STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN J. DAVID HUNGERCHAPTER 4 Environmental Scanning and Industry Analysis

Environmental ScanningSocietal environment --

Economic forcesTechnological forcesPolitical-legal forcesSociocultural forces

Societal EnvironmentEconomic Forces --

Regulate exchange of materials, money, energy and information

Societal EnvironmentTechnological Forces --

Generate problem-solving inventions

Societal EnvironmentPolitical-legal Forces --

Allocate power; provide laws and regulations

Societal EnvironmentSociocultural Forces --

Regulate values, mores, and customs of society

Task EnvironmentTask environment --

Elements or groups that directly affect a corporation and are affected by it

Task EnvironmentIndustry Analysis --

In-depth examination of key factors within a corporations task environment

Variables in Societal Environment

Demographic Trends

Transformational Sociocultural Trends8 Current Trends

Increasing environmental awarenessGrowing health consciousnessExpanding seniors marketImpact of the Generation Y boomletDeclining mass marketChanging pace and location of lifeChanging household compositionIncreasing diversity of workforce & market

International Societal Environments

Scanning the Task Environment

Ethical Behaviorbusiness ethics

Argument that there is no such thing it is an oxymoron

Ethical Decision MakingCorporate practices --

Massive write-downs and restatements of profitMisclassification of expenses as capital expendituresPirating corporate assets for personal gain

External Strategic FactorsStrategic myopia --

Willingness to reject unfamiliar as well as negative information

Issues Priority Matrix

Analyzing the Task Environment

Porters Approach to Industry AnalysisThreat of New Entrants

Economies of scaleProduct differentiationCapital requirementsSwitching costsAccess to distribution channelsCost disadvantagesGovernment policy

Porters Approach to Industry AnalysisRivalry Among Existing Firms

Number of competitorsRate of industry growthProduct or service characteristicsAmount of fixed costsCapacityHeight of exit barriersDiversity of rivals

Porters Approach to Industry AnalysisThreat of Substitute Products or Services

Bargaining Power of Buyers

Bargaining Power of Suppliers

Relative Power of Other Stakeholders

Industry EvolutionFragmented Industry

No dominant industry

Industry EvolutionConsolidated Industry

Dominated by a few large firms

International Risk AssessmentContinuum of International Industries

Strategic Groups

Strategic TypesDefendersProspectorsAnalyzersReactors

General Types

Competitive IntelligenceCalled business intelligence

Gathering information on a companys competitors

ForecastingForecasting Techniques --

ExtrapolationBrainstormingExpert opinionDelphi techniqueStatistical modelingScenario writing

Synthesis of External Factors -- EFAS

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