02 BUS 444 Chap 2

02 BUS 444 Chap 2 - Chapter Two BUS 444 Strategic...

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Analyzing the External Environment of the Firm Chapter Two BUS 444 – Strategic Management Paul McAfee
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After reading this chapter, you should have a good understanding of: LO1 The importance of developing forecasts of the business environment. LO2 Why environmental scanning, environmental monitoring, and collecting competitive intelligence are critical inputs to forecasting. LO3 Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. LO4 The impact of the general environment on a firm’s strategies and performance. Learning Objectives 2of 40
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Learning Objectives (cont.) LO5 How forces in the competitive environment can affect profitability and how a firm can improve its competitive position by increasing its power vis-à-vis these forces. LO6 How the Internet and digitally based compatibilities are affecting the five competitive forces and industry profitability. LO7 The concept of strategic groups and their strategy and performance implications. 3of 40
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Creating the Environmentally Aware Organization
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Environmental Scanning & Monitoring External Scanning Surveillance of a firm’s external environment: Predict environmental changes to come Detect changes already under way Proactive mode Alerts the firm to critical trends before changes have developed a discernible pattern and before competitors recognize them 5of 40
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Environmental Scanning & Monitoring External Monitoring Track evolution of environmental trends, sequence of events or streams of activities 6of 40
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How to Spot Hot Trends Listen Pay attention Follow trends online Go old school
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Virgin Mobile and Crowdsourcing Virgin Mobile USA relies on 2,000 carefully selected online customers, referred to as “Insiders” to keep it aware of trends and promising opportunities. The Insider community—a very hip focus group— provides input on everything from designing phones to coming up with names for service plans.
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Competitive Intelligence Define and understand a firm’s industry Identify rivals’ strengths and weaknesses Intelligence gathering (data) Interpretation of intelligence data Helps a firm avoid surprises 9of 40
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Environmental Forecasting Environmental forecasting Plausible projections about direction, scope, speed and intensity of environmental change 10 of 40
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02 BUS 444 Chap 2 - Chapter Two BUS 444 Strategic...

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