1. Assignment for Session 4
H&W Ch 3, Section 3.1 and 3.2; Ch 5, Section 5.4; Ch 6, pp   
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

2. 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

3. 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

4. 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

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

6. 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

7. 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 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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