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CHAPTER 3: THE EXTERNAL ASSESSMENT (External force (SOCIAL,CULTURE,…
CHAPTER 3: THE EXTERNAL ASSESSMENT
External force
ECONOMIC
Gross domestic product (GDP)
Trends in dollar's value
Low value=lower import,higher export
Advantage weak dollar
Lead to more export
Leads to mpre import
make US goods cheaper to foreign consumer
Combats deflation by pushing up prices of imports
can contribute to rise in stock prices in short run
Stimulate worldwide economic recession
Disadvantage
can lead to inflation
can cause rise in oil price
can weaken US governement
makes it unattractive for American to travel globally
Unemployment rate
SOCIAL,CULTURE, DEMOGRAPHIC & NATURAL ENVIRONMENT FORCES
Have major impact on
Products
Services
Markets
Customer
Aging population
Less white
Widening gap between poor & rich
More Aerican households with people living alone
Aging American
Interest in health care, financial services, travel, crime prevention & leisure
POLITICAL
Key opportunities&threats
Antitrust legislation
Tax rates
Lobbying activities
Patent law
Protectionist policies
Government are taking control of more companies
TECHNOLOGY
Internet
altering the life cycle of products, increase distribution speed, create new products, erasing limiting traditional geographic
altering economic of scale, changing entry barriers & redefining relationship between industries and varies suppliers, creditors, customers, and competitors.
Significant of IT
Chief information officer (CIO): Manager (managing firms' relationship with stakeholders)
Chief Technology Officer (CTO): technician (focus on technical issue)
Ensure the info needed to formulate, implement and evaluate strategies available when it is needed
Responsible for developing, maintaining and updating company's information database
Benefits
reduce/eliminate cost barriers between business
create shorter production run
create shortages in technical skills
changing value&expectation of employees, manager and customer
create new competitive advantages
create new market
proliferation of new&improved products
change the relative competitive cost position in an industry
COMPETITIVE FORCES
Key question concerning competitor
Their strength
Their weaknesses
Their strategies&obj
Their responses to external variables
Their vulnerability to strategic counterattack
our products/service postioning
Entry&exit of firms in the industry
Key factors for our current position in industry
Sales/profit ranking of competitors over time
Nature of supplier&distributor relationships
The threat of substitute products/services
7 characteristics of most competitive firms
market share matters
understanding what business you are in
Broke or not, fix it
Innovate/evaporate
Acquisition os essential for growth
People make a difference
No substitute for quality