EXTERNAL ENVIRONMENT

1
EXTERNAL ENVIRONMENT

• INDUSTRY, MARKETS
• COMPETITION
• ECONOMY
• LEGAL, POLITICAL, SOCIAL

2
INDUSTRY, MARKETS

• CUSTOMER/CONSUMER
• WHO
• WHERE (AREA, COUNTRY)
• WANTS, NEEDS
• BUYING BEHAVIOR
• BUYER
• POWER
• RELATIONSHIPS/ALLIANCES

3
INDUSTRY, MARKETS (CONTD)

• MARKET SIZE, TRENDS
• SUBSTITUTES
• DISTRIBUTION SYSTEM
• STAGE, PRODUCT LIFE CYCLE

4
INDUSTRY, MARKETS (CONTD)

• STAGE, INDUSTRY LIFE CYCLE
• FRAGMENTED
• CONSOLIDATED
• TECHNOLOGY AS THE PRODUCT
• SUPPLIERS
• POWER
• RELATIONSHIPS/ALLIANCES

5
COMPETITION

• NATURE OF
• WHO, WHERE
• STRATEGY
• ADVANTAGES - SUSTAINABLE
• DISADVANTAGES

6
COMPETITION (CONTD)

• RIVALRY
• ENTRANTS, EXITS
• SUBSTITUTES

7
Industry Map / Strategic Groups
Mercedes Jaguar BMW
High
General Motors Ford Chrysler Nissan Toyota Honda V
W
Price/Quality
Hyundai Yugo
Low
Few
Many
Number of Market Segments Served
8
Strategic Groups
Candlelight Dining
Unoccupied Product Space
Atmosphere
Fast Food
Average
Gourmet
Quality of Food
9
Strategic Group Map

• Price
• 18
• 17 ?
• 16 Co B
• 15 ?
• 14 ? Co D
• 13 Co A ?
• 12 Co C
• 11
• 10
• Q3 Q2 Q1
• Quality (1highest)
• What is the strategy? Is the strategy right?

10
ECONOMY

• EFFECTS ON DEMAND
• EXCHANGE RATES
• EMPLOYMENT RATES
• INFLATION
• STABILITY

11
LEGAL, POLITICAL, SOCIAL

• LAWS, REGULATIONS
• VARY BY MARKET
• VARY BY COUNTRY
• ETHICS
• TRENDS
• IMPORT/EXPORT LAWS

12
KEY SUCCESS FACTORS

• ABSOLUTE REQUIREMENTS
• Airlines low unit cost
• Air delivery worldwide dist.