1. Chapter 3

2. 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

3. 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

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

5. 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

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

7. 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

8. 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

9. 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