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CH-1-Enviro Analysis.docx

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Leanne Hagarty

Business Course Model & Environmental Analysis Models Sept 12th 2012 Critical Success Factors (never ask to list, just explain what they mean)  Achieving financial performance -require cash flow -money needed to pay bills -allows for expansion  Meeting customer needs -providing customer values -build satisfaction, trust = recurring/referral revenue  Building quality products and services  Encouraging innovation and creativity -constant change  Gaining employee commitment  Creating a distinctive competitive advantage -ability to compete based on something other than price Key Variables to be considered in strategic analysis. (internal) Strategy: opportunities the business is pursuing/not pursuing Management: bias, approach, tendency, desire Organization: structure, capabilities, leadership, culture Resources: Human, capital, $$$ Strategy is the critical linking variable. -links environment to inside business Principal Logic (of the diamond): consistency or alignment -absolute alignment is not realistic. *Important to have consistency between variables. ex. environment is not in demand for new products but P&G produced new things and lost money. First task: deal with strategy-environment linkage -assess forces at work and their implications. External Analysis Process of evaluating/ analyzing external environment ↓ Managers determine opportunities (+ external trends/changes) and threats (- external trends/ changes) ↓ Firms face multiple environments: • general environment; • specific environment; -affects all businesses -affects industry participants -PEST Model -Porter's five Forces -general trends PEST-Political-Legal Elements:  Laws, regulations  Taxes  Trade agreements or conditions  Political System  Political stability Government can create incentives, constraints, or support/bail out when needed. Affects uncertainty, risks and costs faced by firm. PEST-Economic Elements:  Economic growth -GDP and standard of living  Economic stability- inflation, unemployment  Trade balance- importing vs. exporting  National debt- government borrowing  Interest rates  Exchange rates Influences costs, potential sales and financial uncertainty. PEST-Social Elements:  Cust
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