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Identifying Opportunities and Threats

Identifying Opportunities and Threats

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Published by: api-26073353 on Dec 29, 2008
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10/14/2013

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What you will learn in this section

:
• • Envisioning Strategy – Definition – Framework – Visual Models External Analysis – PEST – PEST Impact Analysis Industry and Competitive Analysis – Industry Structure – Evolution of Industries – Industry Supply Chain – Potential Industry Earnings – Porter’s 5 Forces Analysis – Competitive Intensity – Strategies for minimizing competitive forces – Perceptual Map – Barriers to Entry/Incumbency advantages – DSIR effect Company Resources and Capabilities – ARC Analysis/HR – SWOT Analysis – Value Creating Processes/Core Competencies – Strategic Gameboard – Balanced Scorecard – Change Management

© Sunil Mehrotra

Understanding Strategic Management is like pealing an onion

Analyzing the External Environment: PEST Analysis
Fiscal Policy Monetary Policy Tax laws Intellectual Property protection Poli Copyright laws tica l Securities Laws Business climate

Cha ng

e

External Environment ic m o on nge Ec h a C Opportunities Opportunities

GDP GDP growth Exchange rate Unemployment rate Skilled labor Education levels Trade unions Infrastructure Healthcare costs Raw materials

New technologies l Materials technologies ic a g Process technologies o l o ge n Information technologies ch han Communication technologies e T C Government incentives Energy costs Broadband penetration Technology incubation

Threats Threats
So c Ch ial ang e
Demographics Income Distribution Social stability Ethnic patterns Consumerism Discretionary income Fashions/fads Consumer trends

© Sunil Mehrotra

PEST Analysis using the Internet
http://delicious.com/smehro/mbam619+PEST+Politics%20 PEST Politics
http://www.nytimes.com/interactive/2008/10/18/business/20081019-metrics-graphic.html Can Presidents tame business cycles

http://harvardbusiness.org/flatmm/hbextras/200805/recessions/ HBR Interactive graphics on recessions http://delicious.com/smehro/mbam619+PEST+economy%20 PEST Economy http://www.fedstats.gov/?cm_sp=ExternalLink-_-Federal-_-DOC Fed Stats all in one place http://www.allbusiness.com/marketing-advertising/market-research-analysis-market/114698161.html Collection of resources and links to free data http://delicious.com/smehro/mbam619+PEST+Social%20 PEST Social http://delicious.com/smehro/mbam619+PEST+Technology%20 PEST Technology

PEST Analysis: Example Federal Deficit as % of GDP

Example of fiscal policy : Visualizing federal budget

Example of fiscal policy: National Debt: 1940 to present

Who is funding our debt?

Citigroup's role in CDOs and the financial crisis

Auto worker wages

http://www.nytimes.com/imagepages/2008/12/10/business/20081210_LEONHARDT_GRAPHIC.html

Economy at a glance
Economic Indicators
Real Economic Grow th

Existing Home Sales

Consumer Prices

Sept. 2008 Oct. 2008

Unemployment

Productivity

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

% change from previous period

World map:Population

New technologies are being adopted faster today

Change Will Be Relentless:
Wireless industry example
Micro Fuel Cells Light Emitting Polymer Displays Mesh Networks WCDMA 802.11b Wi-Fi UWB 4G Wireless MIMO Smart Dust
Technology Trigger

Visibility

GPRS EDGE MEMS Wireless Broadband
As of 2Q03 Trough of Disillusionment Slope of Enlightenment Plateau of Productivity
16

Peak of Inflated Expectations

Maturity

Gartner Predicts: Hot Spots Explode …
75,000,000 Users 167,000 Hot Spots Hot Spot Users/ Hot Spots

30,000 Users 1,000 Hot Spots

2001

2008

17

How the Web has grown and evolved

Two Key Forces Driving Business Change
Faster Economic Pace Impatient Customers

Emerge Triennial

Threats Strategy

Appear Rolling Keyholes Chaotic

“Time Tortured”

Windows Opportunity Forecast Demand

Demand Convenience

This Is the “Now Economy”

19

Culture: Innovation in art

20

21

Analyzing the External Environment: PEST Analysis
Fiscal Policy Monetary Policy Tax laws Intellectual Property protection Poli Copyright laws tica l Securities Laws Business climate

Cha ng

e

External Environment ic m o on nge Ec h a C Opportunities Opportunities

GDP GDP growth Exchange rate Unemployment rate Skilled labor Education levels Trade unions Infrastructure Healthcare costs Raw materials

New technologies l Materials technologies ic a g Process technologies o l o ge n Information technologies ch han Communication technologies e T C Government incentives Energy costs Broadband penetration Technology incubation

Threats Threats
So c Ch ial ang e
Demographics Income Distribution Social stability Ethnic patterns Consumerism Discretionary income Fashions/fads Consumer trends

© Sunil Mehrotra

Political Change Impact

Fiscal Policy Monetary Policy Tax laws Intellectual Property protection Copyright laws Securities Laws Business climate International Trade

“Economy” Change Impact

GDP GDP growth Exchange rate Unemployment rate Skilled labor Education levels Trade unions Infrastructure Healthcare costs Raw materials

It is crucial to describe the subject for the PEST analysis clearly so that people, contributing to the analysis, and those interpreting the results from PEST analysis, could understand the purpose of the PEST assessment and its implications

PEST Impact Matrix
Nature of change Impact of change Opportunities Threats Threats Strategic response

Political Change Economic Change Social Change Technological Change
© Sunil Mehrotra

PEST Impact example:
Nature of change Impact of change Opportunities Threats Threats Strategic response

Political Change Economic Change Social Change Technological Change
© Sunil Mehrotra

PEST Analysis Example:
Poli tica l Ch ang e
Infrastructure Technologies Emerging Markets

ic m o on nge Ec h a C

Originations

Digital Connections

Opportunities Opportunities
Environmental Solutions Demographics

l ic a log e no ch hang Te C

So c Ch ial ang e
© Sunil Mehrotra

PEST Impact example:
Nature of change Impact of change Opportunities Threats Threats Strategic response

Political Change Economic Change Social Change Technological Change
© Sunil Mehrotra

PEST Impact example:
Demographics

© Sunil Mehrotra

PEST Impact example:

© Sunil Mehrotra

Student Examples: Pest Analysis
Breanne Hayes April 2008 MBA Graziadio School of Business and Management Pepperdine University

Elizabeth Passeretti April 2008 MBA Candidate Graziadio School of Business and Management Pepperdine University

PEST example:
Nature of change Impact of change Opportunities Threats Threats Strategic response
Shorten Product Development Cycle Evaluate acquisitions Identify product/market needs to serve the elderly Potential new competitors Invest in promising start-ups

Political Change Economic Change Social Change Technological Change

More FDA approval process conservative

Longer time to market

US economic downturn

Consumer spending down Caring for the elderly New growth opportunities

Generic drugs more accepted

Aging Population

New materials for joint replacement

New cost/quality frontier

New products

© Sunil Mehrotra

PEST Impact example:
Nature of change Impact of change Opportunities Threats Threats Strategic response
Operational Efficiency to reduce costs Focus on Operational Efficiency Identify product/market needs to serve the elderly Potential new competitors Invest in/acquire promising start-ups

Political Change Economic Change Social Change Technological Change

Democratic party More in power government control $100+ crude oil price Commodity prices increasing Caring for the elderly New growth opportunities New startups. Disruptive technologies

Pressure on prices

Pressure on costs

Aging Population Breakthrough in science. Process improvement technologies

New science and new technologies imminent

© Sunil Mehrotra

Contemplating the Future

Scenario Planning

http://strategicframing.com/strategic-planning-workshop/

Nappies 1-6?
What is visual thinking? What is Strategic Management? -strategic planning framework What is the role of the CEO/Leader? -Leadership styles What is PEST Analysis? Using the Internet for PEST Analysis -Data sources and web resources Identifying business Opportunities and Threats through PEST Impact analysis framework

Mnemonic 2

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