1. CHAPTER 4 Environmental Scanning and Industry Analysis
STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
Prentice Hall, Inc. © 2006
Prentice Hall 2006

2. Societal environment --
Environmental Scanning
Societal environment --
Economic forces
Technological forces
Political-legal forces
Sociocultural forces
Prentice Hall, Inc. © 2006
Prentice Hall 2006

3. Societal Environment
Economic Forces --
Regulate exchange of materials, money, energy and information
Prentice Hall, Inc. © 2006
Prentice Hall 2006

4. Technological Forces --
Societal Environment
Technological Forces --
Generate problem-solving inventions
Prentice Hall, Inc. © 2006
Prentice Hall 2006

5. Political-legal Forces --
Societal Environment
Political-legal Forces --
Allocate power; provide laws and regulations
Prentice Hall, Inc. © 2006
Prentice Hall 2006

6. Sociocultural Forces --
Societal Environment
Sociocultural Forces --
Regulate values, mores, and customs of society
Prentice Hall, Inc. © 2006
Prentice Hall 2006

7. Task Environment
Task environment --
Elements or groups that directly affect a corporation and are affected by it
Prentice Hall, Inc. © 2006
Prentice Hall 2006

8. Task Environment
Industry Analysis --
In-depth examination of key factors within a corporation’s task environment
Prentice Hall, Inc. © 2006
Prentice Hall 2006

9. Variables in Societal Environment
Prentice Hall, Inc. © 2006
Prentice Hall 2006

10. Demographic Trends
Prentice Hall, Inc. © 2006
Prentice Hall 2006

11. 8 Current Trends – Increasing environmental awareness
Transformational Sociocultural Trends
8 Current Trends –
Increasing environmental awareness
Growing health consciousness
Expanding seniors market
Impact of the Generation Y boomlet
Declining mass market
Changing pace and location of life
Changing household composition
Increasing diversity of workforce & market
Prentice Hall, Inc. © 2006
Prentice Hall 2006

12. International Societal Environments
Prentice Hall, Inc. © 2006
Prentice Hall 2006

13. Scanning the Task Environment
Prentice Hall, Inc. © 2006
Prentice Hall 2006

14. Ethical Behavior
“business ethics”
Argument that there is no such thing … it is an oxymoron
Prentice Hall, Inc. © 2006
Prentice Hall 2006

15. Corporate practices --
Ethical Decision Making
Corporate practices --
Massive write-downs and restatements of profit
Misclassification of expenses as capital expenditures
Pirating corporate assets for personal gain
Prentice Hall, Inc. © 2006
Prentice Hall 2006

16. External Strategic Factors
Strategic myopia --
Willingness to reject unfamiliar as well as negative information
Prentice Hall, Inc. © 2006
Prentice Hall 2006

17. Issues Priority Matrix
Prentice Hall, Inc. © 2006
Prentice Hall 2006

18. Analyzing the Task Environment
Prentice Hall, Inc. © 2006
Prentice Hall 2006

19. Threat of New Entrants – Economies of scale Product differentiation
Porter’s Approach to Industry Analysis
Threat of New Entrants –
Economies of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages
Government policy
Prentice Hall, Inc. © 2006
Prentice Hall 2006

20. Rivalry Among Existing Firms – Number of competitors
Porter’s Approach to Industry Analysis
Rivalry Among Existing Firms –
Number of competitors
Rate of industry growth
Product or service characteristics
Amount of fixed costs
Capacity
Height of exit barriers
Diversity of rivals
Prentice Hall, Inc. © 2006
Prentice Hall 2006

21. Threat of Substitute Products or Services Bargaining Power of Buyers
Porter’s Approach to Industry Analysis
Threat of Substitute Products or Services
Bargaining Power of Buyers
Bargaining Power of Suppliers
Relative Power of Other Stakeholders
Prentice Hall, Inc. © 2006
Prentice Hall 2006

22. Fragmented Industry – No dominant industry Industry Evolution
Prentice Hall, Inc. © 2006
Prentice Hall 2006

23. Consolidated Industry – Dominated by a few large firms
Industry Evolution
Consolidated Industry –
Dominated by a few large firms
Prentice Hall, Inc. © 2006
Prentice Hall 2006

24. Continuum of International Industries
International Risk Assessment
Continuum of International Industries
Prentice Hall, Inc. © 2006
Prentice Hall 2006

25. Strategic Groups
Prentice Hall, Inc. © 2006
Prentice Hall 2006

26. General Types – Defenders Prospectors Analyzers Reactors
Strategic Types
Defenders
Prospectors
Analyzers
Reactors
General Types –
Prentice Hall, Inc. © 2006
Prentice Hall 2006

27. Gathering information on a company’s competitors
Competitive Intelligence
Called business intelligence
Gathering information on a company’s competitors
Prentice Hall, Inc. © 2006
Prentice Hall 2006

28. Forecasting Techniques --
Extrapolation
Brainstorming
Expert opinion
Delphi technique
Statistical modeling
Scenario writing
Prentice Hall, Inc. © 2006
Prentice Hall 2006

29. Synthesis of External Factors -- EFAS
Prentice Hall, Inc. © 2006
Prentice Hall 2006