CHAPTER 3 EXTERNAL ENVIRONMENT ANALYSIS Strategic Management Department 9/16/202250 http //images google com vn/imgres?imgurl=http //www johnwiley com au/highered/stratmgt2e/0470809299 jpg&imgrefurl=h[.]
CHAPTER EXTERNAL ENVIRONMENT ANALYSIS 50 Strategic Management Department 9/16/2022 “To assure victory, always carefully survey the field before battle.” - Sun Tzu OUTLINE 3.1 Structure of external environment 3.2 Macro analysis 3.3 Industry analysis 3.4 External Factor Analysis Summary (EFAS) 52 Strategic Management Department 9/16/2022 3.1.1 Definition Definition: External environment is defined as a complex and continuous set of factors, forces and constraints that have a decisive influence on the existence, operation and effectiveness of a business in its market 53 Strategic Management Department 9/16/2022 3.1.2 Structure External environment structure: Macro environment: includes macro forces that influence the strategic decisions in the long-term of businesses For example: economic forces, political forces, social forces, etc Industry environment (micro-environment): is the environment in which includes a set of factors that directly affect the business and is also influenced by the business For example: suppliers, competitors; customers, etc 54 Strategic Management Department 9/16/2022 POLITICAL, GOVERNMENTAL, LEGAL FORCES ECONOMIC FACTORS Distributors Financial organization Suppliers Union Customers ENTERPRISE Người General cung ứng public Stake-holders Competitors SOCIOCULTURAL FACTORS 55 Strategic Management Department Special interest goups TECHNOLOGICAL FACTORS 9/16/2022 OUTLINE 3.1 Identifying the external environment of the business 3.2 Macro analysis 3.3 Industry analysis 3.4 External Factor Analysis Summary (EFAS) 56 Strategic Management Department 9/16/2022 Economic forces Macro analysis Political and legal forces Socio-cultural forces Technological forces 57 Strategic Management Department 9/16/2022 3.2.1 Economic forces Balance of trade Foreign investment Market orientation Monetary system Income distribution and purchasing power Inflation/Interest rate Economic development Infrastructure and natural resources … 58 Strategic Management Department 9/16/2022 3.2.2 Political and legal forces Political stability Role and attitude of the Government toward international business The law system The court system 59 Strategic Management Department 9/16/2022 OUTLINE 3.1 Structure of external environment 3.2 Macro analysis 3.3 Industry analysis 3.4 External Factor Analysis Summary (EFAS) 62 Strategic Management Department 9/16/2022 3.3.1 Definition and classification Definition Industry is a group of companies offering the similar or substitutable products that can meet customer’s needs Sector is a group of industries that closely related to each other Market segments: Are the groups of customers that are different from the others in the same market Their difference can come from the specific attribute and demand of customers in each group Industry analysis begins with focusing on an overall industry before looking at the issues at the business level or segmentations 63 Strategic Management Department 9/16/2022 3.3.1 Definition and classification (cont.) Classification of “Industry” Number of sellers and degree of differentiation: Monopoly Oligopoly Monopolistic competition Perfect competition Entry-Exit barriers and mobility Cost structure Vertical integration level Globalization level 64 Strategic Management Department 9/16/2022 3.3.2 Porter five-forces industry analysis Industry analysis Competitive intensity analysis Industry’s life cycle analysis Strategic groups analysis Transfer barriers Types of strategy analysis • The perfect competition model: the rate of profit adjustment according to the risk level is equivalent between enterprises and industries • However, most of the research has confirmed that: different industries can maintain different levels of profitability • Reason: Different industries have different structures 65 Strategic Management Department 9/16/2022 66 Strategic Management Department 9/16/2022 a Competitive rivalry in the industry Is the major determinant of how competitive and profitable an industry is In competitive industry, firms have to compete aggressively for a market share low profits Rivalry among competitors is intense when: 67 There are many competitors Exit barriers are high Industry growth is slow or negative Products are not differentiated and can be easily substituted Competitors are of equal size Low customer loyalty Strategic Management Department 9/16/2022 b Bargaining power of suppliers Strong bargaining power of suppliers Sell higher priced/ low quality raw materials directly affect the buying firm’s profits (have to more for the materials) Suppliers have strong bargaining power when: There are few suppliers but many buyers Suppliers are large and threaten to forward integration Few substitutions Suppliers hold scare resources Considerably high cost of switching 68 Strategic Management Department 9/16/2022 Bargaining power of suppliers The percentage of diamond suppliers in the market Other suppliers Diamond retailers 50 The more bargaining power the suppliers have, the more profit they get DeBeers 50 69 ... 61 Strategic Management Department 9/16/2022 OUTLINE 3. 1 Structure of external environment 3. 2 Macro analysis 3. 3 Industry analysis 3. 4 External Factor Analysis Summary (EFAS) 62 Strategic Management. .. Tzu OUTLINE 3. 1 Structure of external environment 3. 2 Macro analysis 3. 3 Industry analysis 3. 4 External Factor Analysis Summary (EFAS) 52 Strategic Management Department 9/16/2022 3. 1.1 Definition... FACTORS 55 Strategic Management Department Special interest goups TECHNOLOGICAL FACTORS 9/16/2022 OUTLINE 3. 1 Identifying the external environment of the business 3. 2 Macro analysis 3. 3 Industry