Strategic Decision Making - Chapter 2 - External Environment

Strategic Decision Making - Chapter 2 - External...

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1 3-1 External Environment Chapter 2 Objectives c What is the external environment? c Key components of general environment c Porter’s five forces model c Organization of external environment: Opportunities and threats c Techniques External factor analysis summary External Environment c “All the relevant factors and influences outside of the company’s boundaries” c Relevant means important enough to have a bearing on the decisions of the company as it makes about its directions c Some factors have low impact and others have high impact Example c Motorola – founded in 1930s as a maker of car radios By 1980s, it had become key supplier of cellular phones 1994 – “the company that everyone loves to love” Malcolm Baldridge Award winner and Six Sigma pioneer In 1996, Motorola released its StarTac – beautiful, sleek and…ANALOG! Despite ample indications for preference for digital technology, Motorola ignored the technology Nokia – more sensitive to market trends General Environment c Demographic segment – Most Crucial c Aging of the population Positive effect on healthcare Negative effects on funeral home industry Preference for cheaper funerals – cremations ($2000) vs. burials ($7000) “Killing” margins in industry Need for company to be proactive Ex: Ski resorts and baby boomers Extreme luxury in cruises etc. Demographics: Other Changes c Graying of baby boomers National Association of Home Builders estimate that people in age group 55-74 will buy 281,000 homes in 2010 – up from 189,000 in 1995 Construction companies scrambling to satisfy niche In 2025, 20% of population will be over 65
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2 The Gray Entrepreneur c For the past 10 years, adults aged 55 to 64 have been most likely to start businesses c People are living longer More likely to pursue business dreams rather than work in their gardens! c Often, they don’t need to work c But developed network of people where starting a business is not too difficult The “unreachables:” 18-34 years old c Most important demographics in advertising – but also most elusive c TV is only a fifth of what this segment spends time with various media Other media include internet, blogs, movies etc. c Top spenders on cars, internet stereo and sneakers c Spends about $13.5b on internet purchases c How do you reach this segment? Advertising to 18-34 year olds c Rise in online spending – 23% up in 2005 c Number of other smaller events aimed at the age group Ex: Online games Car shows etc. Big Opportunity: The Obese c Tim Barry – launched a seat-belt extender for airplanes – very successful c Government stats – 60m Americans now qualify as obese (20% of population) Up from 23m in 1980 c Creation of $49b weight -loss industry Demographics: Obese - Implications c Rav4 – 3 inches wider than previous models c Select Comfort makes a mattress that’s 30% bigger than
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This note was uploaded on 05/20/2010 for the course BUSINESS 101 taught by Professor Xyz during the Spring '10 term at Louisiana College.

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Strategic Decision Making - Chapter 2 - External...

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