Hierarchy of External Influences
• Social
• Economic
• Technical
• Global
• Political/Legal
Firm
•
•
•
•
•
Five Forces
Competitor Intelligence
Industry Structure
Strategic Groups
Political/Legal
Social Influencers (Stakeholders)
• Shareholders
• Government
• Financial Community
• Host Community
• Ecological Environment
• Society in General
Firm
•
•
•
•
•
•
Rivals
Customers
Suppliers
Employees
Managers
Board Members
Social Influence on International Strategy
Acme Inc.
HQ in U.S.
Acme GmbH
WOS in
Germany
Cervesa SA
JV in Mexico
Gang Ped LTD
Contract Supplier
in Thailand
Stakeholder Analysis
•
•
•
•
Who are they?
How can they be classified?
How do they exert influence?
What is level of threat [opportunity] ?
Stakeholder Management
• Establish communication
• Establish mutual satisfaction of needs
via negotiation
• Motivating stakeholders
– Financial
– Political
– Cultural
– Persuasion
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?
Type of Stake in
Firm Operations
Stakeholders and Influence
Ownership
Managers
Board
Stockholders
Other Co.’s
owning
stock
Economic
Dependence
JV Partners
Creditors
IRS
Employees
Customers
Suppliers
Competitors
Social
EPA
OSHA
SEC
Regulatory Economic
Competitors
Suppliers
Customers
Activist
groups
Government
Media
Political
Influence on Firm Behavior
Environmental Scanning Grid
IMPACT
Serious
Threat
General
Economics
Environment Demographics
Political-Legal
Sociocultural
Technological
Global
Competitive Potential Entry
Environment Suppliers
Customers
Substitutes
Rivalry
TOTAL IMPACT
Mild
Threat
Benign
Potential
Oppty.
Strong
Oppty.
External Influences on Five Forces
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
Rivalry Among
Competing Firms
in Industry
Threat of
Substitute
Products
(+) or (-) influence...
More
Competitive
Bargaining
Power of
Buyers
Less
Competitive
Social Influences on the Value Chain
Firm Infrastructure
Human Resource Management
Technological Development
Service
Marketing
& Sales
Outbound
Logistics
Operations
Inbound
Logistics
Procurement
Social Influence on
Business-level
Strategy
Breadth of
Competitive
Scope
Source of Competitive Advantage
Cost
Uniqueness
Broad
Target
Market
Cost
Leadership
Different.
Narrow
Target
Market
Focused
Low Cost
Focused
Different.
Social Responsibility and Corp. Strategy
HQ
Division 1
Division 2
Division 3
Division 4