Download 4-4 The Firm`s External Environment

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Pearce & Robinson, 10th ed.
Chapter 4
The External
Environment
McGraw-Hill/Irwin
Strategic Management, 10/e
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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Learning Objectives
1. Tiga faktor lingkungan yang mempengaruhi kinerja suatu
perusahaan.
2. Lima faktor dalam pengendalian lingkungan.
3. Contoh-contoh pengaruh ekonomi, sosial, politik,
teknologi dan ekologi terhadap perusahaan.
4. Model lima kekuatan dari analisis industri dan contohcontohnya.
5. Pengaruh dari hambatan masuknya pendatang baru,
kekuatan suplier, kekuatan pembeli, ketersediaan barang
substitusi dan persaingan dalam bisnis.
6. Lima Faktor dalam mengoperasikan lingkungan.
7. Pengaruh pesaing, kreditor, pelanggan, karyawan dan
suplier langsung pada perusahaan.
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The Firm’s External Environment
Comprised of following Components:
• Remote environment
• Industry environment
• Operating environment
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Firm’s External Environment
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Remote Environment
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Economic Factors
Social Factors
Political Factors
Technological Factors
Ecological Factors
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Economic Factors
1. Prime interest rates
2. Inflation rates
3. Trends in the growth of the
gross national product
4. Unemployment rates
5. Globalization of the
economy
6. Outsourcing
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Social Factors
Present in the external environment:
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Beliefs & Values
Attitudes & Opinions
Lifestyles
Developed from:
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Cultural conditioning
Ecological conditioning
Demographic makeup
Religion
Education
Ethnic conditioning.
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Political Factors
Political constraints on firms:
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Fair-trade Decisions
Antitrust Laws
Tax Programs
Minimum Wage Legislation
Pollution and Pricing Policies
Administrative jawboning
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Technological Factors
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Technological forecasting helps protect and
improve the profitability of firms in growing
industries.
It alerts strategic managers to
impending challenges and
promising opportunities.
The key to beneficial forecasting of technological
advancement lies in accurately predicting future
technological capabilities and their probable
impacts.
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Ecological Factors
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Ecology refers to the relationships among human
beings and other living things and the air, soil, and
water that supports them.
Threats to our life-supporting ecology caused
principally by human activities in an industrial
society are commonly referred to as pollution
Loss of habitat and biodiversity
Environmental legislation
Eco-efficiency
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International Environment
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Monitoring the international environment
involves assessing each non-domestic
market on the same factors that are
used in a domestic assessment.
While the importance of factors will differ, the same set of
considerations can be used for each country.
Economic, political, legal, and social factors are used to
assess international environments.
One complication to this process is that the interplay
among international markets must be considered.
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Industry Environment
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Harvard professor Michael E. Porter propelled
the concept of industry environment into the
foreground of strategic thought and business
planning.
The cornerstone of Porter’s work first appeared in
the Harvard Business Review, in which he explains
the five forces that shape competition in an
industry.
Porter’s well-defined analytic framework helps
strategic managers to link remote factors to their
effects on a firm’s operating environment.
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Competitive Forces Shape Strategy
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The essence of strategy formulation is coping with
competition.
Intense competition in an industry is neither
coincidence nor bad luck.
Competition in an industry is rooted in its
underlying economics, and competitive forces
exist that go well beyond the established
combatants in a particular industry.
The corporate strategists’ goal is to find a position
in the industry where his or her company can best
defend itself against these forces or can influence
them in its favor.
Forces Driving Industry Competition
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Contending Forces
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Threat of Entry
Economies of Scale
Product Differentiation
Capital Requirements
Cost Disadvantages
Independent of Size
Access to Distribution
Channels
Government Policy
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Powerful Suppliers
A supplier group is powerful if:
• It is dominated by a few companies and
is more concentrated than the industry
it sells to
• Its product is unique or at least
differentiated, or if it has built-up
switching costs
• It is not obliged to contend with other
products for sale to the industry
• It poses a credible threat of integrating forward into the
industry’s business
• The industry is not an important customer of the supplier
group
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Powerful Buyers
A buyer group is powerful if:
• It is concentrated or purchases in
large volumes
• The products it purchases from the industry are standard
• The products it purchases from the industry form a
component of its product and represent a significant
fraction of its cost
• It earns low profits
• The industry’s product is unimportant to the quality of the
buyers’ products or services
• The industry’s product does not save the buyer money
• The buyers pose a credible threat of integrating backward
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Substitute Products
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By placing a ceiling on the prices it can charge,
substitute products or services limit the potential of
an industry
Substitutes not only limit profits in normal times
but also reduce the bonanza an industry can reap in
boom times
Substitute products that deserve the most attention
strategically are those that are
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subject to trends improving their price-performance
trade-off with the industry’s product or
produced by industries earning high profits
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Jockeying for Position
Intense rivalry occurs when:
• Competitors are numerous or are roughly equal
• Industry growth is slow, precipitating fights for market
share that involve expansion
• The product or service lacks differentiation or switching
costs
• Fixed costs are high or the product is perishable, creating
strong temptation to cut prices
• Capacity normally is augmented in large increments
• Exit barriers are high
• Rivals are diverse in strategy, origin, and personality
Industry Analysis
& Competitive Analysis
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An industry is a collection of firms that offer
similar products or services.
Structural attributes are the enduring
characteristics that give an industry its distinctive
character.
Concentration refers to the extent to which
industry sales are dominated by only a few firms.
Barriers to entry are the obstacles that a firm
must overcome to enter an industry.
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Competitive Analysis
1. How do other firms define the scope of their
market?
2. How similar are the benefits the customers derive
from the products and services that other firms
offer? The more similar the benefits of products or
services, the higher the level of substitutability
between them.
3. How committed are other
firms to the industry?
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Operating Environment
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Also called competitive or task environment
Includes competitor positions and customer
profiling based on the following factors:
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Geographic
Demographic
Psychographic
Buyer Behavior
Also includes suppliers & creditors and HRM
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HR: Nature of the Labor Market
Access to personnel is affected by 4 factors:
• Firm’s reputation as an employer
• Local employment rates
• Availability of people with the needed skills
• Its relationship with labor unions.
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Emphasis on Environmental Factors
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Differing external elements affect different strategies at
different times and with varying strengths
Only certainty is that the effect of the remote and
operating environments will be uncertain until a strategy
is implemented
Many managers, particularly in less powerful firms,
minimize long-term planning
Instead, they allow managers to adapt to new pressures
from the environment
Absence of strong resources and psychological
commitment to a proactive strategy effectively bars a firm
from assuming a leadership role in its environment