TABLE 3.5.

SUMMARY JOB AID—EXTERNAL LOGIC

Business Environment From these, Industry Structure
What current trends are/will be identify key threats For this type of industry, what is:
affecting this type of business? and opportunities
for this customer. The intensity of the rivalry
Economic How fiercely do firms in this industry
What changes in the economy are compete with each other?
impacting the business? Fluctuating
interest rates? Availability of capital? The bargaining power of suppliers?
Other? Are key suppliers many or few? Are
they tightly organized or fiercely
Demographic competitive?
What changes in the population
are affecting the business? The bargaining power of buyers
Aging population? Labor market Are there many sources of the
migrating? Other? customers’ products/services, or are
they a scarce resource?
Political/legal The threat of new entrants
What changes in legislation, How easy is it for new competitors to
regulation or legal precedent is enter the market?
impacting this industry? Rise in
lawsuits or awards? Changes in The threat of new entrants?
safety or environmental restrictions? How easy is it for new competitors to
Reductions in federal funding? enter the market?
Other? The threat of substitutes
Technological How likely is it that the customer’s
What technological trends or product will be completely
innovations are affecting (or are supplanted by something different
likely to affect) this industry? (e.g., typewriters replaced by
Electronics? Biotech? Chemistry? computers)?
What specific developments? Is the industry growing fast?

Sociocultural
What changes in people’s habits,
desires, actions, or beliefs are
affecting the business? Changes in
credit spending? Educational level?
Other?

Based on Michael Porter’s Competitive Strategy.

© Lynn Kearny 2009. Reprinted with permission of Lynn Kearny.

 EXTERNAL SCAN WORKSHEET
Do environmental scan for the business you are targeting: ■ Business Environment ■ Industry Structure

BUSINESS ENVIRONMENT KEY THREATS INDUSTRY STRUCTURE

Economic? Competitors: what is intensity of rivalry?

Demographic? Bargaining power of suppliers?

Political/Legal? KEY OPPORTUNITIES Bargaining power of buyers?

Technological? Threat of new entrants?

Sociocultural? Is the industry growing or shrinking? How fast? Threat of substitutes?

• Considering your answers, what appear to be key threats and opportunities for this business?
• How can you test your assessment of the threats and opportunities?

© Lynn Kearny 2009. Reprinted with permission of Lynn Kearny.