Professional Documents
Culture Documents
Strategic Management Concepts Cases 11th Edition by Fred R David Chap 3 100118093612 Phpapp01
Strategic Management Concepts Cases 11th Edition by Fred R David Chap 3 100118093612 Phpapp01
Chapter 3
External Audit
Chapter 3
Long-Term Objectives
Chapter 2
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Internal Audit
Chapter 4
External Assessment
If you're not faster than your competitor, youre in a tenuous position, and if youre only half as fast, youre terminal.
George Salk
3
The idea is to concentrate our strength against our competitors relative weakness.
Bruce Henderson
4
External audit:
Focuses on identifying & evaluating events beyond the immediate control of the firm
6
Competitors Suppliers Distributors Creditors Customers Employees Communities Managers Stockholders Labor Unions Special Interest Groups Products Services
11
Involve as many managers & employees as possible Gather competitive intelligence Information about social, demographic, cultural, environmental, etc. Monitor sources of information (key magazines, articles, etc.) Utilization of Internet Suppliers, distributors, customers as sources of information
12
Economic Forces
Globalization of Industry
Worldwide trend toward similar consumption patterns Global buyers & sellers E-commerce Instant transmission of money & information across continents
22
24
Technological Forces
Technological Change
25
Altering life cycles of products Increasing speed of distribution Creating new products & services Erasing limitations of traditional geographic markets
26
Competitor Information
Sources:
Moodys Manuals Standard Corporation Descriptions Value Line Investment Surveys Duns Business Rankings Standard & Poors Industry Surveys Industry Week Forbes, Fortune, Business Week
30
Seven Characteristics Market share matters Understand what business you are in Broke or not, fix it Innovate or evaporate Acquisition is essential to growth People make a difference No substitute for quality
31
Global Challenge
Difficulties Facing MNCs
Industry Analysis (EFE) External Factor Evaluation Matrix Summarize & evaluate:
Economic Social Cultural Demographic Environmental Political Governmental Technological Competitive
34
List key external factors (10-20) Opportunities & threats Assign weight to each (0 to 1.0) Sum of all weights = 1.0 Assign 1-4 rating to each factor Firms current strategies response to the factor
35
Multiply each factors weight by its rating Produces a weighted score Sum the weighted scores for each Determines the total weighted score for the organization. Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
36
Weight .15
Rating
Weighted score
1 3 1 4 3 2 3 2 2 1
.15 .15 .05 .60 .30 .20 .15 .10 .20 .20 2.10
37
.05 .05 .15 .10 .10 .05 .05 .10 .20 1.00
Threats
Legislation against the tobacco industry Production limits on tobacco Smokeless market SE region U.S. Bad media exposure from FDA Clinton Administration TOTAL
UST (in the previous example), has a total weighted score of 2.10 indicating that the firm is below average in its effort to pursue strategies that capitalize on external opportunities and avoid threats.
Important
Understanding of the factors used in the EFE Matrix is more important than the actual weights and ratings assigned.
39
Identifies firms major competitors and their strengths & weaknesses in relation to a sample firms strategic position
40
(CPM)
Critical Success Factor Advertising Product Quality Price Competition Management Financial Position Customer Loyalty Global Expansion Market Share
Avon
LOreal
1 4 3 4 4 4 4 1
4 4 3 3 3 4 2 4
3 3 4 3 3 2 2 3
Total