CHAPTER 4 Environmental Scanning and Industry Analysis

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