Vous êtes sur la page 1sur 29

Chapter 3: External Assessment

Outline
 The Nature of an External Audit: Five Keys Factors
 Economic Forces

 Social,Cultural,Demographic & Environmental

Forces
 Political, Governmental, and Legal Forces
 Technological Forces
 Competitive Forces

1
Chapter Outline (con’d)
 Competitive Analysis:
 Porter’s Five-Forces Model

 Source of External Information


 The Global Challenge
 Industry Analysis:
 The External Factor Evaluation Matrix

 The Competitive Profile Matrix

2
External Strategic Management Audit
Also called:
 Environmental scanning

 Industry analysis

Purpose:
 Opportunities to be explored

 Threats to be avoided

3
Relationships Between Key External Forces
and an Organization

Competitors
Suppliers
Distributors
Key Forces Creditors
-Economic forces Customers Opportunities
-Social, cultural, Employees &
demographic & Communities
environment forces Threats
Managers
-Political, legal forces
Stockholders
government
-Technological force Labor Unions
-Competitive forces Special Interest Groups
Products
Services

4
Key External Forces
Five (5) Key Forces affecting the Opportunities
and Threats:

1. Economic forces
2. Social, cultural, demographic, &
environmental forces
3. Political, governmental, and legal forces
4. Technological factors
5. Competitive forces

5
Economic Forces
Monitor Key Economic Variables:
 Availability of credit Price fluctuations
 Level of disposable income Monetary policies
 Interest rates Fiscal policies
 Inflation rates
Tax rates
 Federal government budget deficits
 Gross domestic product trend OPEC policies
 Consumption patterns
 Unemployment trends
 Worker productivity levels
 Value of the dollar in world markets
 Stock market trends
 Foreign countries’ economic conditions
 Import/export factors
 Demand shifts for goods/services
 Income differences by region/customer
6
Social, Cultural, Demographic &
Environmental Forces
Key variables – Racial equality
 Number of special-interest groups
Average level of education
 Number of marriages
 Number of divorces Government regulation
 Number of births Attitudes toward customer service
 Number of deaths Attitudes toward product quality
 Immigration & emigration rates Energy conservation
 Life expectancy rates Social responsibility
 Per capita income Value placed on leisure time
 Attitudes toward business Recycling
 Average disposable income Waste management
 Buying habits Air & water pollution
 Ethical concerns
 Attitudes toward saving

7
Social, Cultural, Demographic &
Environmental Forces
Major impact on:

 Products
 Services

 Markets

 customers

8
Political, Govt., & Legal Forces
Key Political, govt., & legal variables:
• Government regulation/deregulation •Environmental protection laws
• Tax law changes
• Special tariffs •Equal employment legislation
• Number of patents •Level of government subsidies
• Changes in patent laws
• Import-export regulations •Antitrust
legislation/enforcement
• Monetary policy
• Political conditions in other countries
• Government budgets
• World oil, currency & labor markets
• Location and severity of terrorist
activities

9
Political, Govt., & Legal Forces
Government Regulation
 Key opportunities & key threats
Antitrust legislation (Microsoft)
Tax rates
Patent laws
 Increasing Global Interdependence
 Impact of political variables
Formulation of Strategies
Implementation of Strategies

10
Political, Govt., & Legal Forces

Globalization of Industry

• Worldwide trend toward similar consumption


patterns
• Global buyers & sellers
• E-commerce
• Instant transmission of money & information
across continents

11
Political, Govt., & Legal Forces

Increasing Global Interdependence

 Strategists in a global economy


• Forecast political climates
• Legalistic skills
• Diverse world cultures

12
Technological Forces
Revolutionary technological forces:

Profound impact on organizations

13
Technological Forces
Internet changes the nature of opportunities and threats --

• Alters life cycle of products


• Increases speed of distribution
• Creates new products and services
• Eases limitations of geographic markets
• Alters economies of scale
• Changes entry barriers

14
Technological Forces
Capitalizing on Information Technology (IT)

 Chief Information Officer (CIO)

 Chief Technology Officer (CTO)

15
Competitive Forces
Collection and evaluation of information on competitors
is essential for successful strategy formulation
Identifying rival firms
• Strengths
• Weaknesses
• Capabilities
• Opportunities
• Threats
• Objectives
• Strategies
16
Competitive Forces
Key Questions About Competitors:
• Their strengths
• Their weaknesses
• Their objectives and strategies
• Their responses to all external variables (e.g.
social, political, demographic, etc.)
• Their vulnerability to our alternative
strategies

17
Competitive Forces
Key Questions About Ourselves:
 Our vulnerability to successful strategic counterattack
 Our product and service positioning relative to
competitors
 Entry and exit of firms in the industry
 Key factors for our current position in industry
 Sales and profit rankings of competitors over time
 Nature of supplier and distributor relationships
 The threat of substitute products or services

18
Competitive Forces
7 Characteristics of most competitive U.S. firms:
1. Market share matters
2. Understand what business you are in
3. Broke or not, fix it
4. Innovate or evaporate
5. Acquisition is essential to growth
6. People make a difference
7. No substitute for quality

19
Competitive Analysis: Porter’s Five-Forces Model

Potential development
of substitute products

Bargaining power Rivalry among Bargaining power


of suppliers competing firms of consumers

Potential entry of new


competitors

20
Global Challenge

International Challenge faced by U.S. firms:

 How to gain and maintain exports to


other nations

 How to defend domestic markets


against imported goods

21
Industry Analysis (EFE)
External Factor Evaluation Matrix
Summarize & evaluate:

Economic Demographic Governmental

Social Environmental Technological

Cultural Political Competitive

22
Industry Analysis (EFE)
Five-Step process:
 List key external factors (10-20)
Opportunities & threats
 Assign weight to each (0 to 1.0)
Sum of all weights = 1.0
 Assign 1-4 rating to each factor
Firm’s current strategies response to the factor
 Multiply each factor’s weight by its rating
Produces a weighted score
23
Industry Analysis (EFE)

Five-step process:
 Sum the weighted scores for each
Determines the total weighted score
for the organization.
 Highest possible weighted score for the
organization is 4.0; the lowest, 1.0.
Average = 2.5
24
UST—Key External Factors Weighted
Weight Rating
Opportunities score

Global markets untapped .15 1 .15


Increased demand .05 3 .15
Astronomical Internet growth .05 1 .05
Pinkerton leader in discount market .15 4 .60
More social pressure to quit smoking .10 3 .30
Threats
Legislation against the tobacco industry .10 2 .20
Production limits on tobacco .05 3 .15
Smokeless market SE region U.S. .05 2 .10
Bad media exposure from FDA .10 2 .20
Clinton Administration .20 1 .20
TOTAL 1.00 2.10
25
Industry Analysis (EFE)

Total weighted score of 4.0 =


Organization response is outstanding to
threats & weaknesses

Total weighted score of 1.0 =


Firm’s strategies not capitalizing on
opportunities or avoiding threats
26
Industry Analysis (EFE)

UST (in the previous example), has a


total weighted score of 2.10 indicating
that the firm is below average in its
effort to pursue strategies that
capitalize on external opportunities and
avoid threats.

27
Industry Analysis (EFE)

Important

 Understanding of the factors used in the


EFE Matrix is more important than the
actual weights and ratings assigned.

28
Industry Analysis (CPM)
Competitive Profile Matrix

 Identifies firm’s major competitors and


their strengths & weaknesses in
relation to a sample firm’s strategic
position

29