Business Policy and Strategy Lecture11 Business Policy and

Business Policy and Strategy Lecture-11 Business Policy and Strategy 1

Recap • Social, Cultural, Demographic & Environmental Forces • Average level of education • Government regulation • Attitudes toward customer service • Attitudes toward product quality • Energy conservation • Social responsibility • Recycling • Waste management • Air & water pollution • Ozone depletion Business Policy and Strategy 2

Recap • Political, Governmental & Legal Forces – Government regulation/deregulation – Tax law changes – Special tariffs – Political Action Committees (PACs) – Voter participation rates – Number of patents – Changes in patent laws – Environmental protection laws – Equal employment legislation Business Policy and Strategy 3

Today’s Lecture • Technological Forces – Revolutionary technological forces – Internet changes the nature of opportunities and threats • Competitive Forces – Collection and evaluation of information on competitors Business Policy and Strategy 4

Technological Forces Revolutionary technological forces: • Profound impact on organizations Internet • Semiconductors • XML technologies • UWB communications • Business Policy and Strategy 5

Technological Forces Internet changes the nature of opportunities and threats - • • • Alters life cycle of products Increases speed of distribution Creates new products and services Eases limitations of geographic markets Alters economies of scale Changes entry barriers Business Policy and Strategy 6

Technological Forces • Altering the life cycles of products by – Increasing the speed of distribution – Creating new products and services – Erasing limitations of traditional – Geographic markets – Changing the historical tradeoff between production standardization and flexibility Business Policy and Strategy 7

Technological Forces Technology-based issues – Underlie nearly every strategic decision – Bank Sector information system • Chief information officer (CIO) and • Chief technology officer (CTO). Business Policy and Strategy 8

Competitive Forces • Collection and evaluation of information on competitors is essential for successful strategy formulation – Virtually competition in all industries can be described as intense. Business Policy and Strategy 9

Competitive Forces Identifying rival firms • • Strengths Weaknesses Capabilities Opportunities Threats Objectives Strategies Business Policy and Strategy 10

Competitive Forces Key Questions About Competitors: • • • Their strengths Their weaknesses Their objectives and strategies Their responses to all external variables (e. g. social, political, demographic, etc. ) Their vulnerability to our alternative strategies Business Policy and Strategy 11

Competitive Forces Key Questions About Competitors: • • Our vulnerability to successful strategic counterattack Our product and service positioning relative to competitors Entry and exit of firms in the industry Key factors for our current position in industry Sales and profit rankings of competitors over time Nature of supplier and distributor relationships The threat of substitute products or services Business Policy and Strategy 12

Competitive Forces Sources of Corporate Information: • Moody’s Manuals • Standard Corporation Descriptions • Value Line Investment Surveys • Dun’s Business Rankings • Standard & Poor’s Industry Surveys • Industry Week • Forbes, Fortune, Business Week Business Policy and Strategy 13

Competitive Forces 7 Characteristics of most competitive U. S. firms: Market share matters Understand what business you are in Broke or not, fix it Innovate or evaporate 5. Acquisition is essential to growth 6. People make a difference 7. No substitute for quality 1. 2. 3. 4. Business Policy and Strategy 14

Competitive Forces Competitive Intelligence Programs: • Systematic and ethical process for gathering and analyzing information about the competition’s activities and general business trends to further a business’ own goals Business Policy and Strategy 15

Competitive Forces Firms need an effective competitive intelligence program. The three basic missions of a CI program are: (1) To provide a general understanding of an industry and its competitors, (2) To identify areas in which competitors are vulnerable and to assesses the impact strategic actions would have on competitors (3) to identify potential moves that a competitors might make that would endanger a firm’s position in the market Business Policy and Strategy 16

Summary • Technological Forces • Profound impact on organizations • • Internet Semiconductors XML technologies UWB communications • Competitive Forces 1. Market share matters 2. Understand what business you are in 3. Broke or not, fix it 4. Innovate or evaporate 5. Acquisition is essential to growth 6. People make a difference 7. No substitute for quality Business Policy and Strategy 17

Next Lecture • COMPETITIVE ANALYSIS – PORTER’S FIVE-FORCES MODEL Business Policy and Strategy 18