Business Policy and Strategy Lecture-10 1Business Strategy and Policy

Business Strategy and Policy 1

Business Policy and Strategy

Lecture-10


Recap

THE INDUSTRIAL ORGANIZATION (I/O)VIEW

Economic Forces– Availability of credit

– Level of disposable income– Interest rates– Inflation rates– Federal government budget deficits– Consumption patterns– Unemployment trends– Worker productivity levels– Stock market trends– Foreign countries’ economic conditions– Income differences by region/customer– Tax rates– OPEC policies


Today Lecture

• Social, Cultural, Demographic & Environmental Forces

• Political, Governmental & Legal Forces


Social, Cultural, Demographic & Environmental Forces

1.Social, cultural, demographic, and environmental changes have a major impact on virtually all products, services, markets, and customers.

2.Social, cultural, demographic, and environmental trends are shaping the way people live, work, produce, and consume.

3. New trends are creating a different type of consumer and, consequently, a need for different products, services, and strategies.



Major impact on:– Products– Services–Markets– customers



Trends for the 2000’s –

– More educated consumers– Population aging– Minorities more influential– Local rather than federal solutions– Fixation with youth decreasing– Hispanics increase to 15% by 2021– African Americans increase to 14% by 2021



Key variables –• Number of special-interest groups• Number of marriages• Number of divorces• Number of births• Number of deaths• Immigration & emigration rates



• Life expectancy rates• Per capita income• Attitudes toward business• Average disposable income• Buying habits• Attitudes toward saving



• Racial equality• Average level of education• Government regulation• Attitudes toward customer service• Attitudes toward product quality• Energy conservation• Social responsibility



• Value placed on leisure time• Recycling• Waste management• Air & water pollution• Ozone depletion• Endangered species


Political, Govt., & Legal Forces• Political, Governmental, and Legal Factors Represent Key Forces

– Federal, state, local, and foreign governments are major regulators, deregulators, subsidizers, employers, and customers of organizations.

• Political, governmental, and legal factors therefore can represent ke

y opportunities or threats for both small and large organizations

– For industries and firms that depend heavily on government contracts or subsidies, political forecasts can be the most important part of an external audit.


Political, Govt., & Legal Forces

• Government Regulations

– Key opportunities & key threats• Tax rates• Lobbying efforts• Patent laws



Increasing Global Interdependence

• Impact of political variables– Formulation of Strategies– Implementation of Strategies

• Strategists in a global economy• Forecast political climates• Legalistic skills• Diverse world cultures



Globalization of Industry

– Worldwide trend toward similar consumption patterns

– Global buyers & sellers– E-commerce– Instant transmission of money & information

across continents


Key Political, govt., & legal variables

• Government regulation/deregulation• Tax law changes• Special tariffs• Political Action Committees (PACs)• Voter participation rates• Number of patents• Changes in patent laws• Environmental protection laws• Equal employment legislation


Key Political, govt., & legal variables

• Import-export regulations• Political conditions in other countries• Government budgets• World oil, currency, & labor markets• Location and severity of terrorist activities


Summary

• Social, Cultural, Demographic & Environmental Forces

• Political, Governmental & Legal Forces


Next Lecture

• Technological Forces– Revolutionary technological forces– Internet changes the nature of opportunities and

threats• Competitive Forces– Collection and evaluation of information on

competitors

Documents

Business Policy and Strategy Lecture-10 1Business Strategy and Policy