COMM 491: Business Strategy
COMM 491: Business Strategy
Business Strategy
Class 3:
External Environment
Immigration
Social Changes
What social changes have happened since your parents
or grandparents were your age?
Smoking
Internet
Declining birth rate McMansions
PSE
Marriage
Drinking and Driving Cell phones
Globalization
Facebook
Non-Computer Technology
While computer / internet technology are probably most
obvious to us in our day-to-day lives, technology and
technological change is everywhere!
Robotics
Energy (solar, wind, LNG fracking, nuclear)
Dramatically improved car gas mileage (litres/100km) &
safety
Sensors tracking, store shelves, active bar codes
Cameras from Photoshop to security
Even, automatic vacuum cleaners
PESTEL Environment
Environment
The environmental segment involves the physical
characteristics & conditions within org operates
Includes factors such as natural disasters, pollution levels,
and weather patterns (i.e. bottled water example)
Increased social awareness, community activism
Long term verses short term orientation
Environmental reviews, & Social License to Operate
Costs of pollution, garbage disposal (zoo poop)
Reduce, Reuse, Recycle
Business Op?
Class Exercise
North Pole Inc.
Demographics
It turns out that demographics are an excellent
predictors of many things, including:
Income
Marital status
Crime
Health (food)
Fertility
DEBT
Kids
->
House
->
Car
->
Apt
->
SAVINGS
Pay-off Loans
->
Good
Pension
Payoff
Mortgage ->
Kids finish PS
Graduat
->
e!
0
80
10
20
30
AGE
40
Bad Pensio
50
60
70
Industry Analysis
Objectives of Industry
Analysis
Threat of Substitutes
Extent of competitive pressure from producers of
substitutes depends upon:
Buyers propensity to substitute
The price-performance-quality characteristics of substitutes.
Market distribution changes
However
Be careful
New entrants should be hesitant if:
Incumbents have previously lashed out at new entries
The incumbents possess substantial resources to fight
back, including excess cash and unused borrowing
power, productive capacity, or clout with distribution
channels and customers.
The incumbents seem likely to cut prices because of a
desire to keep market share or because of industrywide excess capacity.
Industry growth is slow, affecting its ability to absorb
the new arrival and probably causing the financial
performance of all the parties involved to decline.
Strategic Positioning
Once we know which structural features of the industry
support profitability and which depress profitability, we
can choose a favorable positioning within the industry.