Professional Documents
Culture Documents
Analysis
Strategic Management
Environmental Scanning
General Environment/ Societal environment
1. Economic forces that regulate exchange of
materials, money, energy, and information
2. Technological forces that generate problem solving
3. Political legal forces that allocate power and
provide constraining and protecting laws and
regulations
4. Socio-cultural forces that regulate the values, mores,
and customs of society
Technological
Total government
spending for R&D
Total industry
spending for R&D
Antitrust
regulations
Lifestyle changes
Tax laws
Special incentives
Patent protection
Foreign trade
regulations
New products
New developments
in technology
transfer from lab to
Productivity
improvements
through automation
Socio-cultural
Environmental
protection laws
Focus of
technological
efforts
marketplace
Political-Legal
Attitudes toward
foreign companies
Laws on hiring and
promotion
Stability of
government
Chapter 3
Career expectations
Consumer activism
Rate of family
formation
Growth rate of
population
Age distribution of
population
Regional shifts in
population
Life expectancies
Birth rates
7
Technological
Political-legal
Socio-cultural
Economic
Development
Per capita income
GDP tends
Monetary and
Fiscal policies
Employment level
Currency
convertibility
Nature of
competition
Regulation in
technology transfer
Energy availability
Natural resource
availability
Skill level of
workforce
Patent-trademark
protection
Internet availability
Telecommunication
infrastructure
Form of
government
Political ideology
Tax laws
Stability of
government
Regulation of
foreign
ownership
Trade regulations
Foreign policies
Terrorist activity
Legal system
Customs, norms,
values
Language
Demographics
Life-styles
Religious beliefs
Attitude towards
foreigners
Literacy level
Human rights
Environmentalism
What forces
are driving
change in the
industry?
What are the
key factors for
competitive
success?
How attractive
is the industry
from a profit
perspective?
Features
Questions to answer
Scope of
competitive
rivalry
Number of Rivals
Production
Capacity
Production
Capacity
Pace of
Technological
Change
Degree of
Are the products of rivals becoming differentiated or
Product
less differentiated?
Differentiation Are increasing look alike products of rivals causing
heightened price competition?
Product
Innovation
Vertical
Integration
Economies of
Scale
Learning and
experience
curve effects
Fig. 3.3:
HUF MUF
Neutral
MF
HF
comment
Low
High
Low
High
Ample
Restri
cted
Low
Low
High
High
Low
High
Insignifi
cant
Low
Signifi
cant
high
Exit Barriers
Exit Barriers
Factors
Specialized
Assets
Fixed Cost of
Exit
Strategic
interrelations
hip
Government
Barriers
HUF MUF
Neutral
MF
HF
Comments
Hi
Low
Hi
Low
Hi
Low
Low
Hi
Competitive Rivalry
HUF MUF
Factors
Composition of
Competitors
Mkt. Growth rate
Scope of
competition
Fixed storage
Cost
Capacity Increase
Equal
Size
Slow
Global
Degree of
differentiation
Commodity
Strategic Stake
High
Large
High
Neutral
MF
HF
Comment
Unequal
Size
High
Domestic
Low
Small
High
Low
Power Of Buyer
Factors
Number of
Important
buyers
Threat of
Backward
integration
Product
supplied
Switching
cost
% of
buyers
cost
Profit
earned by
buyer
Importance to
final quality of
buyers
Product.
HUF
MUF
MF
HFA
Comment
Few
Many
High
Low
Specialty
Commodity
Low
High
Low
High
High
Low
High
Low
Power of Supplier
Factors
No, of important
Suppliers
Switching cost
Availability of
substitutes
Threat of forward
integration
Importance of
Buyer industry to
suppliers
Importance of
suppliers product
to the buyers
business
HUF
MUF
N MF
Comment
HF
Few
Many
High
Low
Difficult
High
Many
Low
Buys
small
Proporti
on
High
Importa
nce
Buys
large
proport
ion
Low
Import
ance
Factors
Threat of
Obsolescence
of Industrys
product
Aggressiveness
of substitute
products in
promotion
Switching Cost
Perceived
price/ value
MUF
MF
HF
Comment
Hi
Low
Hi
Low
Low
High
Hi
Low
Unfavorable
Neutral Favorable
Driving Forces
Changes in long-term industry growth rate
1. Upsurge in long-term demand triggers a race for growth
among existing firms and attract new-comers
2. A shrinking market heightens competitive pressures for
market share inducing mergers and acquisitions that result
in industry consolidation
Changes in who buys the product and how they use it
Product innovation
Technological change
Marketing innovation
Entry or exit of a major firm
Drivers of Change
Diffusion of technical know how across more
companies and countries
Changes in cost and efficiency
Growing preference for differentiated products
instead of commodity or vice versa
Regulatory influences and government policy
changes
Changing societal concerns, attitudes and life styles
Categorizing International
Industries
Multi-domestic Industries:
Are specific to each country or group of countries
Collection of essentially domestic industries
Each subsidiary is essentially independent of the
activities of the MNCs subsidiaries in other
countries
Global Industries:
Operate world wide, with MNC making only small
adjustment for country specific circumstances
MNCs produce products or services in various
locations throughout the world and sell them making
only small adjustments for country requirements
3.9
Continuum of International
Industries
Multi-domestic
Industry in which companies tailor
their products to the specific
needs of consumers in a
particular country. E.g.:
Telecommunication
Insurance
Banking
Global
Industry in which companies
manufacture and sell the same
products, with only minor
adjustments made for individual
countries around the world. E.g.:
Automobiles
Wrist watches
Electrical appliances
Chapter 3
41
Strategic Groups
3.10 Mapping Strategic Groups in the U.S. Restaurant Chain Industry (Fig. 3.5)
Perkins
International House
of Pancakes
Price
Ponderosa
Bonanza
Shoney's
Denny's
Country Kitchen
Arby's Wendy's
Domino's Dairy Queen
Hardee's Taco Bell
Burger King McDonald's
Low
Limited Menu
Full Menu
Product-Line Breadth
Chapter 3
44
Implications of Strategic
Groups
Marketing
Related
KSFs
HR
Related KSFs
Weight
1
Weighted
Score
Rating
2
Comments
4
Threats
1.00
Notes: 1. List opportunities and threats (510 each) in column 1. 2. Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2
based on that factors probable impact on the companys strategic position. The total weights must sum to 1.00. 3. Rate each factor from 5 (Outstanding)
to 1 (Poor) in Column 3 based on the companys response to that factor. 4. Multiply each factors weight times its rating to obtain each factors
weighted score in Column 4. 5. Use Column 5 (comments) for rationale used for each factor. 6. Add the weighted scores to obtain the total weighted
score for the company in Column 4. This tells how well the company is responding to the strategic factors in its external environment.
Source: T. L. Wheelen and J. D. Hunger, External Strategic Factors Analysis Summary (EFAS). Copyright 1991 by Wheelen and Hunger Associates.
Reprinted by permission.
Chapter 3
50