Environmental analysis 2.8.12 - Environmental analysis...

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Environmental analysis Environmental analysis February 8, 2012 February 8, 2012
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Question Question Have you heard of the firm, Altria?
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Key questions for top executives Key questions for top executives Which industry do we need to enter? How can we do better in the chosen industry?
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The nature of external audit The nature of external audit External environment = external forces out of the control of the companies Identify opportunities and threats Take the advantage of opportunities Minimize or neutralize threats
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Key external forces Key external forces Economic forces Social, cultural, demographic, and environmental forces Political, governmental, and legal forces Technological forces Competitive forces
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Economic forces Economic forces Level of disposable income Interest rates GDP trend Unemployment rate Value of dollars in world markets Stock market trend Tax rates
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Social, cultural, demographic, and Social, cultural, demographic, and environmental forces environmental forces Population change Behavior change Key variables Life expectancy rate Buying habits Childbearing rates Air pollution
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Political, governmental, and legal Political, governmental, and legal forces forces Government regulations Environmental protection laws Antitrust legislation U.S. relationship with other countries Change in tax laws Legislation on equal employment
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Technological forces Technological forces Revolutionary technological changes PC and Internet "The personal computer will never be more than a hobbyist toy.” Ken Olsen, 1981 1982-Ben Rosen, with help from two ex-TI engineers formed Compaq to build a luggable clone of the IBM PC 1998 Compaq buys DEC
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Competitive forces Competitive forces Identify rival firms and understand their strategies Competitive intelligence programs
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Three dimensions of environment Three dimensions of environment Dynamism Competitive threat (munificence) Complexity
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