4-1

Chapter 4 - Environmental Scanning

Societal Environment --

–Economic Forces–Technological Forces–Political-legal Forces–Sociocultural Forces

4-2

Societal Environment

Economic Forces --

–Regulate exchange of materials, money, energy and information

4-3

Societal Environment

Technological Forces --

–Generate problem-solving inventions

4-4

Societal Environment

Political-legal Forces --

–Allocate power; provide laws and regulations

4-5

Societal Environment

Sociocultural Forces --

–Regulate values and customs of society

4-6

Task Environment

Task Environment --

–Elements or groups that directly affect a corporation and are affected by it

4-7

Task Environment

Industry Analysis --

–In-depth examination of key factors within a corporation’s task environment

4-8

Variables in Societal Environment

4-9

Demographic Trends

4-10

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

4-11

International Societal Environments

4-12

Scanning the Task Environment

4-13

Ethical Behavior

“Business Ethics”

–Argument that there is no such thing … it is an oxymoron

4-14

Ethical Decision Making

Corporate Practices --

–Massive write-downs and restatements of profit–Misclassification of expenses as capital expenditures–Pirating corporate assets for personal gain

4-15

External Strategic Factors

Strategic Myopia --

–Willingness to reject unfamiliar as well as negative information

4-16

Issues Priority Matrix

4-17

Analyzing the Task Environment

4-18

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

4-19

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

4-20

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

4-21

Industry Evolution

Fragmented Industry –

–No dominant industry

4-22

Industry Evolution

Consolidated Industry –

–Dominated by a few large firms

4-23

International Risk Assessment

Continuum of International Industries

4-24

Strategic Groups

4-25

Strategic Types

•Defenders•Prospectors•Analyzers•Reactors

General Types –

4-26

Competitive Intelligence

Called business intelligence

Gathering information on a company’s competitors

4-27

Forecasting

Forecasting Techniques --

–Extrapolation–Brainstorming–Expert opinion–Delphi technique–Statistical modeling–Scenario writing

4-28

Synthesis of External Factors -- EFAS