Chapter 3

Chapter 3 Strategic Management Model Domain Definition Long-term Objectives Geographic Market Area Segment Primary Competition Target Market Performance Measure Action Plan Resources Needed Evaluation Timetable Responsibility Accountability Rational Environmental Events Competitive Methods Strengths and Weakness Analysis S2 P2 P3 S3 P1 S1 Industry Remote Task Firm Functional Functional Analysis Financial Position Structural Analysis Physical Assets Labor Force Risk Competitiveness Short-term Objectives Mission Statement Nature of Business Target Customer Products/Services Standard Desired Means to Accomplish Above Evaluation

Concepts of the Environment Perception is Reality Environmental Volatility •Objective measures •Subjective measures Environmental Dimensions •Uncertainty/dynamism •Simple/complex •Illiberality/munificence Environment Major Issues in Environmental Analysis •Lack of clarity, reliability and validity of information •Uncertainty of causal relationships between organizations and their environments – impact upon the firm •Time span of feedback about attempts to manage within the environment is often too long The Power and Rules Dimension Environmental Domain •Remote •Task •Industry Segment •Firm •Functional

The Relationships among Uncertainty, Information, Perception, and Cognitive Processes Amount and Quality of Information Range of Uncertainty Individual Perceptual and Cognitive Processes Previous Experience

Variables Making Up the Dimensions of Uncertainty and Complexity Uncertainty Dimensions Complexity Dimensions • Prices charged by suppliers/ competitors • Labor force supply and cost • Demand curve for products and services • Cost of Capital - Capital availability • Financing opportunities • Competitive methods used by • Regulatory activity in the market area • New product introductions • New entrants in the market • Taxation • Product quality expectations • Technology • Cost of raw materials • Overall economic conditions • Real estate values • Safety and security • Changing profile of labor force • Number and variety of suppliers • Geographic concentration of suppliers • Dispersion of the labor force • Number of brands in competition • Number of political bodies affecting market • Economic variables creating risk • Concentration of customers • Number of potential target markets • Degree of social/cultural diversity • Variety and volume of businesses in market • Potential substitutes for products/ services • Number of steps in the service delivery process • Interdependencies among firms Environment

The Relationship between Complexity and Uncertainty High Uncertain or Very Volatile Simple Certain or Very Stable

Environmental Classification Scheme Remote Environment Economic Political Socio-cultural Technological Ecological Task Environment Customer Supplier Competitor Regulator Industry Environment/Segment Luxury Upscale Mid-price Budget Economy Firm Environment Major Competitors Functional Environment Finance, Marketing, Human Resources, Administration, Operations, Research & Development

Key Variables in the Subcategories of the Remote Environment •Governments •Laws •Regulations •Lobbying •Judicial Political •Key measures of economic well being •Economic cycles •Monetary/fiscal policies •Capital market behaviors •Trade and industrial policies •Labor markets •Income distribution Economic •Communication systems •Transportation systems •Safety and security •Food/nutrition/packaging •Computers •Software/robotics •Energy •Architecture •Layout and design Technological Remote Environment •Demographics •Culture/language •Psychographic •Social change •Public opinion •Education •Nationalism Socio-cultural •Natural resources •Water supply and quality •Air supply and quality •Environmental maintenance •Conservation •Waste management Ecological

Key Relationship of Information Sources and Environmental Analysis Consultants researchers News magazines Trade magazines Newsletters and services Newspapers Information Sources Databases Government Information Trade associations Internal Personal External Personal Misc. Growing Public Concern for the Environment Key Event Key Event First Stage Analysis Second Stage Analysis Estimate Probability of the Event Occurring Third Stage Analysis Understand History and Timing of Event Fourth Stage Analysis Identify Competitive Methods to Invest in