1

Specific Forces in the Global Environment

• Specific Forces:• Forces that can directly increase or decrease a

company’s sales, revenues & ultimately its profit

• Internal Environment

• External Environment

2

Internal Environment

• Employees

• Management

• Organization

3

External Environment

• Micro Environment

• Macro Environment

4

Micro External Environment

• Suppliers

• Distributors

• Customers

• Competitors

5

Micro External Environment

• Suppliers• More vs Less suppliers• Bargaining power• Suppliers for GM & Ford

• Distributors• Bargaining position

6

Micro External Environment

• Customers• Customer’s need• Segmentation of customer’s according to need• Example: Dell

» Individuals (Multimedia applications)

» Small Companies (Workstations)» Large Companies (Powerful

workstations)» Government organizations (Security)» Educational Institutions (Limited budget)

7

Micro External Environment• Competitors

• Total market divided

• Market share of each competitor

• Forecast & Predict competitor’s move

8

Macro External Environment

• Political & Economics Environment

• Socio-cultural Environment

• Demographics Environment

• Technological Environment• Global Environment (Missing)

9

Political & Economic Environment

• Free Market vs Command Economy

• Mix Economies

• Effects on particular business

10

Social Environment

• Class structure• Culture• Customs & Beliefs

• Culture: Values & Norms– Values: General guidelines– Norms: Unwritten code

11

Social Environment

• Diversity/Multicultural

• Aging/Graying of

America

• Two-Income Families

• Single-Parent Families

12

U.S. Household Size

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Number of Persons

1900 1940 1980 2000 2004

Source: U.S. Census Bureau

13

Demographic Environment

• Changes in characteristics of country’s population according to

• Age• Gender• Ethnic background• Race etc

• Example: Increase in population of old age» Pharmaceutical business

14

Americans Living Longer

• U.S. life expectancy rises to a record high 77.9 years

• The number of deaths dropped by 50,000 in 2004 from 2003, the steepest decline since 1938

• By 2005, about one in eight Americans will be 65 or older. By 2025, it will be nearly one in five.

0

500000

1000000

1500000

2000000

2500000

1900s 2003 2004

U.S. Deaths

Source: Investor’s Business Daily, December 8, 2003; Cumberland Times-News, April 20, 2006; U.S. Centers for Disease Control and Prevention; U.S. Census

15

Technological Environment

• How changes in technology will impact the business

• Walmart vs Kroger Case

• One technology taking over another• Previous becoming obsolete• Eco city concept• Future of technology

» Example: IT experiment

16

• Productivity

• E-Commerce

• Responsiveness to Customer

Technological Environment

17

Identity Theft

• Total number of identity theft victims in 2005 – 255,565

• Top four ways how victims information was misused:

1. Credit card fraud

2. Phone/utilities fraud

3. Bank fraud

4. Employment-related fraudSource: Identity Theft: Victim Complaint Data, 2005, Federal Trade Commission; www.consumer.gov/idtheft

18

ID Theft—Protective Steps

• “Focus on the cheap and easy way to keep an eye on your accounts”– Free Credit Reports

– Guard Your Number

– Shred

– Bug Congress• To pass ultimate protection: A credit freeze

anytime you want one. Source: Money, August 2005

19

• U.S. Bottled Water Sales in Past 15 Years Increased more than four-fold to $9.8 Billion

• From October 2004 to September 2005, top bottle water flavors were:

Blend, Lemon, Lime, and Apple

Consumer Trends

Source: Business & Economic Review, Jan.-Mar. 2002; Beverage Marketing Corporation, bottledwater.org, 2004 stats; Productscan Online; datamonitor.com, November 9, 2005

20

Immigration

• In 2005, roughly 35 million immigrants lived in the U.S. as compared to less than 25 million 10 years ago.

• According to a November 2005 poll, 60 percent of Americans favor a barrier built along the US-Mexico Border.

• About 49 percent believe that a child born to an illegal alien in the U.S. should be granted a US citizenship

Source: Center for Immigration Studies; RasmussenReports.com

21

Global Environment

• International Competition and Free Trade

• Improvements in Transportation and Communication

• E- Commerce

• Global Changes

22

Disaster Costs

Hurricane Katrina – 2005 (estimate)$ 200 B

Kobe, Japan Earthquake -- 1995 100 B

September 11, 2001 Attacks 70 B Northridge, CA Earthquake – 1994 44 B

Hurricane Andrew – 1992 35 B

The Economic Cost of Disaster

Source: Business 2.0 , November 2002; MSNBC.com, September 10, 2005.

23

19%19%

Does Global Experience Help Your Career?

20%20%

56%56%

Source: USA Today

5%

Very HelpfulSomewhat

Unnecessary

No Response