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Strategic Industry Analysis: Factors Driving Business Success

Understand the environmental and industry forces affecting businesses, from societal and technological trends to industry evolution and competitive intelligence. Learn about strategic analysis tools like Porter's Approach and forecasting techniques.

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Strategic Industry Analysis: Factors Driving Business Success

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  1. CHAPTER 4 Environmental Scanning and Industry Analysis

  2. Environmental Scanning • Societal environment -- • Political-legal forces • Economic forces • Sociocultural forces • Technological forces

  3. Societal Environment • Political-legal Forces -- • Allocate power; provide laws and regulations • Economic Forces -- • Regulate exchange of materials, money, energy and information

  4. Societal Environment • Sociocultural Forces -- • Regulate values, mores, and customs of society • Technological Forces -- • Generate problem-solving inventions

  5. Task Environment • Task environment -- • Elements or groups that directly affect a corporation and are affected by it

  6. Task Environment • Industry Analysis -- • In-depth examination of key factors within a corporation’s task environment

  7. Variables in Societal Environment

  8. 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

  9. Scanning the Task Environment

  10. External Strategic Factors • Strategic myopia -- • Willingness to reject unfamiliar as well as negative information

  11. Issues Priority Matrix

  12. Analyzing the Task Environment

  13. 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

  14. 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

  15. 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

  16. Industry Evolution • Fragmented Industry – • No dominant industry

  17. Industry Evolution • Consolidated Industry – • Dominated by a few large firms

  18. Strategic Groups

  19. Strategic Types General Types – • Defenders • Prospectors • Analyzers • Reactors

  20. Competitive Intelligence Called business intelligence Gathering information on a company’s competitors

  21. Forecasting • Forecasting Techniques -- • Extrapolation • Brainstorming • Expert opinion • Delphi technique • Statistical modeling • Scenario writing

  22. Synthesis of External Factors -- EFAS

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