1. CHAPTER 4 Environmental Scanning and Industry Analysis
STRATEGIC MANAGEMENT & BUSINESS POLICY 11TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
Prentice Hall, Inc. © 2008
Prentice Hall 2006

2. Societal environment --
Environmental Scanning
Societal environment --
Economic forces - Regulate exchange of materials, money, energy and information
Technological forces - Generate problem-solving inventions
Political-legal forces - Allocate power; provide laws and regulations
Sociocultural forces - Elements or groups that directly affect a corporation and are affected by it
Prentice Hall, Inc. © 2008
Prentice Hall 2006

3. Variables in Societal Environment
Prentice Hall, Inc. © 2008
Prentice Hall 2006

4. Task environment -- Industry Analysis --
Elements or groups that directly affect a corporation and are affected by it
Industry Analysis --
In-depth examination of key factors within a corporation’s task environment
Prentice Hall, Inc. © 2008
Prentice Hall 2006

5. Demographic Trends
Prentice Hall, Inc. © 2008
Prentice Hall 2006

6. 8 Current Trends – Increasing environmental awareness
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
Prentice Hall, Inc. © 2008
Prentice Hall 2006

7. International Societal Environments
Prentice Hall, Inc. © 2008
Prentice Hall 2006

8. Scanning the Task Environment
Prentice Hall, Inc. © 2008
Prentice Hall 2006

9. WARNING! Strategic myopia --
External Strategic Factors
WARNING!
Strategic myopia --
Willingness to reject unfamiliar as well as negative information
Concept of “Receptors” for information in an organization.
Prentice Hall, Inc. © 2008
Prentice Hall 2006

10. A “Portfolio” of Issues
Issues Priority Matrix
A “Portfolio” of Issues
Prentice Hall, Inc. © 2008
Prentice Hall 2006

11. Analyzing the Task Environment
Prentice Hall, Inc. © 2008
Prentice Hall 2006

12. Threat of New Entrants – Economies of scale Product differentiation
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
Prentice Hall, Inc. © 2008
Prentice Hall 2006

13. Rivalry Among Existing Firms – Number of competitors
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
Prentice Hall, Inc. © 2008
Prentice Hall 2006

14. Threat of Substitute Products or Services Bargaining Power of Buyers
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
Prentice Hall, Inc. © 2008
Prentice Hall 2006

15. Consolidated Industry – Dominated by a few large firms (3 +/-)
Industry Evolution
Fragmented Industry –
No dominant industry
Consolidated Industry –
Dominated by a few large firms (3 +/-)
Prentice Hall, Inc. © 2008
Prentice Hall 2006

16. Continuum of International Industries
International Risk Assessment
Continuum of International Industries
Prentice Hall, Inc. © 2008
Prentice Hall 2006

17. Strategic Groups
Prentice Hall, Inc. © 2008
Prentice Hall 2006

18. Competitive Product Matrix
Ericsson
Network IQ™
IBM
Tivoli Netcool
Customer Experience
Management SW
Large
(>$100M)
OSI (SRIT)
Service
Assurance
Nokia
Mobile Quality
Analyzer
Agilent + Teradata
Customer Experience
Management System
Medium
($10M-$100M)
TTI
Netrac™
Company Size
Arantech
touchpoint™
Nexus
Netview
Small
(<$10M)
Network
Service
Customer
Service Quality Monitoring Viewpoint
Prentice Hall, Inc. © 2008

19. General Company Approaches to Strategy
Strategic Types
Defenders
Prospectors
Analyzers
Reactors
General Company Approaches to Strategy
Prentice Hall, Inc. © 2008
Prentice Hall 2006

20. Gathering information on a company’s competitors
Competitive Intelligence
Called business intelligence
Gathering information on a company’s competitors
Product/offering – features, functionality, pricing, targets, etc.
Company – size, profitability, margins, target markets, apparent strategy, etc.
Prentice Hall, Inc. © 2008
Prentice Hall 2006

21. Forecasting Techniques --
Extrapolation – “If things keep going the way they are going now…”
Brainstorming – Free-flowing ideas followed by triage
Expert opinion – Hire a consultant!
Delphi technique – Ask a lot of people.
Statistical modeling – Trending, curve-fitting, etc.
Scenario writing – Map out 3-5 scenarios
Prentice Hall, Inc. © 2008
Prentice Hall 2006

22. Synthesis of External Factors -- EFAS
Prentice Hall, Inc. © 2008
Prentice Hall 2006