Ch 3 -1 Copyright 2007 Prentice Hall Chapter 3 The External Assessment Strategic Management: Concepts & Cases 11 th Edition Fred David

Ch 3 -2 Copyright 2007 Prentice Hall Identify & Evaluate factors beyond the control of a single firm –Increased foreign competition –Population shifts –Information technology External Strategic Management Audit

Ch 3 -3 Copyright 2007 Prentice Hall Competitors Suppliers Distributors Creditors Customers Employees Communities Managers Stockholders Labor Unions Special Interest Groups Products Services Key External Forces Opportunities & Threats Key External Forces & the Organization Beyond control of organization!

Ch 3 -4 Copyright 2007 Prentice Hall Performing External Audit External Factors Measurable Long-term orientation Applicable to competing firms Hierarchical

Ch 3 -5 Copyright 2007 Prentice Hall Economies of Scale Industry Properties Barriers to market entry Product differentiation Level of competitiveness I/O Perspective Firm Performance

Ch 3 -6 Copyright 2007 Prentice Hall Ch 6 -6 Potential development of substitute products Rivalry among competing firms Bargaining power of suppliers Potential entry of new competitors Bargaining power of consumers Porter’s Five Forces

Ch 3 -7 Copyright 2007 Prentice Hall Political, Government & Legal Forces Worldwide trend toward similar consumption patterns Global buyers and sellers E-commerce Technology for instant currency transfers Globalization of Industry

Ch 3 -8 Copyright 2007 Prentice Hall Competitive Forces Strengths Weaknesses Capabilities Opportunities Threats Objectives Strategies Identifying Rival Firms

Ch 3 -9 Copyright 2007 Prentice Hall Competitive Forces 1. Market share matters 2. Understand what business you are in 3. Broke or not, fix it 4. Innovate or evaporate 7 Characteristics of most Competitive U.S. Firms:

Ch Copyright 2007 Prentice Hall Competitive Forces 5. Acquisition is essential to growth 6. People make a difference 7. No substitute for quality 7 Characteristics of most Competitive U.S. Firms:

Ch Copyright 2007 Prentice Hall The Five-Forces Model of Competition (Porter) Potential development of substitute products Rivalry among competing firms Bargaining power of suppliers Potential entry of new competitors Bargaining power of consumers

Ch ©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. ANALYZING THE INTERNAL ORGANIZATION

Ch ©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. ANALYZING THE INTERNAL ORGANIZATION

Ch ©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. ANALYZING THE INTERNAL ORGANIZATION

Ch ©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. ANALYZING THE INTERNAL ORGANIZATION

Ch ©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. RESOURCES, CAPABILITIES, AND CORE COMPETENCIES Core Competencies Capabilities Resources Resources TangibleTangible IntangibleIntangible Resources and superior capabilities that are sources of competitive advantage over a firm’s rivals An integrated and coordinated set of actions taken to exploit core competencies and gain competitive advantage Providing value to customers and gaining competitive advantage by exploiting core competencies in individual product markets