1. Business Policy and Strategy Lecture-10 1Business Strategy and Policy

2. Recap THE INDUSTRIAL ORGANIZATION (I/O)VIEW Economic Forces – Availability of credit – Level of disposable income – Interest rates – Inflation rates – Federal government budget deficits – Consumption patterns – Unemployment trends – Worker productivity levels – Stock market trends – Foreign countries’ economic conditions – Income differences by region/customer – Tax rates – OPEC policies 2Business Strategy and Policy

3. Today Lecture Social, Cultural, Demographic & Environmental Forces Political, Governmental & Legal Forces 3Business Strategy and Policy

4. Social, Cultural, Demographic & Environmental Forces 1.Social, cultural, demographic, and environmental changes have a major impact on virtually all products, services, markets, and customers. 2.Social, cultural, demographic, and environmental trends are shaping the way people live, work, produce, and consume. 3. New trends are creating a different type of consumer and, consequently, a need for different products, services, and strategies. 4Business Strategy and Policy

5. Social, Cultural, Demographic & Environmental Forces Major impact on: – Products – Services – Markets – customers 5Business Strategy and Policy

6. Social, Cultural, Demographic & Environmental Forces Trends for the 2000’s – – More educated consumers – Population aging – Minorities more influential – Local rather than federal solutions – Fixation with youth decreasing – Hispanics increase to 15% by 2021 – African Americans increase to 14% by 2021 6Business Strategy and Policy

7. Social, Cultural, Demographic & Environmental Forces Key variables – Number of special-interest groups Number of marriages Number of divorces Number of births Number of deaths Immigration & emigration rates 7Business Strategy and Policy

8. Social, Cultural, Demographic & Environmental Forces Life expectancy rates Per capita income Attitudes toward business Average disposable income Buying habits Attitudes toward saving Business Strategy and Policy8

9. Social, Cultural, Demographic & Environmental Forces Racial equality Average level of education Government regulation Attitudes toward customer service Attitudes toward product quality Energy conservation Social responsibility Business Strategy and Policy9

10. Social, Cultural, Demographic & Environmental Forces Value placed on leisure time Recycling Waste management Air & water pollution Ozone depletion Endangered species Business Strategy and Policy10

11. Political, Govt., & Legal Forces Political, Governmental, and Legal Factors Represent Key Forces – Federal, state, local, and foreign governments are major regulators, deregulators, subsidizers, employers, and customers of organizations. Political, governmental, and legal factors therefore can represent key opportunities or threats for both small and large organizations – For industries and firms that depend heavily on government contracts or subsidies, political forecasts can be the most important part of an external audit. Business Strategy and Policy11

12. Political, Govt., & Legal Forces Government Regulations – Key opportunities & key threats Tax rates Lobbying efforts Patent laws Business Strategy and Policy12

13. Political, Govt., & Legal Forces Increasing Global Interdependence Impact of political variables – Formulation of Strategies – Implementation of Strategies Strategists in a global economy Forecast political climates Legalistic skills Diverse world cultures Business Strategy and Policy13

14. Political, Govt., & Legal Forces Globalization of Industry – Worldwide trend toward similar consumption patterns – Global buyers & sellers – E-commerce – Instant transmission of money & information across continents Business Strategy and Policy14

15. Key Political, govt., & legal variables 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 Business Strategy and Policy15

16. Key Political, govt., & legal variables Import-export regulations Political conditions in other countries Government budgets World oil, currency, & labor markets Location and severity of terrorist activities Business Strategy and Policy16

17. Summary Social, Cultural, Demographic & Environmental Forces Political, Governmental & Legal Forces Business Strategy and Policy17

18. Next Lecture Technological Forces – Revolutionary technological forces – Internet changes the nature of opportunities and threats Competitive Forces – Collection and evaluation of information on competitors Business Strategy and Policy18