The External Assessment
If you’re not faster than your competitor, you’re in a tenuous position, and if you’re only half as fast, you’re terminal. GEORGE SALK
The idea is to concentrate our strength against our competitor’s relative weakness. BRUCE HENDERSON
If everyone is thinking alike, then somebody isn’t thinking. G E O R G E PAT T O N
The opportunities and threats existing in any situation always exceed the resources needed to exploit the opportunities or avoid the threats. Thus, strategy is essentially a problem of allocating resources. If strategy is to be successful, it must allocate superior resources against a decisive opportunity. WILLIAM COHEN
It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. CHARLES DARWIN
Organizations pursue strategies that will disrupt the normal course of industry events and forge new industry conditions to the disadvantage of competitors. I AN C. MACMILLAN
Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map. W AY N E C A L L O W AY
[ chapter objectives ]
After studying this chapter, you should be able to do the following: 1. Describe how to conduct an external strategicmanagement audit. 2. Discuss 10 major external forces that affect organizations: economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive. 3. Identify key sources of external information, including the Internet. 4. A Retreat for Strategic Planning on the Adriatic Sea. Source: Forest David 5. Discuss important forecasting tools used in strategic management. Discuss the importance of monitoring external trends and events. 6. 7. 8. Explain how to develop an EFE Matrix. Explain how to develop a Competitive Profile Matrix. Experiential Exercise 3B The External Assessment Experiential Exercise 3C Developing an EFE Matrix for My University Experiential Exercise 3D Developing a Competitive Profile Matrix for Walt Disney Company Experiential Exercise 3E Developing a Competitive Profile Matrix for My University 9. Discuss the importance of gathering competitive intelligence. Describe the trend toward cooperation among competitors. 10. Discuss the economic environment in Russia. 11. Discuss the global challenge facing American firms. 12. Discuss market commonality and resource similarity in relation to competitive analysis.
[ Experiential Exercises ]
Experiential Exercise 3A Developing an EFE Matrix for Walt Disney Company
PA RT 2 • S T R ATEGY FORMULATION
This chapter examines the tools and concepts needed to conduct an external strategic management audit (sometimes called environmental scanning or industry analysis). An external audit focuses on identifying and evaluating trends and events beyond the control of a single firm, such as increased foreign competition, population shifts to the Sunbelt, an aging society, consumer fear of traveling, and stock market volatility. An external audit reveals key opportunities and threats confronting an organization so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats. This chapter presents a practical framework for gathering, assimilating, and analyzing external information. The Industrial Organization (I/O) view of strategic management is introduced.
The Nature of an External Audit
VISIT THE NET
Reveals how strategic planning evolved from long-range planning and environmental scanning (external audit or assessment). (horizon.unc.edu/projects/ seminars/futuresresearch/strategic. asp#planning)
The purpose of an external audit is to develop a finite list of opportunities that could benefit a firm and threats that should be avoided. As the term finite suggests, the external audit is not aimed at developing an ex h a u s t iv list of every possible factor that could e influence...