Evaluating a Company's External Environment Essay

2672 WordsMar 27, 201311 Pages
CHAPTER 3 EVALUATING A COMPANY’S EXTERNAL ENVIRONMENT Copyright ®2012 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin 1. Gain command of the basic concepts and analytical tools widely used to diagnose the competitive conditions in a company’s industry. 2. Learn how to diagnose the factors shaping industry dynamics and to forecast their effects on future industry profitability. 3. Become adept at mapping the market positions of key groups of industry rivals. 4. Understand why in-depth evaluation of a business’s strengths and weaknesses in relation to the specific industry conditions it confronts is an essential prerequisite to crafting a strategy that is well-matched to its external situation. 3–2 3.1 From Thinking Strategically about the Company’s Situation to Choosing a Strategy Chapter 3 Thinking strategically about a firm’s external environment Thinking strategically about a firm’s internal environment Forming a strategic vision of where the firm needs to head Identifying promising strategic options for the firm Selecting the best strategy and business model for the firm Chapter 4 3–3 The External Environment ♦ The Macro-Environment ● Is the broad environmental context in which a firm’s industry is situated. ● Includes strategically relevant components over which the firm has no direct control.  General economic conditions  Immediate industry and competitive environment 3–4 3.2 The Components of a Company’s Macro-Environment 3–5 3.1 The Seven Components of the Macro-Environment Component Description Demographics The size, growth rate, and age distribution of different sectors of the population. It includes the geographic distribution of the population, the distribution of income across the population, and trends in these factors.

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