1. Chapter 3 The External Assessment
Strategic Management: Concepts & Cases
11th Edition
Fred David
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2. External Strategic Management Audit
Identify & Evaluate factors beyond the control of a single firm
Increased foreign competition
Population shifts
Information technology
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3. Special Interest Groups
Key External Forces & the Organization
Competitors
Suppliers
Distributors
Creditors
Customers
Employees
Communities
Managers
Stockholders
Labor Unions
Special Interest Groups
Products
Services
Key
External
Forces
Opportunities
&
Threats
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4. Long-term orientation Applicable to competing firms
Performing External Audit
Long-term orientation
External Factors
Measurable
Applicable to competing firms
Hierarchical
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5. I/O Perspective Firm Performance
Industry Properties
Economies of Scale
Barriers to market entry
Product differentiation
Level of competitiveness
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6. Social, Cultural, Demographic & Environmental Forces
U.S. Facts
Aging population
Less Caucasian
Widening gap between rich & poor
2025 = 18.5% population >65 years
2075 = no ethnic or racial majority
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7. 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
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8. Political, Government & Legal Forces
Globalization of Industry
Worldwide trend toward similar consumption patterns
Global buyers and sellers
E-commerce
Technology for instant currency transfers
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9. Competitive Forces Identifying Rival Firms Strengths Weaknesses
Capabilities
Opportunities
Threats
Objectives
Strategies
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10. 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
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11. Competitive Forces 7 Characteristics of most Competitive U.S. Firms:
Acquisition is essential to growth
People make a difference
No substitute for quality
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12. 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
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13. The Global Challenge Faced by U.S. Firms --
Gain & maintain exports to other nations
Defend domestic markets against imported goods
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14. Industry Analysis: The External Factor Evaluation (EFE) Matrix
Summarize & Evaluate
Competitive
Political
Cultural
Technological
Environmental
Social
Governmental
Demographic
Economic
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17. Total weighted score of 4.0
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
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18. Industry Analysis: Competitive Profile Matrix (CPM)
Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic positions
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19. CSF’s Gateway Apple Dell Market share 0.15 3 0.45 2 0.30 4 0.60Wt
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
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20. Gateway Apple Dell CSF’s (cont’d) Prod. Capacity 0.04 3 0.12Wt
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
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