© 2005 John Wiley & Sons PPT 1-1 Chapter 6 - Internal Analysis Aims to provide a detailed understanding of the organization in terms of four aspects: 1.Financial performance (sales, market share & profit) 2.Other performance dimensions customer satisfaction/loyalty product quality brand association relative cost new product activity manager/employee capability and performance 3.Strengths & weaknesses 4.Opportunities & threats

© 2005 John Wiley & Sons PPT 1-2 For Discussion: In performance analysis, what measures would you consider important? Please take McDonald and Chevrolet as examples.

© 2005 John Wiley & Sons PPT 1-3 Chapter 4 – Market/submarket Analysis Aims to determine the attractiveness, structure & dynamics of a market (submarket) to current & potential participants 1.Dimensions Emerging submarkets Size & Growth Profitability Cost structure Distribution systems Trends & Developments Key success factors 2.Risks in high-growth markets (competitors, market changes & firm limitations)

© 2005 John Wiley & Sons PPT 1-4 For Discussion: Case: Fast food industry & McDonald’s 1. What are the emerging submarkets in the fast food industry? 2. What comes to your mind when you mention the name “McDonald’s”? 3. What are the alternative responses available to McDonald’s, assuming that it wants to stay relevant to customers interested in healthier eating?

© 2005 John Wiley & Sons PPT 1-5 Chapter 5 – Environmental Analysis & Strategic Uncertainty Aims to identify & evaluate trends & events in the environment surrounding the market Dimensions Technology Trends Government / Economic Trends Consumer Trends (cultural trends, green movement & demographic trends) Impact Analysis – assess the impact & immediacy of the trend & events Scenario Analysis – explore different assumptions about the future

© 2005 John Wiley & Sons PPT 1-6 For Discussion: Case: Fax Machine 1.What did the fax machine replace, if anything? 2.What will replace (or has replace) the fax machine? 3.When will the fax machine disappear?

© 2005 John Wiley & Sons PPT 1-7 For Discussion: Case: Airline Industry Focusing on the airline industry, develop a list of strategic uncertainties and possible strategic actions.

© 2005 John Wiley & Sons PPT 1-8 For Discussion: What measures would you consider important? It should depend on the strategy & the firm. For a particular company, the overall measures might be similar but the detailed ones will be different. Quality is key for both companies but the way you determine quality will be very different. McDonald is about consistency, cleanliness, fast service, and personal while Chevrolet is about reliability, styling etc.

© 2005 John Wiley & Sons PPT 1-9 For Discussion: Fast food industry & McDonald’s: The trends are towards low fat, low carbohydrate, and fresh vegetables. Typically responses will be around fast food, quick service, non-healthy food, etc. McDonald’s could: a.Change the offering – French fries with less “bad” fat, Taco Bell has fresco style – they omit or replace additives (like mayonnaise) that contain substantial amounts of fat. b.Create a branded offering like Wendy’s Sensational Salads. They will need a real home run to make a difference and that is hard to do especially given the credibility problem. c.Do a co-brand in order to get credibility – like McDonald’s salad with Newman’s own salad dressing d.Start a new concept with a new name – McDonald’s own Baja Fresh e.Do nothing – there are enough people who are loyal to the high fat, fried foods who will support their business.

© 2005 John Wiley & Sons PPT 1-10 For Discussion: Fax Machine: Fax machine replaced snail mail, priority mail and in some cases UPS. The fax is being replaced by and the Internet. It will be replaced when a faster, cheaper, and safer method to transmit documents in developed. The internet is almost there. Also there are some laggard adopters of fax machines who may never switch to or the Internet. The fax machine is still a useful tool for transmitting hard copy or hand written documents that are not in electronic format and if the customer does not own a scanner.

© 2005 John Wiley & Sons PPT 1-11 For Discussion: Airline Industry: Some strategic uncertainties may include: 1.If the price of gasoline goes up significantly or significantly down when will the impact be on the demand for travel? 2.Will some alternative replace airline travel as we know it today (teleconferencing, telesales meetings, etc.)? 3.If some unexpected tragic event should happen to dissuade customers from choosing air travel as a means of transportation, what will replace it?