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Lecture Crafting and executing strategy (17/e): Chapter 3 - Arthur A. Thompson, A. J. Strickland III, John E. Gamble

Chapter 3 - Evaluating a company’s external environment. After studying this chapter you will be able to: To gain command of the basic concepts and analytical tools widely used to diagnose a company’s industry and competitive conditions; To become adept in recognizing the factors that cause competition in an industry to be fierce, more or less normal, or relatively weak; To learn how to determine whether an industry’s outlook presents a company with sufficiently attractive opportunities for growth and profitability. | Chapter 3: Evaluating a Company’s External Environment Screen graphics created by: Jana F. Kuzmicki, Ph.D. Troy University Chapter Learning Objectives To gain command of the basic concepts and analytical tools widely used to diagnose a company’s industry and competitive conditions. To become adept in recognizing the factors that cause competition in an industry to be fierce, more or less normal, or relatively weak. To learn how to determine whether an industry’s outlook presents a company with sufficiently attractive opportunities for growth and profitability. To understand why in-depth evaluation of specific industry and competitive conditions is a prerequisite to crafting a strategy well matched to a company’s situation. Chapter Roadmap The Strategically Relevant Components of a Company’s External Environment Thinking Strategically About a Company’s Industry and Competitive Environment Question 1: What Are the Industry’s Dominant Economic Features? Question 2: How Strong Are Competitive Forces? Question 3: What Forces Are Driving Industry Change and What Impacts Will They Have? Question 4: What Market Positions Do Rivals Occupy—Who Is Strongly Positioned and Who Is Not? Question 5: What Strategic Moves Are Rivals Likely to Make Next? Question 6: What Are the Key Factors for Future Competitive Success? Question 7: Does the Outlook for the Industry Offer the Company a Good Opportunity to Earn Attractive Profits? Diagnosing a company’s situation has two facets Assessing the company’s external or macro-environment Industry and competitive conditions Forces acting to reshape this environment Assessing the company’s internal or micro-environment Market position and competitiveness Competencies, capabilities, resource strengths and weaknesses, and competitiveness Understanding the Factors that Determine a Company’s Situation Figure 3.1: From Thinking Strategically About the Company’s Situation to Choosing a Strategy 3- Figure 3.2: The Components | Chapter 3: Evaluating a Company’s External Environment Screen graphics created by: Jana F. Kuzmicki, Ph.D. Troy University Chapter Learning Objectives To gain command of the basic concepts and analytical tools widely used to diagnose a company’s industry and competitive conditions. To become adept in recognizing the factors that cause competition in an industry to be fierce, more or less normal, or relatively weak. To learn how to determine whether an industry’s outlook presents a company with sufficiently attractive opportunities for growth and profitability. To understand why in-depth evaluation of specific industry and competitive conditions is a prerequisite to crafting a strategy well matched to a company’s situation. Chapter Roadmap The Strategically Relevant Components of a Company’s External Environment Thinking Strategically About a Company’s Industry and Competitive Environment Question 1: What Are the Industry’s Dominant Economic Features? Question 2: How Strong Are