THOMAS L. WHEELEN J. DAVID HUNGER

1. CHAPTER 4 Environmental Scanning and Industry Analysis 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

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

16. Overall customer care market shares for 2009 The customer care market generated USD2.118 billion in revenue in 2009, 3.1% higher than the USD2.055 billion in 2008. The revenue for 2008 is higher than was reported last year (USD1.186 billion) because it was restated. The difference came primarily from a restatement of the size of the customer care market in China, of which we gained substantial visibility this year. Customer care is more consolidated than many other BSS and OSS markets, and two vendors, Oracle and Amdocs, clearly dominate. However, 50 suppliers command revenue of several million dollars in this market. Two vendors, Huawei and AsiaInfo, dominate the Chinese market and there are many other smaller, geographically focused suppliers. The customer care market is driven by greater competition in the emerging markets, the increasingly complex services and service bundles being offered by CSPs, the strong desire of consumers for instant service, the increasing need of CSPs to offer many new services quickly and the need to reduce customer support costs. Executive summary Figure 1: Customer care market shares by revenue, worldwide, 2009 [Source: Analysys Mason, 2010]

17. Executive summary Overall service fulfilment market shares for 2009 • The service fulfilment market generated USD2.233 billion in revenue in 2009, up by 2.8% from USD2.173 billion in 2008. This represents slightly more growth than we forecasted last year (2.3%). • Service fulfilment continues to be a very fragmented market. The top-six vendors accounted for only 44% of the market, while more than 30 other vendors achieved over USD10 million in revenue. • The service fulfilment market grew more than some other areas of BSS/OSS since it is considered to be related to revenue generation. • Growth in the service fulfilment market was driven by network evolution towards optical/packet technology, the push towards instant availability for complex service bundles, the need to operate in uncertain and changing business environments, deregulation of broadband and mobile in growth markets and the increasing desire to meet the needs of SMEs. Figure 1: Service fulfilment market shares by revenue, worldwide, 2009 [Source: Analysys Mason, 2010]

18. International Risk Assessment Continuum of International Industries

19. Strategic Groups

20. Competitive 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 Proprietary - Mortensen Consulting Group and DAX Technologies

21. Strategic Types General Types of Strategies – • Defenders – hold on; cost & market share • Prospectors – create; innovation • Analyzers – portfolio; large companies • Reactors – watch what happens, try to react quickly and effectively

22. Competitive Intelligence • Competitive Intelligence is often 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.

23. Forecasting • Forecasting Techniques -- • Extrapolation – from the past to the future • Brainstorming – informed people mapping out possibilities • Expert opinion – buy reports or commission a study • Delphi technique – structured polling technique; ‘The Wisdom of Crowds” • Statistical modeling – projecting past patterns into the future • Scenario planning – a formal technique for mapping out futures, of various probabilities

24. Synthesis of External Factors -- EFAS