1. EXTERNAL STRATEGIC MANAGEMENT AUDIT WWW.EPOWERPOINT.COM www.ePowerPoint.com1

2. -- ENVIRONMENTAL SCANNING -- INDUSTRY ANALYSIS Ch 3 -2 External Strategic Management Audit www.ePowerPoint.com

3. IDENTIFY & EVALUATE FACTORS BEYOND THE CONTROL OF A SINGLE FIRM INCREASED FOREIGN COMPETITION POPULATION SHIFTS AGING SOCIETY FEAR OF TRAVELING STOCK MARKET VOLATILITY Ch 3 -3 External Strategic Management Audit www.ePowerPoint.com

4. PURPOSE OF EXTERNAL AUDIT IDENTIFY OPPORTUNITIES THREATS Ch 3 -4 External Strategic Management Audit www.ePowerPoint.com

5. Ch 3 -5 Key External Forces Economic forces Social, cultural, demographic & environmental forces Political, governmental & legal forces Technological forces Competitive forces www.ePowerPoint.com

6. Ch 3 -6 Competitors Suppliers Distributors Creditors Customers Employees Communities Managers Stockholders Labor Unions Special Interest Groups Products Services Markets Natural Environment Key External Forces Opportunities & Threats Key External Forces & the Organization www.ePowerPoint.com

7. GATHER COMPETITIVE INTELLIGENCE – SOCIAL CULTURAL DEMOGRAPHIC ENVIRONMENTAL GOVERNMENTAL LEGAL TECHNOLOGICAL Ch 3 -7 External Audit www.ePowerPoint.com

8. Ch 3 -8 External Audit – Sources of Information Internet Libraries Suppliers Distributors Salespersons Customers Competition www.ePowerPoint.com

9. -- KEY FACTORS VARY OVER TIME VARY BY INDUSTRY Ch 3 -9 Performing External Audit www.ePowerPoint.com

10. Ch 3 -10 Performing External Audit -- Variables Market share Breadth of competing products World economies Foreign affiliates Proprietary account advantages www.ePowerPoint.com

11. Ch 3 -11 Performing External Audit -- Variables Price competitiveness Technological advancements Interest rates Pollution abatement www.ePowerPoint.com

12. Ch 3 -12 Performing External Audit External Factors Measurable Long-term orientation Applicable to competing firms Hierarchical www.ePowerPoint.com

13. Ch 3 -13 Industrial Organization (I/O) View -- Industry factors more important than internal factors Performance determined by industry forces www.ePowerPoint.com

14. Ch 3 -14 Economies of Scale Industry Properties Barriers to market entry Product differentiation Level of competitiveness I/O Perspective Firm Performance www.ePowerPoint.com

15. RESEARCH FINDINGS “APPROXIMATELY 20% OF A FIRM’S PROFITABILITY CAN BE EXPLAINED BY THE INDUSTRY, WHEREAS 36% OF THE VARIANCE IN PROFITABILITY IS ATTRIBUTED TO THE FIRM’S INTERNAL FACTORS” Ch 3 -15 www.ePowerPoint.com