Copyright 2005 Prentice Hall

Agenda Assignment # 1 Corrected Google Vision and Mission (group work)
5 A’s and 5 B’s Good results Issues Consistency SWOT’s Writing style should be appropriate for Business Avoid narrative first person Google Vision and Mission (group work) Google SWOT (group Work) Discussion on External Assessment Opportunities and threats Assignment #2 assigned today Due Feb 9 Copyright 2005 Prentice Hall

Group Work There is no one best vision or mission statement for a given organization. Analysts feel that Google needs a clear vision and mission statement to prosper. Writing a mission statement that includes desired (9) components—and at the same time is inspiring and reconciliatory—requires careful thought. Mission statements should not be too lengthy; statements under 200 words are desirable. INSTRUCTIONS: Take 15 minutes to write a vision and mission statement for Google. Scan the case for needed details as you prepare your statements. Join with other classmates to form a group of three or four people. Read each other’s statements silently. As a group, select the best vision statement and the best mission statement from your group. Read those “best” statements to the class. Copyright 2005 Prentice Hall

Text book answer Google Vision Statement: Google strives to be the leader in technology-based solutions for consumer and business problems. Google Mission Statement: Google seeks to maintain its loyal customer base and attract new customers in both current and developing markets with its commitment to quality and promise to put its users above all else (1, 2, 3, 6, 8). Google will lead the industry via a commitment to innovation, service, growth, and quality (4, 5). Its solutions for businesses ensure profitability while providing desirable information for consumers (5). Google desires to instill the belief that the company is a set of capabilities, not just a product or brand (6, 7, 8). It recognizes that its own success is dependent upon the success of its employees (9). Copyright 2005 Prentice Hall

Google SWOT The purpose of this exercise is to give students experience identifying an organization’s opportunities, threats, strengths, and weaknesses. INSTRUCTIONS: Join in a group of 2-4 students Identify Google’s major opportunities, threats, strengths, and weaknesses. List these under separate headings. In class discussion, compare lists of external and internal factors. From the discussion, students should add to their lists. Save this information for use in later exercises during the term. Copyright 2005 Prentice Hall

SWOT Copyright 2005 Prentice Hall Strengths:
Strong brand recognition and recall Brand equity (Ranked #1 among online brands by EquiTrend) Talented employee base Access to Google available to anyone with Internet access Good cash reserves ($426,900,000) Strong revenues (117 percent over previous year) Strong profits (profits increased 106 percent over previous year) Relationships with major corporations like AOL Culture of innovation and accountability Products based on solving consumer needs Weaknesses: Corporate governance minimizes power of nonemployee shareholders Lack of independence on board of directors Vision for company may be unclear Fast growth may be unmanageable and unsustainable Technology that supports targeting advertising can result in inappropriate positioning (e.g., Kraft ad on the Web site for a White Nationalist group) Net profit margin is weak (12.51 percent) compared to Yahoo! (23.00 percent) Company is smaller and less profitable compared to Yahoo! (e.g., Yahoo! revenues were $3,574,517,000 compared to $3,189,223 for Google; Yahoo! spent $368,760,000 on research development while Google spent $225,632,000; Yahoo! net income was $839,553,000 while Google’s was $399,100,000.) Little physical presence (offices) in Asia and none in South America or Africa Copyright 2005 Prentice Hall

SWOT (Part 2) Opportunities: Threats: Copyright 2005 Prentice Hall
Internet-based technologies and businesses continue to develop Worldwide growth in Internet coverage and use Large market still to be tapped (currently only 15.7 percent of the world has Internet access). Asia, in particular, is a valuable potential market. It makes up 56.4 percent of the world’s population, but only 9.9 percent of its population is online (according to Increasing demand for Web-based business and consumer solutions Advertising spending declining in other media but increasing online Potential to expand into other media Threats: Microsoft has stated its plans to threaten Google’s future Other competitors (Yahoo, eBay, MSN, and others) Potential for click fraud Potential for attacks on Google’s servers Legal constraints in the area of intellectual property rights Consumer attitudes toward online advertising Copyright 2005 Prentice Hall

Chapter 3 The External Assessment
Strategic Management: Concepts & Cases 11th Edition Fred David Copyright 2005 Prentice Hall

Chapter Outline The Nature of the External Audit
The Industrial Organization (I/O) View Social, Cultural, Demographic & Environmental Forces Copyright 2005 Prentice Hall

Chapter Outline (cont’d)
Political, Governmental, and Legal Forces Technological Forces Competitive Forces Copyright 2005 Prentice Hall

External Assessment It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. – Charles Darwin Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map. – Wayne Calloway, Former CEO, PepsiCo Copyright 2005 Prentice Hall

External Strategic Management Audit
-- Environmental Scanning -- Industry Analysis Copyright 2005 Prentice Hall

Social, cultural, demographic & environmental forces
Key External Forces Economic forces Social, cultural, demographic & environmental forces Political, governmental & legal forces Technological forces Competitive forces Copyright 2005 Prentice Hall

Special Interest Groups
Key External Forces & the Organization Competitors Suppliers Distributors Creditors Customers Employees Communities Managers Stockholders Labor Unions Special Interest Groups Products Services Markets Natural Environment Key External Forces Opportunities & Threats Copyright 2005 Prentice Hall

External Audit Gather competitive intelligence – Social Cultural
Demographic Environmental Governmental Legal Technological Copyright 2005 Prentice Hall

External Audit – Sources of Information
Internet Libraries Suppliers Distributors Salespersons Customers Competition Copyright 2005 Prentice Hall

Internet Resources www.redherring.com www.fastcompany.com
online.wsj.com cbs.marketwatch.com finance.yahoo.com Copyright 2005 Prentice Hall

Performing External Audit
-- Key Factors Vary over time Vary by industry Copyright 2005 Prentice Hall

Performing External Audit -- Variables
Market share Breadth of competing products World economies Foreign affiliates Proprietary account advantages Copyright 2005 Prentice Hall

Performing External Audit -- Variables
Price competitiveness Technological advancements Interest rates Pollution abatement Copyright 2005 Prentice Hall

Long-term orientation Applicable to competing firms
Performing External Audit Long-term orientation External Factors Measurable Applicable to competing firms Hierarchical Copyright 2005 Prentice Hall

Industrial Organization (I/O) View
-- Industry factors more important than internal factors Performance determined by industry forces Copyright 2005 Prentice Hall

I/O Perspective Firm Performance
Industry Properties Economies of Scale Barriers to market entry Product differentiation Level of competitiveness Copyright 2005 Prentice Hall

Research Findings “Approximately 20% of a firm’s profitability can be explained by the industry, whereas 36% of the variance in profitability is attributed to the firm’s internal factors” Copyright 2005 Prentice Hall

Economic Forces Trends in the dollar’s value European Union Layoffs
Economic standard of living Copyright 2005 Prentice Hall

Economic Standard of Living
Copyright 2005 Prentice Hall

Russia’s Economy Political bureaucracy
Illegal actions by officials and policemen State-run gas; monopoly purchase of newspaper Foreign direct investment Copyright 2005 Prentice Hall

Economic Forces Availability of credit Level of disposable income
Interest rates Inflation rates Copyright 2005 Prentice Hall

Finding Economic Data http://www.economagic.com/
Copyright 2005 Prentice Hall

Social, Cultural, Demographic & Environmental Forces
Major Impact – Products Services Markets Customers Copyright 2005 Prentice Hall

Trends More American households with people living alone By 2021 Hispanics will be largest minority group Aging Americans – affects all organizations Population shift to the south and west Less interested in fitness and exercise Decimation and degradation of the natural environment Copyright 2005 Prentice Hall

U.S. – Mexico Border North America’s fastest growing region
1,500 maquiladoras No longer largest exporter to U.S. Copyright 2005 Prentice Hall

Social, Cultural, Demographic & Environmental Forces (cont’d)
21st Century Trends Fixation with youth decreasing Hispanics increase to 15% by 2021 African American increase to 14% by 2021 Copyright 2005 Prentice Hall

Number of special interest groups
Key Social, Cultural, Demographic & Environmental Variables Childbearing rates Number of special interest groups Number of marriages & divorces Number of births & deaths Immigration & emigration rates Copyright 2005 Prentice Hall

Attitudes toward business
Social, Cultural, Demographic & Environmental Forces Actuarial rates Monitor Key Variables Per capita income Attitudes toward business Avg. disposable income Copyright 2005 Prentice Hall

Attitudes toward saving
Social, Cultural, Demographic & Environmental Forces Consumer behavior Monitor Key Variables Ethical concerns Attitudes toward saving Racial equality Copyright 2005 Prentice Hall

Social responsibility
Social, Cultural, Demographic & Environmental Forces Energy conservation Monitor Key Variables Social responsibility Leisure time values Recycling Copyright 2005 Prentice Hall

Political, Government & Legal Forces
Government Regulation Key opportunities & threats Antitrust legislation Tax rates Lobbying efforts Patent laws Copyright 2005 Prentice Hall

Regulation/deregulation
Key Political, Governmental, & Legal Variables Regulation/deregulation Tax law changes Special tariffs PAC’s Voter participation rates Copyright 2005 Prentice Hall

Environmental protection laws
Key Political, Governmental, & Legal Variables (cont’d) Number of patents Changes in patent laws Environmental protection laws Equal employment legislation Government subsidies Copyright 2005 Prentice Hall

Anti-trust enforcement
Key Political, Governmental, & Legal Variables (cont’d) Anti-trust enforcement Global relationships Import/export regulations Political conditions Location and severity of terrorist activity Copyright 2005 Prentice Hall

Technological Forces Major Impact – Internet Communications
Semiconductors Copyright 2005 Prentice Hall

Technological Forces Significance of IT
Chief Information Officer (CIO) Chief Technology Officer (CTO) Copyright 2005 Prentice Hall

Technological Forces Technology-based issues
Essential for nearly every strategic decision Copyright 2005 Prentice Hall

Competitive Forces Identifying Rival Firms Strengths Weaknesses
Capabilities Opportunities Threats Objectives Strategies Copyright 2005 Prentice Hall

Their objectives and strategies
Key Questions Concerning Competitors Their strengths Their weaknesses Their objectives and strategies Their responses to external variables Their vulnerability to our alternative strategies Copyright 2005 Prentice Hall

Our vulnerability to strategic counterattack
Key Questions Concerning Competitors (cont’d) Our vulnerability to strategic counterattack Our product/service positioning Entry and exit of firms in the industry Key factors for our current position in industry Sales/profit rankings of competitors over time Copyright 2005 Prentice Hall

Nature of supplier & distributor relationships
Key Questions Concerning Competitors (cont’d) Nature of supplier & distributor relationships The threat of substitute products/services Should we keep our strategies secret from employees and stakeholders? Copyright 2005 Prentice Hall

Competitive Forces Sources of Corporate Information Moody’s Manuals
Standard Corporation Descriptions Value Line Investment Surveys Dun’s Business Rankings Standard & Poor’s Industry Surveys Industry Week Forbes, Fortune, Business Week Copyright 2005 Prentice Hall

Competitive Forces 7 Characteristics of most Competitive U.S. Firms:
Market share matters Understand what business you are in Broke or not, fix it Innovate or evaporate Copyright 2005 Prentice Hall

Competitive Forces 7 Characteristics of most Competitive U.S. Firms:
Acquisition is essential to growth People make a difference No substitute for quality Copyright 2005 Prentice Hall

The Five-Forces Model of Competition
Potential development of substitute products Rivalry among competing firms Bargaining power of suppliers Bargaining power of consumers Potential entry of new competitors Copyright 2005 Prentice Hall

Steps to Determine if an Acceptable Profit Can be Earned
Identify key aspects or elements of each competitive force Evaluate how strong and important each element is for the firm Decide whether the collective strength of the elements is worth the firm entering or staying in the industry Copyright 2005 Prentice Hall

Rivalry Among Competing Firms
The Five-Forces Model Rivalry Among Competing Firms Most powerful of the five forces Focus on competitive advantage of strategies Copyright 2005 Prentice Hall

Potential Entry of New Competitors
The Five-Forces Model Potential Entry of New Competitors Barriers to entry are important Quality, pricing, and marketing can overcome barriers Copyright 2005 Prentice Hall

Potential Development of Substitute Products
The Five-Forces Model Potential Development of Substitute Products Pressures increase when consumer’s switching costs decrease Firm’s plans for increased capacity & market penetration Copyright 2005 Prentice Hall

Bargaining Power of Suppliers
The Five-Forces Model Bargaining Power of Suppliers Large number of suppliers & few substitutes affects intensity of competition Backward integration can gain control or ownership of suppliers Copyright 2005 Prentice Hall

Bargaining Power of Consumers
The Five-Forces Model Bargaining Power of Consumers Customers concentrated or buying in volume affects intensity of competition Consumer power is higher where products are standard or undifferentiated Copyright 2005 Prentice Hall

Conditions where Consumers Gain Bargaining Power
If they can inexpensively switch If they are particularly important If sellers are struggling in the face of falling consumer demand If they are informed about seller’s products, prices and costs. If they have discretion in whether and when they purchase the product. Copyright 2005 Prentice Hall

Forecasting Tools and Techniques
Forecasts are educated assumptions about future trends and events Quantitative techniques – Most appropriate when historical data is available and there is a constant relationship Qualitative techniques Copyright 2005 Prentice Hall

The Global Challenge Faced by U.S. Firms --
Gain & maintain exports to other nations Defend domestic markets against imported goods Copyright 2005 Prentice Hall

Multinational Corporations (MNC’s)
The Global Challenge Multinational Corporations (MNC’s) Simultaneously globally competitive & nationally responsive Copyright 2005 Prentice Hall

Worldwide integration of: Strategy formulation Strategy implementation
The Global Challenge Globalization Worldwide integration of: Strategy formulation Strategy implementation Strategy evaluation Copyright 2005 Prentice Hall

Globalization of Industries
The Global Challenge Globalization of Industries Similar consumption patterns Global buyers and sellers E-commerce Instant transmission of money & information Copyright 2005 Prentice Hall

Industry Analysis: The External Factor Evaluation (EFE) Matrix
Summarize & Evaluate Competitive Political Cultural Technological Environmental Social Governmental Demographic Economic Copyright 2005 Prentice Hall

5 Steps (Page 110-111) List key external factors
10-20 Opportunities then threats Assign weights from 0.0 to 1.0 based on importance Sum of all weights across all factors = 1 Assign a rating from 1 to 4 for all factors where 4 = the firm’s response is superior 3 = the firm’s response is above avg 2 = the firm’s response is average 1 = the firm’s response is poor Multiply the rating by the weight Sum the weighted scores Copyright 2005 Prentice Hall

EFE – Gateway Computers (2003)
Key External Factors Weight Rating Wtd Score Opportunities 1. Global PC market expected to grow 20% in 2004 0.10 3 0.30 2. Cost of PC component parts expected to decrease 10% 3. Internet use growing rapidly 0.05 2 4. China entered WTO; lowered taxes for importing PC’s 1 5. The average income for PC worker has declined from $40K/yr to $30k/yr 0.15 Copyright 2005 Prentice Hall

EFE – Gateway Computers (2003) (cont’d)
Key External Factors Weight Rating Wtd Score Opportunities (cont’d) 6. Modernization of business firms and government agencies 0.05 2 0.10 7. U.S. (& world) economies recovering 3 0.15 8. 30% of Chinese population can afford a PC; only 10% of homes have a PC 1 Threats 1. Intense rivalry in industry Copyright 2005 Prentice Hall

Key External Factors Weight Rating Wtd Score Threats (cont’d) 2. Severe price cutting in PC industry 0.10 2 0.20 3. Different countries have different reg’s and infrastructure for PC’s 0.05 1 4. Palm & PDA becoming substitutes 3 0.15 5. Demand exceeds supply of experienced PC workers 4 6. Birth rate in U.S. declining annually Copyright 2005 Prentice Hall

Key External Factors Weight Rating Wtd Score Threats (cont’d) 7. U.s. consumers and businesses delaying purchase of PC’s 0.05 2 0.10 8. PC firms diversifying into consumer electronics 3 0.15 Total 1.00 2.40 Copyright 2005 Prentice Hall

Industry Analysis EFE Total weighted score of 4.0
Organization response is outstanding to threats and weaknesses Total weighted score of 1.0 Firm’s strategies not capitalizing on opportunities or avoiding threats Copyright 2005 Prentice Hall

Industry Analysis: Competitive Profile Matrix (CPM)
Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic positions Copyright 2005 Prentice Hall

Steps to a CPM Identify Critical Success Factors (CSF)
Broad issues Internal and external (5 of each is a good mix) Assign a weight to each CSF Must add up to 1 Assign a rating for your firm and each of your competitors 4 = major strength 3 = minor strength 2 = minor weakness 1 – major weakness Multiply weight by rating Sum the weighted ratings and compare Copyright 2005 Prentice Hall

CSF’s Gateway Apple Dell Market share 0.15 3 0.45 2 0.30 4 0.60
Wt Rating Wt’d Score Market share 0.15 3 0.45 2 0.30 4 0.60 Inventory sys 0.08 0.16 0.32 Fin position 0.10 0.20 Prod. Quality 0.24 Cons. Loyalty 0.02 0.06 Sales Distr Global Exp. Org. Structure 0.05 Copyright 2005 Prentice Hall

Gateway Apple Dell CSF’s (cont’d) Prod. Capacity 0.04 3 0.12
Wt Rating Wt’d Score Prod. Capacity 0.04 3 0.12 E-commerce 0.10 0.30 Customer Serv 2 0.20 4 0.40 Price competitive 0.02 0.08 1 0.06 Mgt. experience 0.01 Total 1.00 2.83 2.47 3.49 Copyright 2005 Prentice Hall

Industry Analysis CPM Important -- Just because one firm receives a 3.2 rating and another receives a 2.8 rating, it does not follow that the first firm is 20 percent better than the second. Copyright 2005 Prentice Hall

Assignment two Prepare a EFE and CPM for Google Due Feb 9
Bus 411 assignment two.doc Due Feb 9 Excel templates for both the EFE and CPM are available in WebCT Copyright 2005 Prentice Hall

Copyright 2005 Prentice Hall

Similar presentations

Presentation on theme: "Copyright 2005 Prentice Hall"— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

Copyright 2005 Prentice Hall

Similar presentations

Presentation on theme: "Copyright 2005 Prentice Hall"— Presentation transcript:

Similar presentations

About project

Feedback