6721External Analysis Students

Conversation: What’s out there and why does it matter?

Outside your business’ walls, what keeps you awake at night? What gets you out of bed in the morning?

What’s the one think you think about (worry about, obsess about, fret about get excited about) the most?

External analysis:

External analysis useful because it allows you to explore the O&T side of the SWOT

That’s necessary for performing a strategic analysis of a particular firm

It’s so critical as a building block, that our first case analysis is an industry analysis.

External analysis:

This section is about doing external analysis That involves assessing Os and Ts

The industry is the most proximal force We have a framework for that: The 5 forces Within each force different Os and Ts emerge We’ll go into one more deeply in lecture

Macro-level Os and Ts are also important PESTLE

External analysis:

The overriding question: Is this an attractive industry? (Eventually: Is this a game we want to

play?) If so:

What do we need to do to take advantage of, or position ourselves against, as we move ahead with our strategic thinking and planning?

Let’s consider opportunities, broadly defined: What kind of things are we looking

for?

Consider Chinese autos Geely Automobile Company Changfeng Motor Company Ltd.

Let’s consider opportunities, broadly defined:

Opportunities:

Large and growing global markets (e.g., US)

But tough logistics dealer & service networks;

transportation Also, Korean and Japanese firms

already manufacturing in US Solutions?

Build them for other firms:

Daimler(Chrysler) AG partnered with

China’s Chery Automobile Co. Small cars worldwide Chrysler dealerships

Dodge Chrysler Jeep

Of course, we need to look beyond the obvious for Os:

Participant sports industry

What are the major segments?

Participant sports industry

Equipment: $12 billion Medicine & therapy: $15 billion Fees, lessons, memberships: $17

billion

Threats: Consider auto manufacturers What about those $2500 cars?

The Tata Nano Bajaj RE60

Are you afraid of them?

Threats: In 1963, you make these:

Threats: Are you afraid of a company that

makes these?

Threats: How about these?

How about this?

Beyond the obvious Ts:

Looking beyond the obvious for possibilities of threat:

e.g., Why haven’t the Japanese done to us in large appliances what they’ve done in autos, electronics?

Matsushita makes more large appliances than anyone in the world

Why don’t we see Matsushita ranges, refrigerators down at Best Buy?

For GE, Matsushita as potential entrant?

Tools for external analysis:

Industry Porter’s Five Forces

Beyond the industry Macro-environment (PESTLE forces)

Tools for external analysis:

Industry Porter’s Five Forces

Beyond the industry Macro-environment (PESTLE forces) Let’s begin here

External analysis: Beyond the industry (the macro-environment)

PESTLE forces Political Economic Socio-cultural Technological Legal Environmental

For each: What’s keeping you up at night? What’s getting you up in the morning? (Or should be?)

External analysis: Beyond the industry (the macro-environment)

PESTLE forces Political Economic Socio-cultural Technological Legal Environmental (Note: May be domestic and/or global) (Note: Issues like demography may touch several)

How do each of these influence the business?

PESTLE forces Political Economic Socio-cultural Technological Legal Environmental

What are the major issues, developments, trends, in each?

PESTLE forces Political Economic Socio-cultural Technological Legal Environmental

Assess each for Os & Ts

PESTLE forces Political Economic Socio-cultural Technological Legal Environmental

Do any deserve a place at the table (on par with the 5 Forces)?

PESTLE forces Political Economic Socio-cultural Technological Legal Environmental

Recall where we are; external analysis:

Industry Porter’s Five Forces

Beyond the industry Macro-environment (PESTLE forces) We began here

Industry analysis

Remember, at the end of this analysis we’re interested in industry attractiveness

That involves an industry look at Opportunities Threats

The moral of the story…

What you see might be important But what you don’t see might be far

more important Look for the things you aren’t

currently seeing. In Black Swan terms: Avoid tunneling Seek out silent evidence