Develop Mission & Vision Perform Situational Analysis Set Objectives & Craft Strategies Implement Strategy Assess Value Creation & Provide Feedback Feedback Strategic Management Framework

Environmental Variables Internal Environment Industry Environment Macro- Environment Wheelen p. 11 Technological Demographic Political Economic Social Global

External Forces Economic Variables –Cost of Money –Consumer debt levels –Consumer Price Index –Currency value/rates –Gov’t deficit –GDP –GNP –Housing starts –Capital Spending Demographic Variables –Age distributions –Gender –Family size –Income levels –Occupation trends –Education –Religion –Race

External Forces Social Variables –Attitude toward: Savings Material Goods Business Represented Minorities Work & Careers Leisure time –Importance of: Environmental Issues Family & Religion Political/Legal Variables –Gov’t Regs/De-Regs –Consumer Laws –Local/National Elections –Judicial System –Levels of Gov’t spending –Gov’t Fiscal Policy –Voter Participation

External Forces Technological Variables –Biotechnology/Pharmaceuticals –Consumer Electronics –Robotics and AI –Handling Industrial Waste –Food Additives –Satellite Tech. & Imaging –Total Fed Spending on R&D –Fed protected tech. released to commercial world –Changes in Info tech.

Cluster Interactions in the Macro Environment Economic Cluster Technological Cluster Demographic/ Socio-cultural Cluster Political/ Legal Cluster

The Nature of Industry Change Incremental vs. Radical We naturally assume incremental How do we identify radical?

Scenario Planning Identifies key factors that influence decision making Derives driving forces that influence these factors Evaluates importance and uncertainty Composes plots for alternate futures Identifies indicators and trigger events

Game Theory Never assume that your opponents’ behavior is fixed. Predict their reaction to your behavior. When the rules of the game are flexible manipulate them to your advantage. Who are the players? Anyone who effects your earnings

Environmental Variables Internal Environment Industry Environment Macro- Environment Wheelen p. 11 Growth rate Competitors Suppliers Customers Community Shareholdrs

Industry Matrix Key Success Company Weighted Factors Weight Rating Score Total Table 3-3 Wheelen p. 69 and Table 3-4 p factorsSum is 1.0 (most Important to Least important) 1.0 Complete for company A & B (Outstanding 5 To Poor 1) Complete for company A & B (column 2 X Column 3, ranging 1 to 5 )

Six Forces Driving Industry Competitiveness Rivalry Among Firms Substitute Products Bargaining Power of Customers Entry of New Competitors Bargaining Power of Suppliers Bargaining Power of Stakeholders

SEES Model “SEES” External Audit Process Scanning Searching for current And emerging trends Sharing Disseminating Information Encouraging employee participation Estimating Forecasting future trends Evaluating Attaching significance Identifying opportunities & threats

Become an Extension of Your Customer’s Organization Company OrganizationsCustomer Organizations Marketing Design & Development Product Development Quality Engineering Quality & Procurement Sales Sales & Purchasing

Determining Market Size Top Down Data Third party Data Your Industry End Product Market Research Groups Industry Participants-i.e. suppliers Market Research Firms Government data Industry forecasts Bottom Up Data Internal Data Marketing Sales Specific customers Specific programs Units & $ forecast Pricing assumptions JUDGE TO ALIGN

Develop Mission & Vision Perform Situational Analysis Set Objectives & Craft Strategies Implement Strategy Assess Value Creation & Provide Feedback Feedback Strategic Management Framework Internal Audit

Where the Money Goes Co –op advertising and discounts to retailers.85 Pressing album and printing booklet.75 Profit to Label.59 Retail Markup 6.22 Company overhead, distribution & shipping 3.34 Marketing and Promotion 2.15 Royalties to artist and songwriter 1.99 Signing act and producing the record