Dimensions of the Societal Environment

1
Dimensions of the Societal Environment

• Economics
• Technology
• Impact of new technologies
• Forecasting new technologies
• Political-Legal
• Sociocultural

2
Issues Priority Matrix
3
Porters Five-Force Model
Threat of Potential Entrants
Competition Among Existing Firms
Bargaining Power of Customers
Bargaining Power of Suppliers
Threat of Substitute Products
Source Adapted from Michael E. Porter, Industry
Structure and Competitive Strategy Keys to
Profitability Financial Analysis
Journal,July-August 1980,p.33.
4
5 Force Analysis of Milk Production
Entrants
Low Capital Requirements () Undifferentiated
Products () Minor Scale Economies () No
Proprietary Assets ()
Customers
Strong
Markets
Mostly Commodities (-) Cows, Land, Low-Tech
Machinery Labor Not Unionized (-)
Suppliers
No Brand Loyalty ()No Switching Costs
()Limits on Shelf Space ()
Strong
Rivalry
Fixed Prices (--) Flat Growth () Undifferentiated
() High Storage Costs ()
Mod.
Dairies
Contracts (-)Concentration ()
Weak
Substitutes
Not Close in Performance (-) Juice, Soft
Drinks, Soy MilkMay Not be Price Competitive
(-)
Mod.
5
Key Success Factors
Market with Key Success Factors at this Stage
Production Stage

• Raw material procurement Diamonds
• Raw material processing Lumber
• Production fabrication Pagers
• Assembly Computers
• Physical distribution Gasoline
• Marketing Beer
• Service backup Accounting
• Technology development Telecom

6
The Industry Matrix
Strategic Company A Company A
Company B Company B Factors Weight
Rating Weighted Score Rating
Weighted Score
Total 1.00


7
Competitive Strength Grid
Key Company A Company A
Company B Company BSuccess Weight
Rating Weighted Score Rating
Weighted Score Factor
Total 1.00


8
Competitive Strength Grid
13th Street Eateries
Key Quiznos
Taco Bell Café Siena
Success Weight Wtd.
Wtd. Wtd. Factor
Rating Score Rating
Score Rating Score
Cost Quality Service Cleanliness Ambience
0.40 0.25 0.15 0.10 0.10
3 4 3 5 3
5 2 2 3 1
2 4 4 4 3
1.20 1.00 0.45 0.50 0.30
2.00 0.50 0.30 0.30 0.10
0.80 1.00 0.60 0.40 0.30
Total 1.00
3.45 3.20
3.10