Strategic Management Framework
Perform
Situational
Analysis
Feedback
Product
Leadership
Value
Customer
Intimacy
Develop
Mission & Vision
Operational
Excellence
Set Objectives
& Craft Strategies
Implement
Strategy
Assess Value Creation
& Provide Feedback
Environmental Variables
MacroEnvironment
Technological
Demographic
Political
Wheelen p. 11
Industry
Environment
Internal
Environment
Economic
Social
Global
External Forces
• Economic Variables
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–
–
–
–
–
–
–
–
Cost of Money
Consumer debt levels
Consumer Price Index
Currency value/rates
Gov’t deficit
GDP
GNP
Housing starts
Capital Spending
• Demographic Variables
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–
–
–
–
–
–
–
Age distributions
Gender
Family size
Income levels
Occupation trends
Education
Religion
Race
External Forces
• Social Variables
– Attitude toward:
•
•
•
•
•
•
Savings
Material Goods
Business
Represented Minorities
Work & Careers
Leisure time
– Importance of:
• Environmental Issues
• Family & Religion
• Political/Legal Variables
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–
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–
–
–
–
Gov’t Regs/De-Regs
Consumer Laws
Local/National Elections
Judicial System
Levels of Gov’t spending
Gov’t Fiscal Policy
Voter Participation
External Forces
• Technological Variables
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–
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Biotechnology/Pharmaceuticals
Consumer Electronics
Robotics and AI
Handling Industrial Waste
Food Additives
Satellite Tech. & Imaging
Total Fed Spending on R&D
Fed protected tech. released to
commercial world
– Changes in Info tech.
Cluster Interactions in the Macro
Environment
Economic
Cluster
Demographic/
Socio-cultural
Cluster
Technological
Cluster
Political/
Legal
Cluster
The Nature of Industry Change
Incremental vs. Radical
•We naturally assume incremental
•How do we identify radical?
Scenario Planning
• Identifies key factors that influence
decision making
• Derives driving forces that influence
these factors
• Evaluates importance and uncertainty
• Composes plots for alternate futures
• Identifies indicators and trigger events
Game Theory
Who are the players?
Anyone who effects your earnings
•Never assume that your opponents’
behavior is fixed.
•Predict their reaction to your behavior.
• When the rules of the game are flexible
manipulate them to your advantage.
Environmental Variables
MacroEnvironment
Industry
Environment
Growth rate
Competitors
Internal
Environment Customers
Suppliers
Community
Wheelen p. 11
Shareholdrs
Industry Matrix
Key Success
Factors
Weight
1
8- 10 factors
Total
Company
Rating
2
Sum is 1.0
(most
Important to
Least
important)
Weighted
Score
3
Complete for
company A & B
(Outstanding 5
To
Poor 1)
1.0
Table 3-3 Wheelen p. 69 and Table 3-4 p. 74
4
Complete for
company A & B
(column 2 X
Column 3, ranging
1 to 5 )
Six Forces Driving Industry
Competitiveness
Bargaining
Power of
Suppliers
Substitute
Products
Bargaining
Power of
Stakeholders
Rivalry
Among
Firms
Bargaining
Power of
Customers
Entry of
New Competitors
SEES Model
Scanning
•Searching for current
And emerging trends
Sharing
•Disseminating
Information
•Encouraging employee
participation
“SEES”
External Audit
Process
Evaluating
•Attaching significance
•Identifying opportunities
& threats
Estimating
•Forecasting
future trends
Become an Extension of Your
Customer’s Organization
Company Organizations
Customer Organizations
Marketing
Marketing
Design &
Development
Product
Development
Quality Engineering
Quality & Procurement
Sales
Sales & Purchasing
Determining Market Size
Top Down Data
Third party Data
Your Industry
End Product Market
•Research Groups
•Industry Participants-i.e. suppliers
•Market Research Firms
•Government data
•Industry forecasts
JUDGE TO ALIGN
Bottom Up Data
Internal Data
Marketing
Sales
•Specific customers
•Specific programs
•Units & $ forecast
•Pricing assumptions
Strategic Management Framework
Perform Internal
Situational Audit
Analysis
Feedback
Product
Leadership
Value
Customer
Intimacy
Develop
Mission & Vision
Operational
Excellence
Set Objectives
& Craft Strategies
Implement
Strategy
Assess Value Creation
& Provide Feedback
Where the Money Goes
•
•
•
•
•
•
•
•
Co –op advertising and discounts to retailers
Pressing album and printing booklet
Profit to Label
Retail Markup
Company overhead, distribution & shipping
Marketing and Promotion
Royalties to artist and songwriter
Signing act and producing the record
.85
.75
.59
6.22
3.34
2.15
1.99
1.08
16.98