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STRATEGIC MANAGEMENT & BUSINESS POLICY10TH EDITION

THOMAS L. WHEELEN J. DAVID HUNGER

CHAPTER 4 Environmental Scanning and Industry Analysis

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Environmental Scanning

Societal environment --

–Economic forces–Technological forces–Political-legal forces–Sociocultural forces

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Societal Environment

Economic Forces --

–Regulate exchange of materials, money, energy and information

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Societal Environment

Technological Forces --

–Generate problem-solving inventions

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Societal Environment

Political-legal Forces --

–Allocate power; provide laws and regulations

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Societal Environment

Sociocultural Forces --

–Regulate values, mores, and customs of society

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Task Environment

Task environment --

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

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Task Environment

Industry Analysis --

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

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Variables in Societal Environment

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Demographic Trends

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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

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International Societal Environments

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Scanning the Task Environment

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Ethical Behavior

“business ethics”

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

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Ethical Decision Making

Corporate practices --

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

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External Strategic Factors

Strategic myopia --

–Willingness to reject unfamiliar as well as negative information

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Issues Priority Matrix

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Analyzing the Task Environment

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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

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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