EXTERNAL ANALYSIS

•Some cases•Societal (Macro) Environment

•Task (Micro) Environment•Porter & Freeman•Sensing & Forecasting

OPPORTUNITIES AND THREATS

•The external environment will determine, in large part, the future of the firm, at two levels1. Societal (Macroenvironment)

»S ociocultural»T echnological»E conomic»P olitical - Legal

2. Task (Microenvironment)»Competitive factors

FIRST, THE MACROENVIRONMENT

Sociocultural TechnicalDemographics New products

Attitudes Innovation

Styles Productivity

Life styles R & D

Economic Political-LegalGNP Environment

Interest rates Laws

Unemployment Anti-trust

Taxes Stability

NOW, FOR THE MICROENVIRONMENT & COMPETITIVE FACTORS

Company

Industry

Society

PORTER’S MODEL

•A firm is most affected by developments in its industry -- basic competitive forces

»Current and Projected

PORTER’S FIVE FACTORS

1. Threat of New Competitors (Long distance, cable)

2. Rivalry Among Existing Firms (Bud v. Miller)

3. Threat of Substitute Products (Air v. auto)

4. Power of Buyers (WalMart)

5. Power of Suppliers (Intel, Air to Tortola)

FREEMAN’S SIXTH FACTOR

6. Power of other industry stakeholders

–Environmentalists (SWPCC)–Communities (VT v. WalMart)–Banks (Covenants)–Unions (AAUP)–Government agencies (Regents)–More

INTELLIGENCE & FORECASTING

•Environmental Sensing– Internal System (Belasco & Stayer)–Outside Agents (D & B, CBD, databases)

–Spying and Offensive Hiring

•Dangerous Area–DeLorean’s view on GM’s forecasting–Change at an increasing rate–Drucker’s discontinuities