1. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

2. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Four Identifying Attractive Markets

3. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Macro Trend Analysis: A Framework for Assessing Market Attractiveness Demographic environment Sociocultural environment Economic environment Political/legal environment Technological environment Physical environment

4. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Shifts Occurring in U.S. Demographics Family Structure: Traditional is becoming less typical Aging: Baby boomers dominate growth Geographic Distribution: Increase in immigrants and migration of jobs and people to suburbs Ethnic Composition: U.S. becoming more diverse

5. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit 4.4 Shifting Values in Western Societies Traditional values Self-denial ethic Higher standard of living Traditional sex roles Accepted definition of success Traditional family life Faith in industry, institutions Live to work Hero worship Expansionism Patriotism Unparalleled growth Industrial growth Receptivity to technology New values Self-fulfillment ethic Better quality of life Blurring of sex roles Individualized definition of success Alternative families Self-reliance Work to live Love of ideas Pluralism Less nationalistic Growing sense of limits Information/service growth Technology orientation Source: “Changing Values: The New Emphasis of Self-Actualization,” The Futurist, January-February 1989, p. 15.

6. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Economic Environment GDP has increased between rich and poor countries World’s economic growth continues to increase Developing countries are expected to have higher growth rates than developed countries

7. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Political Risks Confiscation Expropriation Domestication Changes in exchange control Local content laws Import restrictions Taxes Price controls

8. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Trends in Biology Pharmaceuticals Production of human growth hormones Introduction of vaccines Gene therapy Agriculture Disease-resistant livestock and plants Nonpolluting pesticides and insecticides

9. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Major Events Fueling Information Revolution Development of Fiber-optic Cables Storage devices developed to handle the increasing volume of data Use of flexible low-cost wireless transmission Development of low-cost multimedia chips

10. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Decline of the Earth’s Health Depletion of valuable resources Deserts growing Forests shrinking Lakes dying Quality and quantity of groundwater declining Rise in temperature

11. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit 4.7 Opportunity/Threat Matrix for a Telecommunications Company 1. Wireless communications technology will make networks based on fiber and copper wires redundant. 2.Technology will provide for the storage and accessing of vast quantities of data at affordable costs. 3.The prices of large-screen digitalized TV sets will be reduced by 50 percent. 4.Telephone companies will emerge as the dominant force in the telecommunications industry as well as the operators of telecommunications systems. Probability of Occurrence (2010) HighLow Level of Impact on Company* High Low 4 2 1 3 *Profits or market share or both.