Strategic Management 2.pptVIP

Sociocultural Segment More women in the workforce Dual-income families Increase in temporary workers Greater concern for healthy diets and physical fitness Greater interest in the environment Postponement of having children 2-* Political/Legal Segment Tort reform Americans with Disabilities Act (ADA) Repeal of Glass-Steagall Act in 1999 Deregulation of utility and other industries Increases in federally mandated minimum wages Taxation at local, state, federal levels Legislation on corporate governance reforms (Sarbanes-Oxley Act) 2-* Technological Segment Genetic engineering Emergence of Internet technology Computer-aided design/computer-aided manufacturing systems (CAD/CAM) Wireless communication Nanotechnology 2-* Economic Segment Interest rates Unemployment Consumer Price index Trends in GDP Changes in stock market valuations 2-* Global Segment Increasing global trade Currency exchange rates Emergence of the Indian and Chinese economies Trade agreements (NAFTA, EU, ASEAN) Creation of WTO (decreasing tariffs/free trade in services) 2-* The Competitive Environment Competitive environment factors that pertain to an industry and affect a firm’s strategies Competitors, customers, and suppliers 2-* Porter’s Five Forces Model of Industry Competition 2-* Exhibit 2.7 The Threat of New Entrants Profits of established firms in the industry may be eroded by new competitors Sources of entry barriers Economies of scale Product differentiation Capital requirements Switching costs Access to distribution channels Cost disadvantages independent of scale 2-* QUESTION If you are considering opening a new pizza restaurant in your community, what would be the threat of new entrants? How would you evaluate Porter’s other forces for this industry? Explain. 2-* The Bargaining Power of Buyers Buyers threaten an industry by: Forcing down prices Bargaining for higher quality or more services Playing competitors against each other 2-* The Bargaining Power of Buyers A buyer group is powerfu