Hierarchy of External Influences

1
Hierarchy of External Influences

• Social
• Economic
• Technical
• Global
• Political/Legal

Remote Environment
Competitive Environment
Firm

• Five Forces
• Competitor Intelligence
• Industry Structure
• Strategic Groups
• Political/Legal

2
Social Influencers (Stakeholders)

• Shareholders
• Government
• Financial Community
• Host Community
• Ecological Environment
• Society in General

Remote Environment
Competitive Environment
Firm

• Rivals
• Customers
• Suppliers
• Employees
• Managers
• Board Members

3
Social Influence on International Strategy
Acme GmbH WOS in Germany
Acme Inc. HQ in U.S.
Cervesa SA JV in Mexico
Gang Ped LTD Contract Supplier in Thailand
4
Stakeholder Analysis

• Who are they?
• How can they be classified?
• How do they exert influence?
• What is level of threat opportunity ?

5
Stakeholder Management

• Establish communication
• Establish mutual satisfaction of needs via
  negotiation
• Motivating stakeholders
• Financial
• Political
• Cultural
• Persuasion

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Social Influence on Strategy

• Financial goals vs. caving in
• Business-level strategy
• Revise goals?
• How to adjust value chain activities?
• Can social influence be a good thing?
• Corporate-level strategy
• Portfolio management?
• Transformation?

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Stakeholders and Influence
Other Co.s owning stock
Managers Board Stockholders
Ownership
Employees Customers Suppliers Competitors
JV Partners Creditors IRS
Competitors Suppliers Customers
Type of Stake in Firm Operations
Economic Dependence
Activist groups Government Media
EPA OSHA SEC
Social
Regulatory
Economic
Political
Influence on Firm Behavior
9
Environmental Scanning Grid
10
External Influences on Five Forces
() or (-) influence...
Threat of New Entrants
Threat of New Entrants
More Competitive
Rivalry Among Competing Firms in Industry
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of Substitute Products
Less Competitive
11
Social Influences on the Value Chain
Firm Infrastructure
Human Resource Management
MARGIN
Technological Development
Procurement
Service
Inbound Logistics
Marketing Sales
Outbound Logistics
Operations
12
Social Influence on Business-level Strategy
Source of Competitive Advantage
Cost
Uniqueness
Cost Leadership
Broad Target Market
Different.
Breadth of Competitive Scope
Focused Different.
Focused Low Cost
Narrow Target Market
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Social Responsibility and Corp. Strategy