Week+2+-+External+Environment+Analysis+(Student).pptx -...

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+ External Analysis: Industry Structure, Competitive Forces, and Strategic Groups Chapter 3
+ Chapter Outline 3.1 The PESTEL Framework 3.2 Industry Structure and Firm Strategy: The Five Forces Model 3.3 Changes over Time: Industry Dynamics 3.4 Explaining Performance Differences within the Same Industry: Strategic Groups 3.5 Implications for the Strategist
+ Case 3 With high entry barriers, the BIG THREE GM, Ford, and Chrysler – dominated the U.S. car market until the 1980s. There have been no new recent entrants due to the HIGH industry entry barriers. Tesla Motors’ Model S received outstanding market reception, and was awarded the 2013 MotorTrend Car of the Year. Tesla Motors and the U.S. Automotive Industry Courtesy of Tesla Motors
+ EXTERNAL ANALYSIS PESTEL Framework INDUSTRY ANALYSIS Five Forces Model COMPETITOR ANALYSIS Strategic Group Mapping MACRO MICRO
+ 3.1 The PESTEL Framework Managers mitigate threats and exploit opportunities by analyzing the external environmental forces. Factors are interdependent. Framework to scan, monitor, and evaluate important external factors/trends impacting a firm in its quest for competitive advantage. KEY CONCEPTS
+ Exhibit 3.1 The Firm Embedded in Its External Environment
+ Political/Legal Factors Political environment P rocesses/actions of government that can influence the decisions and behavior of firms Legal environment L aws, mandates, regulations, and court decisions – all of which can have a direct bearing on a firm’s profit potential
+ Economic Factors E conomy-wide phenomena, consisting of the following five macroeconomic factors affecting firm strategy: Growth rates Interest rates Levels of employment Price stability (inflation and deflation) Currency exchange rates
+ Strategy Highlight 3.1 The EU (European Union) began its formation in the early 1950s. Today – The euro is the common currency used by 17 of the 27 EU member states. 2009 – Several European countries took on too much debt and were unable to repay their credit obligations. Strict austerity programs were enacted. Banks tightened credit hampering firms worldwide. How the Eurozone Crisis Is Hurting Companies
+ Sociocultural Factors Sociocultural factors Capture cultures, norms, and values for society; are dynamic and differ across groups. Implications for firm strategy must be considered. Demographic trends Capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.
+ Technological Factors Technological factors Capture the application of knowledge to create new processes and products. Innovations in process technology Lean manufacturing, Six Sigma quality, and biotechnology.

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