LNChap003 - Chapter 3 Lecture Note Analyzing a Company's...

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Chapter 3 Lecture Note Analyzing a Company’s External Environment Chapter Summary Chapter Three presents the concepts and analytical tools for assessing a single-business company’s external environment. Attention centers on the competitive arena in which a company operates, together with the technological, societal, regulatory, or demographic influences in the macro-environment that are acting to reshape the company’s future market arena. Lecture Outline I. Introduction 1. Managers are not prepared to act wisely in steering a company in a different direction or altering its strategy until they have a deep understanding of the company’s situation. 2. This understanding requires thinking strategically about two facets of the company’s situation: a. The industry and the competitive environment in which the company operates and the forces acting to reshape that environment and the forces acting to reshape this environment b. The company’s own market position and competitiveness - its resources and capabilities, its strengths and weaknesses vis-E0-vis rivals, and its windows of opportunities 3. Managers must be able to perceptively diagnosis a company’s external and internal environments to succeed in crafting a strategy that is an excellent fit with the company’s situation, is capable of building competitive advantage, and promises to boost company performance – the three criteria of a winning strategy. 4. Developing company strategy begins with a strategic appraisal of the company’s external and internal situations to form a strategic vision of where the company needs to head, then moves toward an evaluation of the most promising alternative strategies and business models, and finally culminates in a choice of strategy. 5. Figure 3.1, From Thinking Strategically about the Company’s Situation to Choosing a Strategy , depicts the sequence recommended for managers to pursue. II. The Strategically Relevant Components of a Company’s External Environment 1. All companies operate in a macro-environment shaped by influences emanating from the economy at large, population demographics, societal values and lifestyles, governmental legislation and regulation, technological factors, and the industry and competitive arena in which the company operates. 2. Figure 3.2, The Components of a Company’s Macro-environment , identifies the arenas within
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an organization’s macro-environment. 3. Strictly speaking, a company’s macro-environment includes all relevant factors and influences outside a company’s boundaries. 4. For the most part, influences coming from the outer ring of the macro-environment have a low impact on a company’s business situation and shape only the edges of the company’s direction and strategy. There are exceptions to this, of course, such as the cigarette industry. 5.
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LNChap003 - Chapter 3 Lecture Note Analyzing a Company's...

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