1. Java Logs
You are interested in opening a Java Logs outlet here. What information would you want to collect first?
How would you do to get that information?

2. Ch 3: Environment Scanning and Industry Analysis
Societal Environment
Industry Environment
External Environment 1

3. Macro (Societal) -environment
Socio-cultural forces
Demographic changes
Social values
Lifestyles
Economic forces
Unemployment
Interest rates
Imports and exports
Corporation
Technological Forces
- New products and processes
- Innovation
- Scientific discovery; R&D
Political-Legal forces
- Political relationships
- Taxation / Regulation
- Political change

4. Variables in Societal Environment
Economic
GDP trends
Interest rates
Money supply
Inflation rates
Unemployment
Technological
Ave. R&D spending
Patent laws
New products
New tech devel.
Productivity chgs.
Political-Legal
Envir. protection
Tax laws
Foreign trade regs.
HR Laws
Gov’t stability
Socio-cultural
Lifestyle changes
Consumer activism
Family formation
Population growth
Age distrib. changes

5. Online News Sources http://online.wsj.com/public/us

6. The Role of Forecasting
Environmental Scanning
Trends
Forecast Future Trends
Strategic Planning

7. Popular Forecasting Techniques
Extrapolation
Brain storming
Expert opinion
Regression
Simulation / What Ifs

8. Forces Driving Industry Competition
3.6 Forces Driving Industry Competition (Fig. 3.3)
Forces Driving Industry Competition
Threat
of New
Entrants
Bargaining
Power
of Suppliers
of Buyers
Relative
of Unions,
Governments,
etc.
Potential
Threat of
Substitute
Products
or Services
Industry
Competitors
Rivalry Among
Existing Firms
Other
Stakeholders
Buyers
Substitutes
Suppliers
Source:  Adapted/reprinted with permission of The Free Press, an imprint of Simon & Schuster, from Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter. Copyright © 1980 by The Free Press.

9. Some Barriers to Entry:
Economies of Scale
Capital Requirements
Switching Costs
Access to Distribution Channels

10. Rivalry Among Existing Firms
# of Competitors
Industry Growth
Exit Barriers (emotional, fixed assets)

11. Power of Suppliers High buyer switching costs Unique product
Few sellers

12. Power of Buyers # & Size of sellers Backward integration
Low product differentiation

13. Substitutes How close are the substitutes? Tea? Gasoline? Diamonds
depends on context

14. Industry Analysis Determine Industry Select Force
Prepare presentation / Report
Link Theory to your Research Findings
Headings/subheadings, #’s & %, Tables, Appendices (make clear references)

15. External Factor Analysis Summary (EFAS)
3.16 External Factor Analysis Summary (EFAS): Blank
External Factor Analysis Summary (EFAS)
External Strategic Factors
Rating
Weighted Score
Weight
Comments 1 2 3 4 5
Opportunities
Threats
Total Weighted Score
1.00
Notes: List opportunities and threats (5–10 each) in column Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2 based on that factor’s probable impact on the company’s strategic position. The total weights must sum to Rate each factor from 5 (Outstanding) to 1 (Poor) in Column 3 based on the company’s response to that factor Multiply each factor’s weight times its rating to obtain each factor’s weighted score in Column Use Column 5 (comments) for rationale used for each factor Add the weighted scores to obtain the total weighted score for the company in Column 4. This tells how well the company is responding to the strategic factors in its external environment.
Source: T. L. Wheelen and J. D. Hunger, “External Strategic Factors Analysis Summary (EFAS).” Copyright © 1991 by Wheelen and Hunger Associates. Reprinted by permission.