Assignment for Session 4 H&W Ch 3, Section 3.1 and 3.2; Ch 5, Section 5.4; Ch 6, pp. 90-102    Southwest Airlines article (available online through course web site)    Prepare to discuss the following based on the readings and the company articles assigned to date.   (Quiz possible) 1.  Which environmental variables (Fig. 3-1) are most significant for each company? 2.  Which societal variables (Table 3.1) are most significant for each company? 3.  Which forces in Porter's model are most important for each company? 4.  Which generic strategy (Figure 5.3) is each company following? 5.  How would you answer the 3 questions on Directional Strategy in the middle of H&W p. 91 for any one of the companies? Strategic Management Environmental Scanning, Corporate & Business Strategy

Session 4: Today’s agenda Conclude analysis of Amazon’s O/E Put directional and business strategy in context Development of Opportunities and Threats through environmental scanning Environmental analysisAreas of concernIssues and prioritiesO & T Industry analysis (Porter model)Areas of concernO & T Generic business strategies Strategic Management Environmental Scanning, Corporate & Business Strategy

Concluding O/E analysis for Amazon What is your overall O/E rating for Amazon? What issues (problems or opportunities) are evident from the O/E analysis Goals/objectives approach Internal processes approach Resource-based approach Stakeholder approach Strategic Management Environmental Scanning, Corporate & Business Strategy

Putting directional & business strategy in perspective Corporate strategy addresses Directional strategy: growth, diversification, mode for expansion Portfolio strategy: businesses, industries, or markets to compete in Parenting strategy: how to manage units in the portfolio Business strategy: how to compete Corporate directional strategy is relevant even when there is only one business unit. Strategic Management Environmental Scanning, Corporate & Business Strategy

Environmental scanning Why do it? What work output should an environmental scan produce? Strategic Management Environmental Scanning, Corporate & Business Strategy

Environmental Scanning, Corporate & Business Strategy Which elements are most relevant? What are the implications for management? Environmental Scan Economic Forces Sociocultural Forces Task Environment Suppliers Shareholders Governments Employees/ Labor Unions Internal Environment Special Interest Groups Structures Culture Resources Competitors Customers Trade Association Creditors Communities Political - Legal Forces Technological Forces Strategic Management Environmental Scanning, Corporate & Business Strategy

Environmental & industry analysis Fig. 3-1 Environment Note distinction between inside and outside External focus is on Opportunities and Threats Table 3.1 Environmental variables Identify important variables. Fig. 3.2 Scanning external environment Which factors are key Fig 3.3 Issues priority matrix What opportunities and threats need to be addressed? Strategic Management Environmental Scanning, Corporate & Business Strategy

Industry Analysis (Porter) Potential Entrants Relative Power of Unions, Government, Etc. Threat of New Entrants Other Stakeholders Industry Competitors Rivalry Among Existing Firms Bargaining Power Of Buyers Buyers Suppliers Bargaining Power Of Suppliers Threat of Substitute Products or Services Strategic Management Environmental Scanning, Corporate & Business Strategy Substitutes

Session 4: Environmental scanning, corporate and business strategy. Evaluate Southwest’s environment using Fig. 3-1 & Table 3-1. Identify the “high priority” issues in Fig. 3-3. Categorize the issues as Opportunities or Threats Characterize Southwest’s generic business strategy Fig. 5-3. Strategic Management Environmental Scanning, Corporate & Business Strategy

SWOT analysis & Alternative Strategies   STRENGTHS – S WEAKNESSES - W OPPORTUNITIES – O SO STRATEGIES WO STRATEGIES THREATS - T ST STRATEGIES WT STRATEGIES Internal External See the Assignments and Forms web page for versions of this table in Word and PowerPoint. Environmental Scanning, Corporate & Business Strategy Strategic Management

Generic business strategies Focuses on how the firm will compete Competitive strategies (Porter) Address scope (broad or narrow) and advantage (cost or differentiation) 4 options Competitive Advantage Cost leadership Differen-tiation Cost Focus Focused differenti-ation Competitive Scope Strategic Management Environmental Scanning, Corporate & Business Strategy

Assignment for Session 5 H&W Ch 4; Ch 5, Sections 5.1, 5.2, 5.3 Value chain item in Reading Packet! Preparation questions/tasks Describe the resource-based view of the firm? What is its purpose? What is the process for doing a resource-based analysis? What are Southwest’s core competencies? What are Southwest’s distinctive competencies? Are they sustainable? Analyze the cells in the internal value chain (see next slide). Identify strengths and weaknesses. Strategic Management Environmental Scanning, Corporate & Business Strategy

The internal value chain Which cells are strong? Which are weak? Which offer competitive opportunities? The internal value chain Firm infrastructure Out- bound Logistics Inbound Logistics Opera- tions Market- ing and sales Margin Primary Activities Support Activities Human resource management Technology Development Procurement Serv- ice What strengths and weaknesses are revealed by this analysis? Strategic Management Environmental Scanning, Corporate & Business Strategy