s 5 forces: • Threat of new entrants • Rivalry among existing firms • Threat of substitute products • Bargaining power of buyers • Bargaining power of suppliers • Relative power of other stakeholders (added)

23. Threat of new entrants-new entrants to an industry bring new capacity, a desire to gain market share and substantial resources

24. Rivalry Among Existing Firms-A competitive move by one firm can be expected to have a noticeable effect on its competitors and thus may cause retaliation. Intense rivalry is related to the following factors: • Small number of competitors and equal in size. • Slow rate of industry growth. • Similar product or service characteristics. • High amount of fixed costs. • Large capacity. • High of exit barriers.

25. Threat of Substitute Products or Services-products that appear different but can satisfy the same need or can perform the same function as another product.

26. Bargaining Power of Buyers- ability of buyers to force prices down, bargain for higher quality, play competitors against each other.

27. Bargaining Power of Suppliers- ability of suppliers to raise prices or reduce quality.

28. Relative Power of Other Stakeholders Some of these groups are: • Government • Local communities • Creditors • Trade associations • Special interest groups • Unions • Shareholders • Complementors- products that work well with a firm’s product

29. H M L OVERALL RATING H M L Expected Outcome H M L H M L H M L H M L H M L

30. COMPETITIVE ANALYSIS: 5 FORCES Competitive Rivalry: (high) • Competitive positioning • Market saturation • Low switching cost Bargaining Power of Suppliers: (low) Bargaining Power of Buyers: (high) • Backward Integration • Big purchasing volume • Low switching cost in term of technology and machine. • Price sensitivity of customers • Low switching cost in consumer products Threat of Substitutes: (high) Threat of New Entrants: (low) • A lot of substitute product for agricultural and food products. • Economies of Scale • Product differentiation

31. Common mistakes in industry analysis – • Threat of New Entrants – • Petroleum refinery industry(L)  (O) • Small restaurant (H)  (T)

32. Industry Evolution Over time, most industries evolve through a series of stages from growth through maturity to eventual decline. • Fragmented industry-new 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-mature industry, domination by a few large firms, each struggles to differentiate products from its competition.

34. Strategic group-a set of business units or firms that pursue similar strategies with similar resources.

36. Strategic Types • Defenders- limited product line, focus on improving the efficiency, cost orientation, no innovation. • Prospectors- fairly broad product lines, focus on product innovation and market opportunities. • Analyzers- with at least two product-market areas, emphasize on efficiency and innovation. • Reactors- lack a consistent strategy-structure-culture relationship.

37. Key success factors- variables that can significantly affect the overall competitive positions of companies within an industry. Industry matrix- summarizes the key success factors within a particular industry.

39. Must assign running numbers Total weight must add up to 1 To SFAS table The most important external factors are identified in the EFAS table as shown here by shading these factors.

40. Common mistakes in writing EFAS Must assign running numbers Must analyze O&T from external factors

41. Common mistakes in writing EFAS Must analyze O&T from external factors

42. Discussion Question • Generate EFAS and IFAS tables • Divide participants into 6 groups • Please analyze opportunities and threats of ABAC’s MBA program. Summarize these external factors by using the External Factor Analysis Summary (EFAS) table. • Please analyze strengths and weaknesses of ABAC’s MBA program. Summarize these internal factors by using the Internal Factor Analysis Summary (IFAS) table. • Send a representative to present your group’s answer.