1、Strategic Management Concepts:A Competitive Advantage Approach,Concepts and Cases Seventeenth EditionChapter 3The External AssessmentCopyright 2020,2017,2015 Pearson Education,Inc.All Rights ReservedLearning Objectives(1 of 2)3.1 Describe the nature and purpose of an external assessment in formulati
2、ng strategies.3.2 Identify and discuss 10 external forces that impact organizations.3.3 Explain Porters Five-Forces Model and its relevance in formulating strategies.Learning Objectives(2 of 2)3.4 Describe key sources of information for identifying opportunities and threats.3.5 Discuss forecasting t
3、ools and techniques.3.6 Explain how to develop and use an External Factor Evaluation(E F E)Matrix.3.7 Explain how to develop and use a Competitive Profile Matrix(CPM).Figure 3.1 A Comprehensive Strategic-Management ModelSource:Fred R.David,“How Companies Define Their Mission,”Long Range Planning 22,
4、no.1(February 1989):91.See also Anik Ratnaningsih,Nadjadji Anwar,Patdono Suwignjo,and Putu Artama Wiguna,“Balance Scorecard of Davids Strategic Modeling at Industrial Business for National Construction Contractor of Indonesia,”Journal of Mathematics and Technology,no.4(October 2010):20.External Audi
5、t External audit focuses on identifying and evaluating trends and events beyond the control of a single firm reveals key opportunities and threats confronting an organization so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threatsThe
6、 Purpose of an External Audit The external audit is aimed at identifying key variables that offer actionable responses Firms should be able to respond either offensively or defensively to the factors by formulating strategies that take advantage of external opportunities or that minimize the impact
7、of potential threats.Key External ForcesExternal forces can be divided into five broad categories:1.economic forces2.social,cultural,demographic,and environmental(SCDE)forces3.political,governmental,and legal forces4.technological petitive forcesFigure 3.2 Relationships Between Key External Forces a
8、nd an OrganizationThe AQCD Test When identifying and prioritizing key external factors in strategic planning,the following 4 factors are important:Actionable Quantitative Comparative Divisional The AQCD is a measure of the quality of an external factor.Economic Forces(1 of 2)Shift to service economy
9、Availability of creditLevel of disposable incomePropensity of people to spendInterest ratesInflation ratesG D P trendsConsumption patternsUnemployment trendsValue of the dollar Economic Forces(2 of 2)Import/Export factorsDemand shifts for different goods and servicesIncome differences by region and
10、consumer groupPrice fluctuationsForeign countries economic conditionsMonetary and Fiscal policyStock market trendsTax rate variation by country and stateEuropean Economic Community(E E C)policiesOrganization of Petroleum Exporting Countries(O P E C)policiesSocial,Cultural,Demographic,and Environment
11、al(SCDE)Forces SCDE forces impact strategic decisions on virtually all products,services,markets,and customers.These forces are shaping the way people live,work,produce,and consume.Key SCDE Variables(1 of 3)Population changes by race,age,and geographic area Regional changes in tastes and preferences
12、 Number of marriages Number of divorces Number of births Number of deaths Immigration and emigration rates Social Security programsKey SCDE Variables(2 of 3)Life expectancy rates Per capita income Social media pervasiveness Attitudes toward retirement Energy conservation Attitudes toward product qua
13、lity Attitudes toward customer service Pollution controlKey SCDE Variables(3 of 3)Attitudes toward foreign peoples Energy conservation Social programs Number of churches Number of church members Social responsibility issuesPolitical,Governmental,and Legal Forces Local,state,and federal laws,as well
14、as regulatory agencies and special-interest groups,can have a major impact on the strategies of small,large,for-profit,and nonprofit organizations.Political,Government,and Legal Variables(1 of 2)Natural environmental regulations Protectionist actions by countries Changes in patent laws Equal employm
15、ent opportunity laws Level of defense expenditures Unionization trends Antitrust legislationPolitical,Government,and Legal Variables(2 of 2)U S A versus other country relationships Political conditions in countries Global price of oil changes Local,state,and federal laws Import-export regulations Ta
16、riffs,particularly on steel and aluminum Local,state,and national electionsTechnological Forces(1 of 3)New technologies such as:the Internet of Things 3D printing the cloud mobile devices biotech analytics autotechTechnological Forces(2 of 3)robotics and artificial intelligenceare fueling innovation
17、 in many industries,and impacting strategic-planning decisions.Technological Forces(3 of 3)Many firms now have a Chief Information Officer(C I O)and a Chief Technology Officer(C T O)who work together to ensure that information needed to formulate,implement,and evaluate strategies is available where
18、and when it is neededCompetitive Forces An important part of an external audit is identifying rival firms and determining their strengths,weaknesses,capabilities,opportunities,threats,objectives,and strategiesObtaining Competitive Intelligence (1 of 2)Legal and ethical ways to obtain competitive int
19、elligence:1.Reverse-engineer rival firms products.2.Use surveys and interviews of customers,suppliers,and distributors of rival firms.3.Analyze rival firms Form 10-K.4.Conduct fly-over and drive-by visits to rival firm operations.5.Search online databases.6.Contact government agencies for public inf
20、ormation about rival firms.Obtaining Competitive Intelligence (2 of 2)7.Monitor relevant trade publications,magazines,and newspapers.8.Purchase social-media data about customers of all firms in the industry.9.Hire top executives from rival firms.Key Questions About Competitors (1 of 3)1.What are the
21、 strengths and weaknesses of our major competitors?2.What products and services do we offer that are unique in the industry?3.What are the objectives and strategies of our major competitors?4.How will our major competitors most likely respond to current economic,SCDE,political,governmental,legal,tec
22、hnological,and competitive trends affecting our industry?Key Questions About Competitors (2 of 3)5.How vulnerable are the major competitors to our new strategies,products,and services?6.How vulnerable is our firm to successful counterattack by our major competitors?7.How does our firm compare to riv
23、als in mastering the social-media conversation in this industry?8.To what extent are new firms entering and old firms leaving this industry?9.What key factors have resulted in our present competitive position in this industry?Key Questions About Competitors (3 of 3)10.How are supplier and distributo
24、r relationships changing in this industry?Competitive Intelligence ProgramsCompetitive intelligence(CI)a systematic and ethical process for gathering and analyzing information about the competitions activities and general business trends to further a businesss own goalsFigure 3.3 The Five-Forces Mod
25、el of Competition(1 of 2)The Five-Forces Model of Competition(2 of 2)1.Identify key aspects or elements of each competitive force that impact the firm.2.Evaluate how strong and important each element is for the firm.3.Decide whether the collective strength of the elements is worth the firm entering
26、or staying in the industry.The Five-Forces Model(1 of 6)Rivalry among competing firms Most powerful of the five forces Focus on competitive advantage of strategies over other firmsTable 3.5 The Five-Forces Model1.When the number of competing firms is high2.When competing firms are of similar size3.W
27、hen competing firms have similar capabilities4.When demand for the industrys products is changing rapidly5.When price cuts are common in the industry6.When consumers can switch brands easily7.When barriers to leaving the market are high8.When barriers to entering the market are low9.When fixed costs
28、 are high among competing firms10.When products are perishable or have short product life cyclesConditions That Cause High Rivalry Among Competing FirmsThe Five-Forces Model(3 of 6)Potential Entry of New Competitors Barriers to entry are important Quality,pricing,and marketing can overcome barriersB
29、arriers to Entry(1 of 2)Need to gain economies of scale quickly Need to gain technology and specialized know-how Lack of experience Strong customer loyalty Strong brand preferences Large capital requirements Lack of adequate distribution channelsBarriers to Entry(2 of 2)Government regulatory policie
30、s Tariffs Lack of access to raw materials Possession of patents Undesirable locations Counterattack by entrenched firms Potential saturation of the marketThe Five-Forces Model(4 of 6)Potential development of substitute products Pressure increases when:Prices of substitutes decrease Consumers switchi
31、ng costs decreaseThe Five-Forces Model(5 of 6)Bargaining Power of Suppliers is increased when(there are):Few suppliers Few substitutes Costs of switching raw materials is high Backward integration is gaining control or ownership of suppliersThe Five-Forces Model(6 of 6)Bargaining power of consumers
32、Customers being concentrated or buying in volume affects intensity of competition Consumer power is higher where products are standard or undifferentiatedConditions Where Consumers Gain Bargaining Power1.If buyers can inexpensively switch2.If buyers are particularly important3.If sellers are struggl
33、ing in the face of falling consumer demand4.If buyers are informed about sellers products,prices,and costs5.If buyers have discretion in whether and when they purchase the productSources of External Information(1 of 2)Unpublished sources include customer surveys,market research,speeches at professio
34、nal and shareholders meetings,television programs,interviews,and conversations with stakeholders.Published sources of strategic information include periodicals,journals,reports,government documents,abstracts,books,directories,newspapers,and manuals.Sources of External Information(2 of 2)IBISWorldLex
35、is-Nexis AcademicLexis-Nexis Company DossierMergent OnlinePrivCoRegional Business NewsS&P NetAdvantageValue Line Investment SurveyU.S.Securities and Exchanges CommissionCompany Annual Reports On-Line(CAROL)Forecasting Tools and Techniques Forecasts educated assumptions about future trends and events
36、 no forecast is perfectMaking Assumptions Assumptions Best present estimates of the impact of major external factors,over which the manager has little if any control,but which may exert a significant impact on performance or the ability to achieve desired results.Industry Analysis:The External Facto
37、r Evaluation(E F E)MatrixSummarize and evaluate these factors:Social Cultural Demographic Economic Environmental Political Governmental Legal Technological CompetitiveE F E Matrix Steps1.List 20 key external factors2.Weight from 0.0 to 1.03.Rate the effectiveness of current strategies from 1-44.Mult
38、iply weight*rating5.Sum weighted scoresTable 3.8 E F E Matrix for a Local 10-Theater Cinema Complex(1 of 2)Key External FactorsWeightRatingWeighted ScoreOpportunities1.Two new neighborhoods developing within 3 miles0.0910.092.TDB University is expanding 6%annually0.0840.323.Major competitor across t
39、own recently closed0.0830.244.Demand for going to cinemas growing 10%0.0720.145.Disposable income among citizens up 5%in prior year0.0630.156.Rowan County is growing 8%annually in population0.0530.157.Unemployment rate in county declined to 3.1%0.0320.06Table 3.8 E F E Matrix for a Local 10-Theater
40、Cinema Complex(2 of 2)Key External FactorsWeightRatingWeighted ScoreThreats8.Trend toward healthy eating eroding concession sales0.1240.489.Demand for online movies and DVDs growing 10%0.0620.1210.Commercial property adjacent to cinemas for sale0.0630.1811.TDB University installing an on-campus movi
41、e theater0.0430.1212.County and city property taxes increasing 25%0.0820.613.Local religious groups object to R-rated movies0.0430.1214.Movies rented at local Red Boxs up 12%0.0820.1615.Movies rented last quarter from Time Warner up 15%0.0610.06Total1.002.58Industry Analysis:Competitive Profile Matr
42、ix(C P M)Identifies firms major competitors and their strengths&weaknesses in relation to a sample firms strategic positions Critical success factors include internal and external issuesTable 3.10 An Example Competitive Profile Matrix Note:The ratings values are as follows:1=response is poor,2=respo
43、nse is average,3=response is above average,4=response is superior.As indicated by the total weighted score of 2.20,Company 3 is performing worst.Only 8 critical success factors are included for simplicity;in actuality,however,this is too few.The template asks that 12 factors be included and to tailor factors to a given industry.Figure 3.4 How to Gain and Sustain Competitive AdvantagesCopyright
