1. Business Policy and Strategy Lecture-11 1Business Policy and Strategy

2. Recap Social, Cultural, Demographic & Environmental Forces Average level of education Government regulation Attitudes toward customer service Attitudes toward product quality Energy conservation Social responsibility Recycling Waste management Air & water pollution Ozone depletion 2Business Policy and Strategy

3. Recap Political, Governmental & Legal Forces – Government regulation/deregulation – Tax law changes – Special tariffs – Political Action Committees (PACs) – Voter participation rates – Number of patents – Changes in patent laws – Environmental protection laws – Equal employment legislation 3Business Policy and Strategy

4. Today’s Lecture Technological Forces – Revolutionary technological forces – Internet changes the nature of opportunities and threats Competitive Forces – Collection and evaluation of information on competitors 4Business Policy and Strategy

5. Technological Forces Revolutionary technological forces: Profound impact on organizations Internet Semiconductors XML technologies UWB communications 5Business Policy and Strategy

6. Technological Forces Internet changes the nature of opportunities and threats -- Alters life cycle of products Increases speed of distribution Creates new products and services Eases limitations of geographic markets Alters economies of scale Changes entry barriers 6Business Policy and Strategy

7. Technological Forces Altering the life cycles of products by – Increasing the speed of distribution – Creating new products and services – Erasing limitations of traditional – Geographic markets – Changing the historical tradeoff between production standardization and flexibility Business Policy and Strategy7

8. Technological Forces Technology-based issues – Underlie nearly every strategic decision – Bank Sector information system Chief information officer (CIO) and Chief technology officer (CTO). 8Business Policy and Strategy

9. Competitive Forces Collection and evaluation of information on competitors is essential for successful strategy formulation – Virtually competition in all industries can be described as intense. Business Policy and Strategy9

10. Competitive Forces Identifying rival firms Strengths Weaknesses Capabilities Opportunities Threats Objectives Strategies Business Policy and Strategy10

11. Competitive Forces Key Questions About Competitors: Their strengths Their weaknesses Their objectives and strategies Their responses to all external variables (e.g. social, political, demographic, etc.) Their vulnerability to our alternative strategies Business Policy and Strategy11

12. Competitive Forces Key Questions About Competitors: Our vulnerability to successful strategic counterattack Our product and service positioning relative to competitors Entry and exit of firms in the industry Key factors for our current position in industry Sales and profit rankings of competitors over time Nature of supplier and distributor relationships The threat of substitute products or services Business Policy and Strategy12

13. 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 Business Policy and Strategy13

14. Competitive Forces 7 Characteristics of most competitive U.S. firms: 1. Market share matters 2. Understand what business you are in 3. Broke or not, fix it 4. Innovate or evaporate 5. Acquisition is essential to growth 6. People make a difference 7. No substitute for quality Business Policy and Strategy14

15. Competitive Forces Competitive Intelligence Programs: Systematic and ethical process for gathering and analyzing information about the competition’s activities and general business trends to further a business’ own goals Business Policy and Strategy15

16. Competitive Forces Firms need an effective competitive intelligence program. The three basic missions of a CI program are: (1) To provide a general understanding of an industry and its competitors, (2) To identify areas in which competitors are vulnerable and to assesses the impact strategic actions would have on competitors (3) to identify potential moves that a competitors might make that would endanger a firm’s position in the market Business Policy and Strategy16

17. Summary Technological Forces Profound impact on organizations Internet Semiconductors XML technologies UWB communications Competitive Forces 1. Market share matters 2. Understand what business you are in 3. Broke or not, fix it 4. Innovate or evaporate 5. Acquisition is essential to growth 6. People make a difference 7. No substitute for quality Business Policy and Strategy17

18. Next Lecture COMPETITIVE ANALYSIS – PORTER’S FIVE-FORCES MODEL Business Policy and Strategy18