ch. 3 assessing opportunities and threats marsha swink jonathan mclaurin paul shirley
TRANSCRIPT
Open Systems-Two Perspectives
•Environment as a source of Information▫Amount of change- dynamic vs. stable▫Amount of complexity- complex vs. simple
•Environment as a source of Resources▫Scarce and necessary resources▫Hostile= greater uncertainty
External Environmental Sectors
•Specific Environment-Customers, competitors, suppliers
and other competitive factors.
•General Environment-Economic, Demographic,
Sociocultural, Political-Legal, and Technological.
Rivalry Among Existing Firms
•Competitors- Few or Many?
•Sales Growth- Slowing or Progressing
•Diversity Among Competitors.▫How similar is your competition to you?
Potential Entrants to the Industry•Economies of Scale- High or Low?
•Capital Requirements- Large or Small?
•Government Policies- In Place to Help or Harm?
Bargaining Power of Buyers
•Purchases Large or Small Volumes?
•Products Purchased are Standard or Unique?
•Buyer’s Profits- High or Low?
Bargaining Power of Suppliers
•Are Suppliers Concentrated or Fragmented?
•Importance of the Industry Being Supplied▫Is our company important
•Product is an Important Input to Industry.
Specific Environment
•Industry Profitability▫What does the company have to achieve
profitability?▫What can it develop or create to progress?
General Environment
•Includes:▫Economic▫Demographic▫Sociocultural▫Political-Legal▫Technological
• Trends positive(opportunity)/negative(threats)
•Some Changes have no effect on organization
Economic
•Rising cost of energy and fuels▫Retailers- consumers lose appetite of
spending▫Exception: Wal-Mart▫CostCo’s greatest struggle
•Macroeconomic data▫Interest rates, GDP, Unemployment levels
•Global Business analysis won’t change much▫Biggest challenge is reliable statistics
Demographics• Age• Gender• Income• Ethnicity• Education• Geographic Location• Employment• Birth Rates
• Cross Examine
• Understand current and potential customers
• Hourglass Phenomenon
Peace Baby Boomers Today
Demographics
•U.S.▫24.7 million small businesses▫24.6 million people married w/children▫Avg Inc. $48,201 per person
•CostCo▫Small Businesses▫Upper/Middle Class Families▫ Avg. Inc. Target Market
100,000
Sociocultural
•Understand Current▫Culture▫Lifestyles
Kraft’s healthier food products▫Traditions▫Tastes▫Attitudes
•What’s “in”▫Apple’s iPods/Phones/Pads
CostCo’s Sociocultural Forces
•U.S▫Shopping convenient, ▫Deliverer organic options▫Awareness of food allergens
•Canada▫Many ethnic groups
•Japan▫Freshness▫Portability
Technological
•Look For▫Scientific Innovation▫Technological Innovation
•Most Affected▫Product R&D▫Organizational Work Processes
•Computerization
CostCo’s Technological Facts
•Track purchases of members▫Know which products sell more▫Restocking inventory▫Memberships connected w/credit cards
Finding Info on External Environment
•Customer surveys•Trade journals•General news•External informational systems•Problems
▫Too much information
Responsibility for External Analysis•Small to Mid-size organizations
▫All should monitor changes
•Large organizations ▫Managers
•Everyone is involved
What's the point?
•Align the organization with the environment
•Understand what the environment has to offer
•Ever increasing dynamic environment
•Makes a difference in performance results
•Promotion and raises
Take Aways External Environment•Industry profitability
•Stay in line with environment
•Continually Assess opportunity and threats