verage taking advantage of the external opportunities and minimizing external threats facing the firm.

There is definitely room for improvement, though, because the highest total weighted score would be 4.0.

As indicated by ratings of 1, the business needs to capitalize more on the “Two new neighborhoods
developing within 3 miles” opportunity and work to avoid the “movies rented from . . . Time Warner”

threat.

An actual EFE Matrix for one of the largest U.S. grocery retailers, Kroger, is given in Table 3-9  on page

82. As shown, the most important external factor facing Kroger, as indicated by a weight of 0.10, deals
with Amazon acquiring Whole Foods Market. Kroger’s key factors are listed in order from the most

important (highest weight) to the least important. Notice how the factors largely meet the AQCD test.

Recall that mathematically, 0.04 is 33 percent more important than 0.03, and a rating of 3 is 50 percent
higher than a rating of 2. Small judgments regarding assignment of weights and ratings in matrices are

vital for making effective larger decisions related to deployment of resources and money across regions
and products.

Table 3-9 An Actual EFE Matrix for Kroger Co.

Opportunities Weight Rating Weighted

Score

1. Organic & natural food sales in the United States 0.09 4 0.36

totaled $47 billion, an increase of nearly $3.7 billion

from the previous year.

2. Online grocery spending is forecasted to grow 0.07 3 0.21

from 4.3% of the total U.S. food and beverage sales

to 20% by 2025.

3. Sales growth in the grocery industry is 3.8% 0.07 4 0.28

annually.

4. Organic food sales increased 8.8% to $55 billion. 0.05 2 0.1

5. Convenience store lunch and dinner services 0.05 2 0.1

contribute 21.7% of in-store sales.

6. The National Retail Federation estimates an 8% to 0.05 1 0.05

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 12% U.S. e-commerce growth in 2019.

7. Global food retail sales are about $4 trillion 0.04 2 0.08

annually, led by supermarkets/hypermarkets.

8. GDP of United States increased from 2.2% to 3.1%. 0.04 2 0.08

9. The Private Label Manufacturer’s Association 0.03 1 0.03

notes that private label products are 25% to 50%

cheaper than national brands, appealing to

customers who value affordability.

10. Studies show that 51.2% of Internet users make 0.01 3 0.03

online purchases using mobile apps.

Threats Weight Rating Weighted

Score

1. Amazon spent $13.7 billion to acquire 460 brick- 0.10 2 0.2

and-mortar Whole Foods Market stores.

2. Target is investing $7 billion to update and 0.08 1 0.08

downsize its stores and develop new exclusive

brands between 2018 and 2020.

3. Walmart’s fiscal 2017 revenue was $485.8 billion, 0.07 3 0.21

up $9.4 billion, or 0.78%. Kroger’s total revenue is

$115.3 billion.

4. Fast-food revenue exceeds $600 billion annually; it 0.05 2 0.1

is rising 15% annually.

5. E-commerce sales as percentage of total retail 0.05 1 0.05

sales is nearly 10%, and rising 3% annually.

6. Walmart groceries cost about 4% less than 0.04 2 0.8

Kroger’s.

7. Walmart.com now offers more than 67 million 0.03 1 0.03

products, a 30% increase this year.

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 8. Walmart created its own “designer” cantaloupe 0.03 2 0.06

that “tastes as sweet in winter as it does in

summer,” and a more flavorful tomato is in the

works.

9. Publix Supermarket is growing 12% a year. 0.03 4 0.12

10. Aldi’s U.S. grocery market is growing 15% a year. 0.02 3 0.06

Total 1.00 3.03

Overall, the total weighted score of 3.03 is above the average (midpoint) of 2.5, indicating that Kroger is

doing pretty well at taking advantage of the external opportunities and minimizing the threats facing the
firm. There is definitely room for improvement, though, because the highest total weighted score would

be 4.0. The rating of 1 for “The National Retail Federation estimates an 8–12% U.S. e-commerce growth
in the next year,” for example, suggests that Kroger should better capitalize on this opportunity, perhaps

by expanding its online offerings.

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The Competitive Profile Matrix
LO 3.7 Explain how to develop and use a Competitive Profile Matrix (CPM).

The Competitive Profile Matrix (CPM)  reveals how a focal firm compares to major competitors across

a range of key factors. This comparative analysis provides important strategic information regarding a

firm’s competitive advantages or disadvantages in a given industry. In determining what factors to

include in a CPM, tailor the factors to the particular industry. For example, in the airline industry, such

factors as on-time arrival, leg room in planes, and routes served are far better factors to include than

merely including “quality of service” or “financial condition” as factors.

Similar to an EFE, a CPM uses weights and total weighted scores, which quantify the importance of a

given factor to the industry, as well as total weighted scores, which quantify how well a given firm is

doing relative to the other two firms evaluated in the CPM. The key difference between a CPM and EFE is

that a CPM compares firms and an EFE Matrix analyzes how a firm internally is responding to key

external issues. Critical success factors include points of competitive advantage within an industry, as
well as other factors that are crucial for a firm to succeed within a given industry; critical success factors

in a CPM can include both internal and external issues. List critical success factors from highest weight

to lowest weight in a CPM.

Weights in a CPM are industry-based and sum to 1.0. Ratings in a CPM are assigned to quantify how well

a firm and its key competitors are performing on each critical success factor; ratings reveal the degree of
effectiveness of the firm’s strategies. Assign a rating between 1 and 4 to each key factor to indicate how

effectively the firm’s current strategies respond to the factor, where 4 = the response is superior, 3 = the

response is above average, 2 = the response is average, and 1 = the response is poor. Ratings are

company-based; weights are industry-based.

A sample CPM is provided in Table 3-10 . In this example, the two most important factors to being

successful in the industry are “advertising” and “global expansion,” as indicated by weights of 0.20. If

there were no weight column in this analysis, note that each factor then would be equally important.
Thus, including a weight column yields a more robust analysis because it enables the analyst to capture

perceived or actual levels of importance. Note in Table 3-10  that Company 1’s strategies are responding

in a superior fashion to “product quality,” as indicated by a rating of 4, whereas Company 2’s strategies

are superior regarding “advertising.” Overall, Company 1’s strategies are responding best, as indicated by

the total weighted score of 3.15 and Company 3 is responding worst. Never duplicate ratings in a row in a

CPM; go ahead and make judgments or decisions as to appropriate ratings based on your research and

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knowledge of the focal firm and rival companies. (NOTE: The point of this example is to illustrate the

mechanics of developing a CPM rather than having industry-specific factors.)

Table 3-10 An Example Competitive Profile Matrix

Company 1 Company 2 Company 3

Critical Success Weight Rating Score Rating Score Rating Score

Factors

Advertising 0.20 1 0.20 4 0.80 3 0.60

Global Expansion 0.20 4 0.80 1 0.20 2 0.40

Financial Position 0.15 4 0.60 2 0.30 3 0.45

Management 0.10 4 0.40 3 0.20 1 0.10

Product Quality 0.10 4 0.40 3 0.30 2 0.20

Customer Loyalty 0.10 4 0.40 3 0.30 2 0.20

Price 0.10 3 0.30 2 0.20 1 0.10

Competitiveness

Market Share 0.05 1 0.05 4 0.20 3 0.15

Total 1.00 3.15 2.50 2.20

NOTE: The ratings values are as follows: 1 = response is poor, 2 = response is average, 3 = response is above average, 4
= response is superior. As indicated by the total weighted score of 2.20, Company 3 is performing worst. Only 8 critical
success factors are included for simplicity; in actuality, however, this is too few. The template asks that 12 factors be
included and to tailor factors to a given industry.

Other than the critical success factors listed in the sample CPM, factors often included in this analysis

include breadth of product line, effectiveness of sales distribution, proprietary or patent advantages,
location of facilities, production capacity and efficiency, experience, union relations, technological

advantages, and e-commerce expertise. In generating the list of critical success factors, strive to include
factors that differentiate firms within the industry (i.e., factors that determine competitive advantages).

Just because one firm receives a 3.20 overall total weighted score and another receives a 2.80 in a CPM,
it does not necessarily follow that the first firm is precisely 14.3 percent better than the second, but it

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does suggest that the first firm is performing better on the variables included in the CPM. Regarding
weights in a CPM or EFE Matrix, be mindful that 0.08 is mathematically 33 percent higher than 0.06, so
even small differences can reveal important perceptions regarding the relative importance of various

factors. The aim with numbers is to assimilate and evaluate information in a meaningful way that aids in
decision making.

An actual CPM is provided in Table 3-11 , again for Kroger Company. Note that the two rival firms,

Walmart and Amazon, receive higher ratings than Kroger on several critical success factors, including
distribution system, advertising, and customer service, for example. Also note the factors are listed

beginning with the most important (highest weight). Note there is no duplication of ratings across a row
and that Kroger is responding worse than Walmart and Amazon on “name recognition” and “advertising.”

Table 3-11 An Actual CPM for Kroger Company

Kroger Walmart Inc. Amazom.com

Company Inc.

Critical Success Weight Rating Score Rating Score Rating Score

Factors

Price 0.17 3 0.51 4 0.68 2 0.34

Competitiveness

Product Quality 0.13 2 0.26 3 0.39 1 0.13

Multiple Formats 0.10 4 0.40 3 0.30 1 0.10

Market Penetration 0.09 4 0.36 3 0.27 2 0.18

Customer Loyalty 0.08 2 0.16 4 0.32 3 0.24

Name Recognition 0.08 1 0.08 4 0.32 3 0.24

Store Locations 0.07 2 0.14 4 0.28 1 0.07

Customer Service 0.07 2 0.14 3 0.21 4 0.28

Market Share 0.06 2 0.12 4 0.24 1 0.06

Financial Profit 0.05 2 0.10 4 0.20 3 0.15

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Distribution 0.05 2 0.10 3 0.15 4 0.20

System

Advertising 0.05 1 0.05 4 0.20 2 0.10

Total 1.00 2.42 3.56 2.09

Implications for Strategists

Figure 3-4  reveals that to gain and sustain competitive advantages, strategists

must collect, analyze, and prioritize information regarding the firm’s competitors,

as well as identify and consider relevant social, demographic, economic, and

technology trends and events impacting the firm and its industry. It is not
uncommon for there to be substantial discussing, perhaps even some cussing, in

deliberating what external factors should be included in an EFE Matrix, because

factors included ultimately impact the firm’s strategies and direction. An

engineering hunt for external facts is essential because resultant strategies can
be expensive and sometimes irreversible. Survival of the firm can hinge on an

effective, thorough external assessment being performed.

Figure 3-4 How to Gain and Sustain Competitive Advantages

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Figure 3-4 Full Alternative Text 

This chapter reveals that actionable, quantitative, comparative, divisional (AQCD)

information is a key ingredient for making strategic decisions. The EFE Matrix and

Competitive Profile Matrix presented in this chapter are excellent strategic-

planning tools for assimilating and prioritizing information to enhance decision-

making.

The Process of Performing an External Audit

In performing an external audit, involve as many managers and employees as

possible because involvement leads to understanding and commitment;

individuals appreciate having the opportunity to contribute ideas and to gain a

better understanding of their firm’s industry, competitors, markets, and

strategies. An effective way to gather competitive intelligence and information

across the 10 forces discussed in this chapter is to ask various managers to

monitor particular sources of information, such as key magazines, trade journals,

newspapers, and online sources. These persons can submit periodic scanning
reports to the person(s) who coordinate the external audit. This approach

provides a continuous stream of timely strategic information and involves many

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individuals in the external-audit process. Suppliers, distributors, salespersons,

customers, and competitors represent other sources of vital information.

After external-audit information is gathered, it should be assimilated into an EFE

Matrix and CPM as described herein. To accomplish this task, some firms

conduct a meeting or series of meetings to collectively determine the most

important opportunities and threats facing the firm. A prioritized list of these

factors can be obtained by requesting all managers to individually rank the

factors identified, from 1 (for the most important opportunity/threat) to 20 (for the

least important opportunity/threat). Then, by summing the rankings, a prioritized

list of factors is revealed. Prioritization is absolutely essential in strategic

planning because no organization can do everything that would benefit the firm;

tough choices among good options have to be made; in both an EFE Matrix and

CPM factors are listed from most important (highest weight) to least important.

Even a full list of more than 50 factors can be distilled to the 20 most important
in the manner described.

Implications for Students

In developing and presenting the external assessment for your firm, be mindful

that gaining and sustaining competitive advantage is the overriding purpose of

developing the EFE Matrix and CPM. During this “external” section of your written
or oral project, emphasize how and why particular factors can yield competitive

advantage for the firm. In other words, instead of robotically going through the

weights and ratings (which, by the way, are critically important), highlight various
factors in light of where you are leading the firm. Make it abundantly clear in your

discussion how your firm, with your recommendations, can subdue rival firms or

at least profitably compete with them. Showcase during this part of your project

the key underlying reasons how and why your firm can prosper among rivals.
Remember to be prescriptive, rather than descriptive, in the manner that you

present your entire project. If presenting your project orally, be self-confident

and passionate rather than timid and uninterested. Definitely “bring the data”

throughout your project because “vagueness” is the most common downfall of

students in doing case analysis. To obtain the most recent information about your

case company, read the firm’s most recent quarterly report; the narrative that

accompanies quarterly reports is excellent.

It is necessary for students in developing an EFE Matrix to include specific

(AQCD) factors related to direct competitors, trends in the economy, legal or tax

issues, consumer attitudes, consumer demographics, and other similar facts,

trends, and events. In addition, there are factors associated with Porter’s Five

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Forces that may need including. For example, you may want to include factors

such as the following:

1. China recently established four free-trade zones allowing foreign

companies to establish operations in the country without having a Chinese

partner; this may be an external threat because rival firms can enter the

market more easily, such as in the automobile industry.

2. Potential substitute products may be a threat. For example, consumption

of bottled water rising 8 percent annually is a threat for Dr Pepper Snapple.

3. Suppliers in any industry can potentially siphon away profits as easily as a

direct competitor; suppliers raising prices by 10 percent may be an

external threat.

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Chapter Summary
Increasing turbulence in markets and industries around the world means the external audit has become

an explicit and vital part of the strategic-management process. This chapter provided a framework for
collecting and evaluating economic, social, cultural, demographic, environmental, political, governmental,

legal, technological, and competitive information. The AQCD Test was explained to assure that

opportunities and threast as stated in an EFE Matrix are actionable, qualitative, comparative, and
divisional to the extent possible.

Firms that do not mobilize and empower their managers and employees to identify, monitor, forecast, and
evaluate key external forces may fail to anticipate emerging opportunities and threats and, consequently,

may pursue ineffective strategies, miss opportunities, and invite organizational demise. Firms not taking

advantage of e-commerce and social-media networks are technologically falling behind.

A major responsibility of strategists is to ensure development of an effective external-audit system. This

includes using information technology to devise a competitive intelligence system that works. The EFE
Matrix, CPM, and Porter’s Five-Forces Model can help strategists evaluate their market and industry, but

these tools must be accompanied by good intuitive judgment. Multinational firms especially need a

systematic and effective external-audit system because external forces among foreign countries vary so

greatly.

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Key Terms and Concepts
actionable responses  (p.67)

chief information officer (CIO)  (p.72)

chief technology officer (CTO)  (p.72)

competitive intelligence (CI)  (p.72)

Competitive Profile Matrix (CPM)  (p.82)

external audit  (p.66)

External Factor Evaluation (EFE) Matrix  (p.79)

external forces  (p.67)

industry analysis  (p.66)

information technology (IT)  (p.72)

Porter’s Five-Forces Model  (p.74)

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Issues for Review and Discussion
3-1. Explain why it is important to develop both a full and narrow list of key external factors in

developing an EFE Matrix.

3-2. Explain the significance of an EFE Matrix total weighted score of 3.67 versus a 1.59.
3-3. What does a CPM total weighted score of 1.88 imply for a company?

3-4. In an EFE Matrix, should the weights for opportunities be designed to roughly equal the

weights for threats? Why?

3-5. List the 10 external forces discussed in this chapter. When and why would some forces
be more important than others?

3-6. How have external factors resulted in a major overhaul to the traditional retail industry as

we once knew it?

3-7. Provide a synopsis of IBISWorld, Mergent Online, and PrivCo.

3-8. Compare and contrast the EFE Matrix with a CPM in terms of value provided for a

strategist in performing an external assessment.

3-9. Mathematically, how much more important is a rating of 4 compared to a rating of 3?

Why is this concept important in developing strategic-planning matrices?

3-10. Describe how political elections can be an important external factor for companies to

consider. Select an industry and reveal some key political factors impacting firms.

3-11. List some legal or ethical ways to gather competitive intelligence. List some illegal or
unethical ways.

3-12. As the value of the dollar rises, U.S. firms doing business abroad see their profits fall, so

some firms raise prices of their products to offset the decrease in profits. What are some risks

of raising prices?
3-13. Does McDonald’s Corp. benefit from a low or high value of the dollar? Explain why.

3-14. Explain how Facebook, Twitter, and Instagram can represent a major threat or

opportunity for a company.

3-15. If your CPM has three firms and they all end up with the same total weighted score,

would the analysis still be useful? Why?

3-16. What external factors impact the ability of state to attract business? Visit the website:

https://www.cnbc.com/2017/06/12/heres-how-your-state-can-become-a-cnbc-top-state-for-‐

business.html and summarize how the selection criteria used to determine the best states for

business compares to the information presented in this chapter.

3-17. Governments sometimes use “protectionism” to cope with economic problems,

imposing tariffs and subsidies on foreign goods as well as placing restrictions and incentives

on their own firms to keep jobs at home. What are the strategic implications of protectionism

for international commerce?

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3-18. Rank order the relative importance of Porter’s five forces in the business of operating a

college or university.

3-19. Let’s say you work for McDonald’s and you applied Porter’s Five-Forces Model to study

the fast-food industry. Rank the five forces as to relative importance for strategic planning at

McDonald’s.

3-20. Explain why it is appropriate for ratings in an EFE Matrix to be 1, 2, 3, or 4 for any

opportunity or threat.

3-21. Why is inclusion of about 20 factors recommended in the EFE Matrix rather than about

10 factors or about 40 factors?

3-22. In developing an EFE Matrix, explain why is it advantageous to arrange your

opportunities according to the highest weight, and your threats likewise?

3-23. In developing an EFE Matrix, would it be best to have 10 opportunities and 10 threats or

would 17 opportunities (or threats) be fine with 3 of the other to achieve a total of 20 factors

as desired?

3-24. Could or should critical success factors in a CPM include external factors? Explain.

3-25. Explain how to conduct an external strategic-management audit in a business versus as

a student performing case analysis.

3-26. Identify a recent economic, social, political, or technological trend that significantly

affects the local Pizza Hut.

3-27. Discuss the following statement: Major opportunities and threats usually result from an
interaction among key environmental trends rather than from a single external event or factor.

3-28. Use Porter’s Five-Forces Model to evaluate competitiveness within the U.S. banking
industry.

3-29. How does the external audit affect other components of the strategic-management
process?

3-30. Construct an EFE Matrix for an organization of your choice.

3-31. Let’s say your boss develops an EFE Matrix that includes 62 factors. How would you
suggest reducing the number of factors to 20?

3-32. Discuss the ethics of gathering competitive intelligence.

3-33. Discuss the ethics of cooperating with rival firms.

3-34. Do you agree with Porter’s view that competitive positioning within an industry is a key
determinant of competitive advantage(s)?

3-35. Define, compare, and contrast the weights versus ratings in an EFE Matrix.
3-36. What is the different between factors listed in an EFE Matrix versus critical success

factors listed in a CPM? In which matrix is it particularly important to include specific,

actionable factors? Why?

3-37. List the 10 external forces that give rise to opportunities and threats.
3-38. Why do annual reports often state external risk information in really vague terms; why
should strategists avoid including such vagueness in developing an EFE Matrix?

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 3-39. Explain the AQCD Test for determining the quality of an external factor. Why should the
AQCD Test be met to the extent possible in performing an external assessment?

MyLab Management Writing Assignments

If your instructor is using MyLab Management, go to www.pearson.com/

mylab/management for Auto-graded writing questions as well as the following

Assisted-graded writing questions:

3-40. Describe the “process of performing an external audit” in an

organization doing strategic planning for the first time.

3-41. Compare and contrast the duties and responsibilities of a Chief

Information Officer (CIO) with a Chief Technology Officer (CTO) in a large

firm.

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Assurance-of-Learning Exercises

Set 1: Strategic Planning for Coca-Cola

Exercise 3A Develop an EFE Matrix for Coca-Cola

Purpose

This exercise will give you practice in developing an EFE Matrix. An EFE Matrix summarizes the results of
an external audit. This is an important strategic-planning tool widely used by strategists.

Instructions
Step 1 Join with two other students in class, and jointly prepare an EFE Matrix for Coca-Cola. Refer to

the Cohesion Case (p. 28) and to Exercise 1A (p. 37), if necessary, to identify external
opportunities and threats. Make sure the factors you include are actionable, quantitative,

comparative, and specific. Use the online sources listed in Table 3-7 . Be sure not to include

strategies as opportunities; but do include as many monetary amounts, percentages, numbers,

and ratios as possible.

Step 2 All three-person teams participating in this exercise should record their EFE total weighted
scores on the board. Put your initials after your score to identify it as your team’s score.

Step 3 Compare the total weighted scores. Which team’s score came closest to the instructor’s answer?

Discuss reasons for variation in the scores reported on the board.

Exercise 3B Develop a Competitive Profile Matrix for Coca-Cola

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Purpose
Monitoring competitors’ performance and strategies is a key aspect of an external audit. This exercise is

designed to give you practice in evaluating the competitive position of organizations in a given industry

and assimilating that information in a CPM.

Instructions
Step 1 Turn back to the Cohesion Case and review the section on competitors (p. 28). Also view online

resources that compare Coca-Cola with Pepsi. Use the sources listed in Table 3-7 .
Step 2 Prepare a CPM that includes Coca-Cola, Pepsi, and Dr Pepper.

Step 3 Turn in your CPM for a classwork grade.

Set 2: Strategic Planning for My University

Exercise 3C Develop an EFE Matrix for Your College or University

Purpose
Most colleges and universities do strategic planning. Institutions are consciously and systematically

identifying and evaluating external opportunities and threats facing higher education in your state, the
nation, and the world.

Instructions
Step 1 Join with two other individuals in class and jointly prepare an EFE Matrix for your institution.

Step 2 Go to the board and record your total weighted score in a column that includes the scores of all

three-person teams participating. Put your initials after your score to identify it as your team’s

score.

Step 3 Which team viewed your college’s strategies most positively? Which team viewed your college’s

strategies most negatively? Discuss the nature of the differences.

Exercise 3D Develop a Competitive Profile Matrix for Your College or University

Purpose
Your college or university competes with all other educational institutions in the world, especially those in

your own state. State funds, students, faculty, staff, endowments, gifts, and federal funds are areas of

competitiveness. Other areas include athletic programs, dorm life, academic reputation, location, and
career services. The purpose of this exercise is to give you practice in thinking competitively about the

business of education in your state.

Instructions
Step 1 Identify two colleges or universities in your state that compete directly with your institution for

students. Interview several persons, perhaps classmates, who are aware of particular strengths

and weaknesses of those universities. Record information about the two competing universities.

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Step 2 Prepare a CPM that includes your institution and the two competing institutions. Include the

following 10 factors in your analysis:

1. Tuition costs

2. Quality of faculty

3. Academic reputation

4. Average class size

5. Campus landscaping

. Athletic programs

7. Quality of students
. Graduate programs

9. Location of campus

10. Campus culture

Step 3 Submit your CPM to your instructor for evaluation.

Set 3: Strategic Planning to Enhance My Employability

Exercise 3E How Competitive Is Your State Among All States for Finding a Job?

Purpose
Just like companies, states compete against each other across numerous variables. For more than a

decade, CNBC has been conducting annual research to determine where each U.S. state ranks (out of the

50 states) in terms of their quality of life, job prospects, business attractiveness, and education, among

many other things. Each year, data is collected on more than 60 measures of competitiveness and all 50
states are scored on each measure, ranging from economic policies and taxes, to the cost of food, to the

quality of their workforces.

The purpose of this exercise is to determine how your state ranks in terms of its job outlook and

prospects. This information can enhance your job search as you near completion of a business

administration degree.

Instructions
Step 1 Go to the following website https://www.cnbc.com/2017/07/11/top-states-to-find-a-job-in-

america-in-2017.html and take a while to explore the types of reports offered, as well as the

source of data collected and used to create such reports.

Step 2 Review where your state ranks on the list of top states for business, top states to get an

education, and top states to find a job. Determine the three best competitive aspects of your

state.

Step 3 Are there similarities between your state’s ranking on each of these three reports? Do you think
job outlooks, education, and business attractiveness are inherently related? Develop a report

explaining your answer. Use information from the reports to support your arguments. What

actions could your state take to improve its competitiveness overall?

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Exercise 3F Compare and Contrast CareerBuilder, Glassdoor, Monster Jobs, and
ZipRecruiter

Purpose
Job hunting websites compete against each other for your business. Both job seekers and companies

with job openings use job hunting websites, especially CareerBuider, Glassdoor, Monster Jobs, and

ZipRecruiter. The purpose of this exercise is to familiarize you with the operation, strengths, and

weaknesses of these four websites.

Instructions
Step 1 Review the four named websites taking note of what you especially like and dislike.

Step 2 Prepare a CPM for CareerBuilder. Include the three rival websites in your analysis.

Exercise 3G A Template Competency Test

Purpose
The free Excel strategic planning template at www.strategyclub.com is widely used for strategic planning

by students and small businesses; this exercise aims to enhance your familiarity with the template.

Developing competence with the template will enable you to place this skill appropriately on your resume,

in addition to facilitating your development of a comprehensive strategic plan for an assigned case

company.

Instructions
Answer the following six questions about the template. Discuss your answers with classmates to

determine any issues or concerns.

Questions
1. How many factors does the template include in an EFE Matrix; in a CPM?

2. What happens using the template if you enter an inappropriate rating or weight such as a

weakness rating of 4 or a weight of 1.2?

3. In using the template, why are changes to a matrix done on Part I or Part II rather than on a

matrix itself?

4. Why is it best to transform a firm’s income statement and balance sheet into the template

financial statement format early in developing a strategic plan for a case company?

5. What are key differences between Part I and Part II in the template?

. Does the template address vision and/or mission statements?

Set 4: Individual versus Group Strategic Planning

Exercise 3H What External Forces Are Most Important In Strategic Planning?

Purpose

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A prioritized list of external factors is needed for effective strategic planning. Oftentimes the process

entails all managers individually ranking the factors identified, from 1 (most important) to 20 (least

important). Prioritization is absolutely essential in strategic planning because no organization can do

everything that would benefit the firm; tough choices among good choices have to be made.

External forces can be divided into five broad categories: (1) economic forces; (2) social, cultural,

demographic, and natural environment forces; (3) political, governmental, and legal forces; (4)

technological forces; and (5) competitive forces. For some companies or organizations at various times,

some forces may be more important to include than others. This exercise reveals the authors’ ranking of

the relative importance of five external forces for inclusion in an external assessment.

The purpose of this exercise is to examine more closely the external areas of a business. In addition, the
purpose of this exercise is to examine whether individual decision-making is better than group decision-

making. Academic research suggests that groups make better decisions than individuals about eighty

percent of the time.

Instructions
Rank the five external forces as to their relative importance

. First, rank the forces as an individual. Then, rank

the forces as part a group of three. Thus, determine what person(s) and what group(s) here today can

come closest to the expert ranking. This exercise enables examination of the relative effectiveness of

individual versus group decision-making in strategic planning.

Steps
1. Fill in Column 1 in Table 3-12  to reveal your individual ranking of the relative importance of

the five forces (1 = most important, 2 = next most important, etc.). For example, if you feel
Economic factors are the 4th most important external force, then enter a 4 in Table 3-12  in

Column 1 beside Economic.

Table 3-12 External Force Analysis: Comparing Individual versus Group

Decision-Making

External Forces Column Column Column Column Column

1 2 3 4 5

1. Economic

2.

Social/Cultural/Demographic/Environment

3. Political/Governmental/Legal

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 4. Technological

5. Competitive

Sums

2. Fill in Column 2 in Table 3-12  to reveal your group’s ranking of the relative importance of the

five forces (1 = most important, 2 = next most important, etc.).

3. Fill in Column 3 in Table 3-12  to reveal the expert’s ranking of the five forces.

4. Fill in Column 4 in Table 3-12  to reveal the absolute difference between Column 1 and Column

3 to reveal how well you performed as an individual in this exercise. (NOTE: Absolute difference

disregard negative numbers)

5. Fill in Column 5 in Table 3-12  to reveal the absolute difference between Column 2 and Column

3 to reveal how well your group performed in this exercise.

. Sum Column 4. Sum Column 5.

7. Compare the Column 4 sum with the Column 5 sum. If your Column 4 sum is less than your

Column 5 sum, then you performed better as an individual than as a group. Normally, group

decision-making is superior to individual decision-making, so if you did better than your group,

you did excellent.

. The Individual Winner(s): The individual(s) with the lowest Column 4 sum is the WINNER.

9. The Group Winners(s): The group(s) with the lowest Column 5 score is the WINNER.

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Mini-Case on Sam’s Club

Sam’s Club is Booming in China

Sam’s Club in the United States has struggled to attract affluent shoppers. However, in China, Sam’s Club

targets high-income consumers, and specifically affluent mothers with young children. Sam’s Club does a

great job at positioning itself for the wealthy Chinese target market. Advertised as a trusted place with
imported goods and high-quality foods, Sam’s Club stores are located in China’s most affluent cities. Its

success thus far in China can be attributed largely to its effective market segmentation, targeting, and
positioning.

Kevin Foy/Shutterstock

Many large firms have trouble doing business in China despite the country’s high GDP, rising levels of

disposable income, shift to becoming a high-tech nation, and growing middle class. But Walmart’s Sam’s

Clubs are booming in China. Three of the top five Sam’s Clubs by sales are located in China. Rather than

positioning itself as a place for bulk items and closeouts, Sam’s Clubs in China are positioned as a place
for high-quality products and foods. For example, eggs are guaranteed to be less than 12 days old and all

have a serial number that customers can enter into their smartphone and see the production date and

origin.

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Sam’s in China benefits from not having to “do battle” with Costco Wholesale; Costco does no business

in China. Sam’s has roughly 2 million members in China, many whom are affluent moms age 35 to 40, a

primary target group. The number of Sam’s stores in China is expected to increase from 20 at the start of

2018 to 40 by 2020. Sam’s in China recently provided “two-kid seat” carts in all stores to take advantage

of China recently relaxing its “one-child policy.”

Another feature of Sam’s stores in China is extra large parking lots; nearly all customers drive to Sam’s

and ample parking is greatly appreciated in a country where crowded and expensive parking is the norm

otherwise. Sam’s strategies in China are an excellent example of how a firm must adapt it policies,

procedures, features, and actions when it enters a foreign land to capitalize on external opportunities and
threats in that country. What works in one country quite likely needs changing in another; pushing the

same business model globally has spelled doom for many firms that enter

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