Download - The External Forces
-
8/2/2019 The External Forces
1/22
Chapter 3The External Assessment
-
8/2/2019 The External Forces
2/22
Identify & Evaluate factors beyond
the control of a single firm Increased foreign competition
Population shifts
Information technology
External StrategicManagement Audit
-
8/2/2019 The External Forces
3/22
Competitors
SuppliersDistributors
CreditorsCustomers
EmployeesCommunities
ManagersStockholdersLabor Unions
Special Interest GroupsProductsServices
Key
ExternalForces
Opportunities&Threats
Key External Forces & the Organization
-
8/2/2019 The External Forces
4/22
Performing External Audit
ExternalFactors
Measurable
Long-term orientation
Applicable tocompeting firms
Hierarchical
-
8/2/2019 The External Forces
5/22
Economies of Scale
Industry Properties
Barriers to market entry
Product differentiation
Level of competitiveness
I/O Perspective Firm Performance
-
8/2/2019 The External Forces
6/22
Social, Cultural, Demographic& Environmental Forces
U.S. Facts
Aging population
Less Caucasian
Widening gap between rich & poor
2025 = 18.5% population >65 years2075 = no ethnic or racial majority
-
8/2/2019 The External Forces
7/22
Key Social, Cultural, Demographic &Environmental Variables
Number of marriages & divorces
Number of special interest groups
Number of births & deaths
Immigration & emigration rates
Childbearing rates
-
8/2/2019 The External Forces
8/22
Political, Government & LegalForces
Worldwide trend toward similarconsumption patterns
Global buyers and sellers
E-commerce
Technology for instant currency transfers
Globalization of Industry
-
8/2/2019 The External Forces
9/22
Competitive Forces
Strengths
Weaknesses
Capabilities
Opportunities
Threats
Objectives
Strategies
Identifying Rival Firms
-
8/2/2019 The External Forces
10/22
Competitive Forces
1. Market share matters2. Understand what business you are in
3. Broke or not, fix it
4. Innovate or evaporate
7 Characteristics of mostCompetitive U.S. Firms:
-
8/2/2019 The External Forces
11/22
Competitive Forces
5. Acquisition is essential to growth6. People make a difference
7. No substitute for quality
7 Characteristics of mostCompetitive U.S. Firms:
-
8/2/2019 The External Forces
12/22
The Five-Forces Model of Competition
Potential developmentof substitute products
Rivalry amongcompeting firms
Bargaining powerof suppliers
Potential entry of newcompetitors
Bargaining powerof consumers
-
8/2/2019 The External Forces
13/22
The Global Challenge
Faced by U.S. Firms --
Gain & maintain exports to other
nations
Defend domestic markets againstimported goods
-
8/2/2019 The External Forces
14/22
Industry Analysis: The External FactorEvaluation (EFE) Matrix
CompetitivePoliticalCultural
TechnologicalEnvironmentalSocial
GovernmentalDemographicEconomic
Summarize & Evaluate
-
8/2/2019 The External Forces
15/22
EFE Gateway Computers (2003)
Key External Factors Weight Rating WtdScore
Opportunities
1. Global PC market expected to grow
20% in 20040.10 3 0.30
2. Cost of PC component partsexpected to decrease 10% - 2004
0.10 3 0.30
3. Internet use growing rapidly 0.05 2 0.10
4. China entered WTO; lowered taxesfor importing PCs
0.10 1 0.10
5. The average income for PC workerhas declined from $40K/yr to $30k/yr
0.05 3 0.15
-
8/2/2019 The External Forces
16/22
EFEGateway Computers (2003) (contd)
Key External Factors Weight Rating WtdScore
Opportunities (contd)
6. Modernization of business firms and
government agencies0.05 2 0.10
7. U.S. (& world) economies recovering 0.05 3 0.15
8. 30% of Chinese population canafford a PC; only 10% of homes have a
PC
0.05 1 0.05
Threats 0.10 1 0.10
1. Intense rivalry in industry 0.10 1 0.05
-
8/2/2019 The External Forces
17/22
EFEGateway Computers (2003) (contd)
Key External Factors Weight Rating WtdScore
Threats (contd)
2. Severe price cutting in PC industry 0.10 2 0.20
3. Different countries have differentregs and infrastructure for PCs
0.05 1 0.05
4. Palm & PDA becoming substitutes 0.05 3 0.15
5. Demand exceeds supply ofexperienced PC workers
0.05 4 0.20
6. Birth rate in U.S. declining annually 0.05 3 0.15
-
8/2/2019 The External Forces
18/22
EFEGateway Computers (2003) (contd)
Key External Factors Weight RatingWtd
Score
Threats (contd)
7. U.s. consumers and businessesdelaying purchase of PCs
0.05 2 0.10
8. PC firms diversifying into consumerelectronics
0.05 3 0.15
Total 1.00 2.40
-
8/2/2019 The External Forces
19/22
Total weighted score of 4.0 Organization response is outstanding to threats
and weaknesses
Industry Analysis EFE
Total weighted score of 1.0 Firms strategies not capitalizing on opportunities
or avoiding threats
-
8/2/2019 The External Forces
20/22
Industry Analysis: Competitive ProfileMatrix (CPM)
Identifies firms major competitors
and their strengths & weaknessesin relation to a sample firms
strategic positions
-
8/2/2019 The External Forces
21/22
Gateway Apple Dell
CSFs Wt Rating WtdScore
Rating
WtdScore
Rating WtdScore
Market share 0.15 3 0.45 2 0.30 4 0.60
Inventory sys 0.08 2 0.16 2 0.16 4 0.32
Fin position 0.10 2 0.20 3 0.30 3 0.30Prod. Quality 0.08 3 0.24 4 0.32 3 0.24
Cons. Loyalty 0.02 3 0.06 3 0.06 4 0.08
Sales Distr 0.10 3 0.30 2 0.20 3 0.30
Global Exp. 0.15 3 0.45 2 0.30 4 0.60
Org. Structure 0.05 3 0.15 3 0.15 3 0.15
-
8/2/2019 The External Forces
22/22
Gateway Apple Dell
CSFs (contd) Wt Rating WtdScore
Rating
WtdScore
Rating WtdScore
Prod. Capacity 0.04 3 0.12 3 0.12 3 0.12
E-commerce 0.10 3 0.30 3 0.30 3 0.30
Customer Serv 0.10 3 0.30 2 0.20 4 0.40Pricecompetitive
0.02 4 0.08 1 0.02 3 0.06
Mgt.
experience
0.01 2 0.02 4 0.04 2 0.02
Total 1.00 2.83 2.47 3.49