...2 2.1 The General Environment The General Environment 2.2 Scanning, Monitoring, and Forecasting Changes in the Environment 2.3 Scenario Planning 2.4 PEST Analysis 2.5 SWOT Analysis 2.6 The General and the Competitive Environments Key Work Strategic decision making under conditions of uncertainty Key Work Strategic inflection points and their impact on strategy Tools and Techniques Writing a PEST analysis Tools and Techniques Undertaking scenario planning ➜ Main Reference Schoemaker, P.J.H. (1995). Scenario planning: a tool for strategic thinking. Sloan Management Review, 36(2), 25. Learning Objectives After completing this chapter you should be able to: • Define what constitutes the general environment • Evaluate the role of scanning and monitoring in detecting environmental trends • Apply scenario planning to decision making in uncertain environments • Evaluate PEST as a framework for analysing the macro-environment • Explain the use of SWOT analysis • Evaluate the relationship between the general and the competitive environment 37 Introduction In the previous chapter we looked at what strategy is and introduced a number of different perspectives on strategy formulation. We addressed the importance of values in determining why an organization exists, and looked at how an organization’s values, its vision, and its mission guide individuals’ behaviour by signposting what is important to the organization. We explained the importance...
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...Objectives 1. Explain the importance of analyzing and understanding the firm’s external environment. It is important for a firm to analyze and understand their external environment, because the external environment can pose opportunities and threats. As the firm seeks to gain competitive advantage and above-average returns they are influenced by external environment. The firm needs to understand the segments (demographic, political, global, physical, etc.) with their environment in order to achieve their goal. As more firms enter the market and as technology changes and grow in affects a firm capability of having or maintain competitive advantage, so firms need to have full awareness of what is happening in the external environment. 2. Define and describe the general environment and the industry environment. The general environment could be considered as the outer layer that is widely dispersed and affects organizations indirectly. The general environment is a group of seven environmental segments (demographic, economic, political/legal, sociocultural, technological, global, and physical) which influence an industry and the firms within it. A firm does not directly control the general environment, but by all means firm’s actions are influence by the segments. The industry environment directly influences a firm and its competitive actions and response. A firm response and competitive actions may be influenced by these set of factors: the threat of new entrants, the power...
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...THE EXTERNAL ENVIRONMENT: OPPORTUNITIES, THREATS, INDUSTRY COMPETITION AND COMPETITOR ANALYSIS. “It is not the strongest species that survive, nor the most intelligent, but the one most responsive to change.” Charles Darwin Today, two types of strategies exist: proactive/reactive. Anticipation, change, adaptability is necessary nowadays so the proactive strategy (ex: Coca Cola). External environment conditions create both threats and opportunities for firms that have major implications for their strategic actions. Regardless of the industry, the external environment is critical to a firm’s survival success. The firm’s understanding of the external environment is matched with knowledge about its internal environment to form its vision, to develop its mission and to take actions that result in strategic competitiveness and above-average returns. Factors that can have an impact on business have to be taken in consideration. Companies sometimes have to have strategic scenario in case of an unexpected factors, which can affect the external environment: - The attacks of September 11, - The coalition invasion in Afghanistan in October 2001, - The outbreak of the Severe Acute Respiracy Syndrome (SARS) - The war in Iraq in 2003, - The Madrid (2004) and London (2005) bombings. I. The general, industry and competitor environments. The external environment Demographic Global Industry environment Threat of new entrant Power of suppliers Power of buyers Product substitutes Intensity...
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...Click to add text to title page ACCT3583 Management Accounting 2 ACCT3583: Seminar 1 Administration Seminar 1 – Analysing the External Environment Welcome to ACCT3583 – Management Accounting 2! We will begin with a course overview – referring to the ACCT3583 Course Outline Outline. This is an opportunity to discuss learning outcomes, assessments and general course admin., as well as providing a subject overview We will then cover Topic 1: Analysing the External Environment 2 ACCT3583 Management Accounting 2 ACCT3583 Teaching team Teaching Team Contact details Brian Burfitt (Lecturer‐in‐Charge) Yee Shih Phua ACCT3583 Teaching team Consultation Tues 10am – 12Noon Teaching Team Contact details Mark McCoy Consultation By Appointment Email: b.burfitt@unsw.edu.au Telephone: 9385 5807 Office: Quad 3081 Email: Y.Phua@unsw.edu.au Telephone: 9385 5812 T l h 9385 5812 Office: Quad 3062 Thurs 12Noon – 2 Th 12N 2pm Email: TBA Telephone: TBA Jonathan Yuen Email: jonathan.yuen@unsw.edu.au Telephone: 9385 6283 Office: Quad 3089 Mon 4pm ‐6pm Yichelle Zhang Email: yichelle.zhang@unsw.edu.au Telephone: 9385 6283 Office: Quad 3089 12Noon – 1pm 3 ACCT3583 Management Accounting 2 4 ACCT3583 Management Accounting 2 ACCT3583 Seminar overview ACCT3583 Course assessment Seminar overview Seminars comprise lecture content and in-class discussions You must view the podcast, read the assigned readings and...
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...Chapter 2 The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis KNOWLEDGE OBJECTIVES 1. Explain the importance of analyzing and understanding the firm’s external environment. 2. Define and describe the general environment and the industry environment. 3. Discuss the four activities of the external environmental analysis process. 4. Name and describe the general environment’s six segments. 5. Identify the five competitive forces and explain how they determine an industry’s profit potential. 6. Define strategic groups and describe their influence on the firm. 7. Describe what firms need to know about their competitors and different methods (including ethical standards) used to collect intelligence about them. CHAPTER OUTLINE Opening Case Environmental Pressures on Wal-Mart THE GENERAL, INDUSTRY, AND COMPETITOR ENVIRONMENTS EXTERNAL ENVIRONMENTAL ANALYSIS Scanning Monitoring Forecasting Assessing SEGMENTS OF THE GENERAL ENVIRONMENT The Demographic Segment The Economic Segment The Political/Legal Segment The Sociocultural Segment The Technological Segment The Global Segment Strategic Focus Does Google Have the Market Power to Ignore External Pressures? INDUSTRY ENVIRONMENT ANALYSIS Threat of New Entrants Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Products Intensity of Rivalry among Competitors INTERPRETING INDUSTRY ANALYSES ...
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...Pixar Case Study 1. How does Pixar use strategic management? Strategic management consists of the analyses, decisions and actions an organization undertakes in order to create and sustain competitive advantage” (Dess, Lumpkin, Eisner, & McNamara, 2014). Strategic management focuses on the entire organization and is used by Pixar by putting their ideas to reality. They use strategic planning to create valuable products for their audience. Through computer animation and cooperation between employees in the organization Pixar creates unique characters and stories that relates with their audiences and it how they have created their competitive advantage. Pixar’s competitive advantages are their employees and technologies, which is how the company can compete and how they have reached success. Their vision, mission and strategic objectives are the foundation of the way they work, and they make decision based on their external and internal environment and then take action to create a story and characters that will be remembered. Pixar’s innovative ideas, decisions and actions have created their success. What they want is create quality stories that last with each generation. So they have used that idea to direct the organization towards overall goals and objectives. Pixar leaders/managers include their stakeholders in the decision making, which created a culture that shares knowledge and information. Their long term perspective to move the hearts and minds of family audiences...
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...GE’s Two-decade Transformation: Jack Welch’s Leadership « We Bring Good Things To Life ». This is how General Electric (GE) defined its activity, in general terms, between 1979 and 2003. During this period, and more precisely from 1981 to 2001, Jack Welch was the company’s CEO. This previous advertising slogan, designed by the advertising firm BBDO, largely contributed to GE corporate identity; indeed, according to Baer Performance Marketing, “When you hear the name General Electric, […] “We Bring Good Things to Life” is also brought to mind” (baerpm.com). Furthermore, it didn’t have for only purpose to promote the firm’s products and services, but it also emphasized their high quality, and as a result, it highlighted GE’s will to improve consumers’ lives. In other words, the slogan had more than communication purposes: it would lead the entire process of value creation; it summed GE’s strategy up. General Electric was created by a merge between two electricity-related companies – Edison General Electric Company and Thomson-Houston Electric Company, in 1892, from Thomas Edison and Charles Coffin initiative. Widely considered as one of the most successful corporations of the 20th century, recognized by Fortune to be the “Most Admired Company in the United States” and named Financial Times’ “Most Admired Company in the World” in 2001, the firm has dramatically grown from a merge between two electricity enterprises to an American multinational conglomerate corporation...
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...Analyzing the External Environment of the Firm Chapter 2 1) Because of to minimize or eliminate threats and exploit opportunities, so managers should analyze the external environment 2) This involves a continuous process of environmental scanning and monitoring as well as obtaining competitive intelligence on present and potential rivals. These activities provide valuable inputs for developing forecasts. In addition, many firms use scenario planning to anticipate and respond to volatile and disruptive environmental changes. 3) The general environment consists of factors that can have a dramatic effect on a firm's strategy. Typically, a firm has little ability to predict trends and events in the general environment, and even less ability to control them. We divide the general environment into six segments: demographic, socio-cultural, political/legal, technological, economic, and global. A. THE DEMOGRAPHIC SEGMENT Demographics are the most easily understood and quantifiable elements of the general environment. Demographics include elements such as the aging population, rising or declining affluence, changes in ethnic composition, geographic distribution of the population, and income level disparities. B. THE SOCIOCULTURAL SEGMENT Socio-cultural forces influence the values, beliefs, and lifestyles of a society. Examples include a higher percentage of women in the workforce, dual-income families, increases in the number of temporary workers, greater...
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...risk Average Returns- returns equal to those an investor expects to earn from other investments with a similar amount of risk Business-level strategy- is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets Capability- the capacity for a set of resources to perform a task or an activity in an integrative manner Competitive action- a strategic or tactical action the firm takes to build or defend its competitive advantages or improve tis market position Competitive Advantage- when it implements a strategy that creates superior value for customers and competitors are unable to duplicate or find too costly to try to imitate Competitive behavior- set of competitive actions and responses a given firm takes to build or defend its competitive advantages and to improve its market position Competitive dynamics- refer to all competitive behaviors—that is, the total set of actions and responses taken by all firms competing within a market Competitive response- a strategic or tactical action the firm takes to counter the effects of a competitor’s competitive action Competitive rivalry- the ongoing set of competitive actions and competitive responses that occur among firms as they maneuver for an advantageous market position Competitor Analysis – how companies gather and interpret information about their competitors Competitor Intelligence – the set of data and information...
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...External Environment Table of Contents Introduction 2 External Environment: laying the foundations 2 Task Environment 3 General Environment 4 Non-Profit vs. For-Profit: perspectives on competition 5 Environment Characteristics 6 Opportunity or Threat? 8 Conclusion 8 References 10 Introduction “No organization can exist in a vacuum” (“Key forces in the external environment, Chapter 3”, n.d.). To a certain extent all types of organisations; whether private or public services, governmental bodies or charitable groups, are subject to and influenced by specific environmental factors. In this day and age with many existing classes of organisations utilising different approaches to management, there is a feasible assumption that a common change in the organisational environment may likely affect two separate organisations diversely. This response will identify how the environment directly impacts organisations, in relation to leadership roles and organisational performance. For the purpose of comparison, the point of focus will revolve around two major classes of organisations namely; ‘profitable’ verses ‘not-for-profit’ groups. The primary aim of this paper is to construct a foundational view of the external environment from a manager’s perspective. Theoretical key principles discussed will attempt to identify with the following statement - “In comparison to profitable groups; not-for-profit groups possess a different degree of vulnerability...
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...Table of Contents Introduction 2 External Environment: laying the foundations 2 Task Environment 3 General Environment 4 Non-Profit vs. For-Profit: perspectives on competition 5 Environment Characteristics 6 Opportunity or Threat? 8 Conclusion 8 References 10 Introduction “No organization can exist in a vacuum” (“Key forces in the external environment, Chapter 3”, n.d.). To a certain extent all types of organisations; whether private or public services, governmental bodies or charitable groups, are subject to and influenced by specific environmental factors. In this day and age with many existing classes of organisations utilising different approaches to management, there is a feasible assumption that a common change in the organisational environment may likely affect two separate organisations diversely. This response will identify how the environment directly impacts organisations, in relation to leadership roles and organisational performance. For the purpose of comparison, the point of focus will revolve around two major classes of organisations namely; ‘profitable’ verses ‘not-for-profit’ groups. The primary aim of this paper is to construct a foundational view of the external environment from a manager’s perspective. Theoretical key principles discussed will attempt to identify with the following statement - “In comparison to profitable groups; not-for-profit groups possess a different...
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...Business Economics Assessment The assessment addresses the following learning outcome: * Evaluate the impact that external micro and macro environments have on the activities and performance of organisations. Submission dates: Part 1 – Friday 4 February 2011 Part 2 – Friday 8 April 2011 Assessment Brief The assessment for the Business Economics module is a group portfolio (individual for re-sitting students) consisting of two parts to be submitted mid way through the autumn and spring terms. The portfolio will provide an analysis of the microeconomic and macroeconomic environments that impact on an organisation or sector of the group’s choice. The first part of this portfolio will consist of a group report to be submitted by the end of week 3 of the spring term which identifies the key micro economic constraints that impact on the organisation or sector under consideration. In terms of weighting the first element contributes 50% of the marks for the module. This first element will address some of the key microeconomic aspects affecting the business or sector selected. It will consist of a report that identifies the key features and constraints that impact on the competitive environment under consideration. Specifically, this will address: 1. The extent of competition in the sector/market – e.g. the number of competing firms, the size of these firms and any particular issues that arise from this, such as market dominance, price leadership...
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...tips ● General Environment Dimensions in the broader society that influence an industry and the firms within it ● Industry Environment-more direct effect on strategy Set of factors that directly influences a firm and its competitive actions and response ● Competitor Environment Focuses on each company against which a firm directly competes ●The General Environment is grouped into seven environmental segments: page 38 [1] Demographic – population, age, geographic distribution [2] Economic - Inflation and interest rates [3] Political/Legal – org & gov trying to influence each other AntiTrust & Tax laws, deregulation policies [4] Sociocultural – greatest impact, workforce diversity, quality of worklife [5] Technological-Product innovations [6] Global-trading between countries, critical global markets [7] Physical-energy consumption ●To successfully deal with uncertainty in the external environment and achieve strategic competitiveness, firms must be aware of and understand these segments. EXTERNAL ENVIRONMENTAL ANALYSIS-more important for technology based companies • Firms engage in external environmental analysis to better understand and cope with their environments. • This analysis has four parts: - • Scanning (cookies on websites) –studying all segments in the general enviroment • monitoring, -events and trends • forecasting-projections of future trends • assessing.-determine timing and significance of trends INDUSTRY ENVIRONMENT ANALYSIS ...
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...opportunities for firms to increase growth in the competitive marketplace. The three firms I have chosen are some of the most well known and my favorets. 1. Mazda: The Mazda Car company is one of the largest car manufacturer firms in the world. The firm believes in high technology and innovation to provide products to its customers. Toyota should invest its capital and attention more to manufacture eco-friendly cars . 2. GM: General Motors is the U.S based firm and included in the largest car manufacturers in the competitive market. In the competitive market, there is an opportunity for the firm that the firm to pay attention on innovation and technological development to increase its customer . 3. Pontiac: Pontiac is the U.S based firm that also works in auto sector. The firm should pay attention on acquiring more customers for expanding its market. It is an opportunity for the firm to expand its business Under this opportunity, less effort is required from the side of firm to target and develop the market. In this, more investment in the use and development of environmental friendly techniques in manufacturing cars will be a low-hanging fruit for Mazda to enlarge its market in all over the world. In this opportunity, a short period of time is available for the firms to attain the opportunity in the marketplace. For Pontiac, customer's acquisition will be home run opportunity to enlarge the business and growth in the competitive market It indicates to the key...
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...Robin Muncy Nintendo: Maintaining Competitive Advantage Copyright 2011. Gatton Student Research Publication. Volume 3, Number 1.Gatton College of Business & Economics, University of Kentucky MGT 499 Spring 2011 2 Abstract Nintendo has been a major contender in the video game industry for the past several decades, and has faced the challenge of developing and maintaining competitive advantage over the years. With the introduction of the Nintendo Wii console, the company gained a stronghold as a leader in the video gaming industry. However, competitors Sony and Microsoft are quickly gaining on Nintendo’s competitive advantage, forcing the company to monitor and reevaluate its strategies. To maintain a competitive advantage, Nintendo must look toward influencing the customers of Sony and Microsoft, continue developing innovative technologies, and also consider the impact of social networking and mobile devices on the gaming industry. 3 History of Nintendo Nintendo Co. Ltd began its long history at the turn of the twentieth century as a Japanese manufacturer of playing cards. The company went public in the 1960s, and by the 1970s Nintendo had begun directing its focus toward electronic toys and video games. Nintendo became a leader in the video game industry in the ‘80s and ‘90s with its home video game consoles and popular game titles. Competitors began to emerge in the ‘90s; the release of Sony’s PlayStation platform broadened the video game market, and the rising...
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