EXTERNAL ENVIRONMENT

INDUSTRY, MARKETS

COMPETITION

ECONOMY

LEGAL, POLITICAL, SOCIAL

INDUSTRY, MARKETS

CUSTOMER/CONSUMERWHOWHERE (AREA, COUNTRY)WANTS, NEEDSBUYING BEHAVIOR

BUYERPOWERRELATIONSHIPS/ALLIANCES

INDUSTRY, MARKETS (CONT’D)

MARKET SIZE, TRENDS

SUBSTITUTES

DISTRIBUTION SYSTEM

STAGE, PRODUCT LIFE CYCLE

INDUSTRY, MARKETS (CONT’D)

STAGE, INDUSTRY LIFE CYCLEFRAGMENTEDCONSOLIDATED

TECHNOLOGY AS THE PRODUCT

SUPPLIERSPOWERRELATIONSHIPS/ALLIANCES

COMPETITION

NATURE OF

WHO, WHERESTRATEGYADVANTAGES - SUSTAINABLEDISADVANTAGES

COMPETITION (CONT’D)

RIVALRY

ENTRANTS, EXITS

SUBSTITUTES

Industry Map / Strategic Groups

High

Low

Few Many

Pri

c e/Q

u ali

ty

Number of Market Segments Served

General MotorsFordChryslerNissanToyotaHondaVW

MercedesJaguarBMW

HyundaiYugo

Strategic Groups

Candlelight Dining

Fast Food

Atm

osph

ere

Average Gourmet

Quality of Food

Unoccupied Product Space

Strategic Group MapPrice 18 17 16 Co B 15 14 Co D 13 Co A 12 Co C 11 10

Q3 Q2 Q1 Quality (1=highest)

What is the strategy? Is the strategy “right?”

ECONOMY

EFFECTS ON DEMANDEXCHANGE RATESEMPLOYMENT RATESINFLATIONSTABILITY

LEGAL, POLITICAL, SOCIAL

LAWS, REGULATIONSVARY BY MARKETVARY BY COUNTRY

ETHICSTRENDSIMPORT/EXPORT LAWS

KEY SUCCESS FACTORS

“ABSOLUTE” REQUIREMENTS

Airlines: low unit costAir delivery: worldwide dist.