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Chapter 3 Analyzing the external strategic environment

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									         CHAPTER 3
   ANALYZING THE EXTERNAL
   STRATEGIC ENVIRONMENT



Bess Luker- Mamie Duprie- Alicia Estrada-
Taylor Watts- Ryan Dupriest
What will be covered
   Globalization
   Global Trends
   Risk and Uncertainty
   Scenario Analysis
   Business and Society
Globalization
   World’s major economics and intensified competition
   70-85 % of U.S. Economy
   Business Growth
   Flow of Information
Understanding Globalization
   Focus on the trade and regard the free flow of
    capital
   Political Globalization
   Economic Globalization
   Technological Globalization
   Psychological Globalization
Regionalism: A Stepping Stone on the
path Toward a global Economy
   Globalization a work in progress
   Triad
   EU
   NAFTA
   ASEAN
   EUROMED
   APEC
   Mercosur
New Powerhouses: India and China
   India: Investment is growing, foreign capital and
    technology are coming in, Western-style competition is
    taking hold, and state intervention is diminishing.

    China: has combined inexpensive labor with technology
    to create a major, global competitive advantage.

   A key challenge for Western companies doing business
    in China is that the government still controls many
    aspects of the business environment.
Global Tectonics and Their Strategic
Implications
   The maturity of many Western markets has forced
    firms to expand beyond the confines of the
    developed world into areas with greater potential
    that carry a level of risk far greater than that to
    which they are accustomed.]

   Greater participation means more growth.
Global Tectonics
   Describes the process by which developing trends in
    technology, nature, and society slowly revolutionize
    the business environment, much like Earth’s tectonic
    plates shift the ground beneath our feet.
   Environmental tectonics
   Technological tectonics
   Societal tectonics
12 Global Trends
Present the most significant challenges for companies in the next 30 years.
1.   Population Trends
2.   Urbanization
3.   The spread of infectious Diseases
4.   Resource management
5.   Environmental degradation
6.   Economic integration
7.   Knowledge dissemination
8.   Information technology
9.   Biotechnology
10.  Nanotechnology
11.  Conflict
12.  Governance
1. Population Trends
   Population is rising
   Highest in areas not capable
   Aging of population
   Women in the workforce
2. Urbanization
 Migration from rural to urban areas( less than
  half of population lives in cities)
 Mega cities will become common
3. The Spread of Infectious disease
   Greater levels of migration = greater likelihood of
    epidemics.
   Impact on economic growth
4. Resource management
   Access to fresh water is a key concern.
   Possibility of future conflicts over water resources.
   Energy availability is a ongoing concern
     Wind   Farms
5. Environmental degradation
   Effects on ecosystems
     Droughts

     Water   pollution
     Deforestation

     Erosion

     Kyoto Treaty- reduce greenhouse gas and gas
      emissions world wide.
6. Economic integration
   Cross-boarder economic activity
     Airbus    Consortium
       Britain
       Germany
       Spain
       France

   Multinational Corporations (MNC’s)
     Some   industries are more regulated than others
       Steal Industry
       Telecommunications
7. Knowledge Dissemination


   Emergence of a global economy
   Internet economy
   Smart products
8. Information Technology

   Internet
   Ex. Yamaha-Motor’s online dealer management
    system
   Intranet
   Quality of people’s lives
9. Biotechnology

   Greatest potential in three areas
     Medicine

     Agriculture

     Environment

   Long run
10. Nanotechnology



   One atom at a time
   Molecular manufacturing
11. Conflict

   Berlin Wall
   Terrorism ex. 9/11
   Companies must develop security standards
12. Governance
   Two interrelated sets of laws
     Rule of law
     Ex. 2009 Lead law banning sale of motorcycles for children
     Market defines the second set of laws



   Dimensions:
     Management structures
     Business culture
     Cross-border investment
     Global investors
A Global Knowledge Economy-
Strategic Implications
1.        Laws of abundance
2.        Location is diminished
3.        National laws, barriers, and taxes
4.        Knowledge-enhanced products and or services
     1.     ex. Yamaha’s EFI and ATV power steering
5.        Higher Inherent value
6.        Human capital
Risk and Uncertainty
   Predictability
     Certainty

     Risk

     Uncertainty
Scenario Analysis
   One of the most widely used techniques
   A disciplined method
   Two categories
     Things we believe we know something about
     Elements we consider uncertain or unknowable
   The objective
   The scenario-building process
     Decide
     Identify
     Construct
     Generate
The Global Scenario Group
   Three fundamentally different social visions of the
    future
     Conventional  worlds
     Barbarization

     Great transitions
Conventional Worlds
   Envision the global system evolving without major
    surprises
   World economy grows rapidly and developing
    countries
   Scenario 1: incorporate mid-range population &
    development projects typical technology change
    assumption
   Scenario 2: Adds strong, comprehensive and
    coordinated government action
Barbarization
   Envision the grim possibility that the social,
    economic, and moral underpinning of civilization
    deteriorate
   Scenario 3: Crises combine and spin out of control
   Scenario 4: features and authoritarian response to
    threat of breakdown
Great Transitions
   Explore visionary solutions to sustainability
    challenge
   Scenario 5: Incorporates the green vision
   Scenario 6: Shares some of the goals of scenario 5
    but seeks to change the character
Compact Between Business and Society

   “Business as usual” might no longer be and option
    and traditional strategies change
   Size means scrutiny- the larger the company is the
    more exemplary performance in ethical behavior,
    employee practices etc
   Cutting costs raises compliance risk- the more a
    company cuts cost the more potential for
    noncompliant ethical practice
Compact Between Business and Social
Continue
   Strategy must involve society- forward thinking
    companies have to think about social and
    environmental problems
   Reducing risks means building trust- classic risk
    managements also expands events arising in society
   Satisfying shareholders means satisfying
    stakeholders- Company pays attention to business-
    society relationships
Compact Between Business and Social
Continue
   Global growth requires global gains- global
    perspective recognizes strong communities
   Productivity requires sustainability- environmental
    management, safety, etc.
   Differentiation relies on reputation- United States
    50 million people $225 billion large influence
   Good governance needs good representation-
    corporate scandals generating strict controls

								
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