Remember, syllabus and schedule highlights
are at
http://yourpeakescape.com/uscupstate
Chapter 2: Environment and Culture
Macro environment?
Competitive environment?
How do companies respond to uncertainty?
What is culture?
How does culture affect responses?
“The essence of a business is
outside itself.” – Peter Drucker
Inputs, processes, outputs
“Open system”—company is affected by
and affects its environment
2-3
Macroenvironment
External environment can influence strategic
decisions and company’s success:
Laws and regulations
Economy
Technology
Demographics
Social values
Ecological factors/trends
Fighting Fat with Videogames
How does Nintendo use the public health issue
of obesity to its competitive advantage in the
marketplace?
What demographic trends might influence new
Wii Fit products?
Competitive Environment: Porter’s 5 Forces model
Threat of new entrants
[into our market/industry]
Supplier
power
[when bargaining
with us]
Rivalry among
existing firms
[we’re here]
Threat of substitutes
[for our product]
Buyer
power
[when bargaining
with us]
Let’s apply Porter’s 5 Forces model to
Ben & Jerry’s
Who is the Competition?
Worldwide:
small and large domestic firms?
regional competitors?
overseas firms?
newer entrants?
New Entrants
Easier when entry barriers are low:
Government policy (e.g., patent laws)
Capital requirements (start-up costs)
Brand identification (consumer brand loyalty)
Cost disadvantages (Established economies of scale)
Distribution channels (e.g., supermarket shelf space)
Substitutes and Complements
Substitute
Threat posted by an alternative
Technological change is typical source
Complement:
Opportunity created when one product is
used in conjunction with another
Resource Suppliers
People – e.g., schools
Raw materials –producers, wholesalers, and
distributors
Information – e.g., news media, researchers
Money – investors and creditors
Supplier Issues
Price
Quality
Alternatives
Switching costs
Buyers: customers
Final consumers –buy products in their finished
form.
Intermediate consumers – buy raw materials or
wholesale products to process and re-sell to
final consumers.
May have great influence over price, quality,
design, service.
Environment Uncertainty
Can be hard to understand environment, predict
the future.
Complexity – How many issues? How
interconnected?
Dynamism – How much discontinuous change
in the industry?
Identifying Your Environment
Scenario Development
Cirque du Soleil and Ben & Jerry’s?
Scenarios – alternative possible futures
Best-case scenario
Worst-case scenario
Multiple scenarios lead to stronger plans
Responding to Uncertainty
Adapt to the environment
Influence the environment
Move to a new environment
Can do independently or cooperate with others
Independent strategy examples
Compete—exploit a competence or improve internally
Help competitors in an effort to improve relations
Public relations—work to create a favorable image
Legal action—engage in legal battles
Political action—try to influence politicians
Cooperative strategy examples
Contracting—agreements with outsiders to exchange
products, information, patents
Coopting—absorb new outsiders into your company or
its planning/leadership work
Coalition—get others to act jointly on political initiatives
Change your environment’s boundaries
Move into new suitable market or industry.
Diversification – expand into new markets, industires,
or locations to reduce dependence on a market or
technology
Merge—combine companies
Acquire—buy businesses
Divest—sell off businesses
Trend analysis
Environmental trends that may foster change
Economic trends
Social trends
Trends in demographic patterns
Political/regulatory trends
Technology trends
Ecological trends
Industry analysis:
5 IMPORTANT issues
Defining the industry
Choosing dimensions/criteria for analysis
Predicting behavior
Addressing firm-level differences
Dealing with dynamism and innovation
Now…Organization Culture
Culture – shared assumptions and values about
The company
Its goals and practices
What’s important
How the world works
How we interact and get things done
Strong culture
Influences how people think and behave
Common belief in the company’s goals,
priorities and practices
Good if it encourages appropriate behavior
Weak culture
Few common values
Confusion about corporate goals
Unclear guiding principles
Fosters conflict and poor performance
Clues to culture
Mission statements, official goals
Business practices (how a company responds to
problems, makes strategic decisions, and treats
employees and customers)
Symbols, rites, and ceremonies
Stories (myths, legends, and true stories)
The Ritz Carlton Service Values
“I Am Proud To Be Ritz-Carlton”
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I build strong relationships and create Ritz-Carlton guests for life.
I am always responsive to the expressed and unexpressed wishes and needs of our guests.
I am empowered to create unique, memorable and personal experiences for our guests.
I understand my role in achieving the Key Success Factors and creating The Ritz-Carlton
Mystique.
I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
I own and immediately resolve guest problems.
I create a work environment of teamwork and lateral service so that the needs of our guests
and each other are met.
I have the opportunity to continuously learn and grow.
I am involved in the planning of the work that affects me.
I am proud of my professional appearance, language and behavior.
I protect the privacy and security of our guests, my fellow employees and the company's
confidential information and assets.
I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free
environment.
Excerpt from www.corporate.ritzcarlton.com
So…here’s a question
The Ritz Carlton service values demonstrate
which aspect of culture?
1.
2.
3.
4.
corporate mission statement
business practices
ceremony
myth
What kind of culture do you want to work
in?
For questions that will help you figure out the
culture of a company, see:
http://career-advice.monster.com/jobinterview/interview-preparation/assesscompany-culture-best-fit/article.aspx
What we just did
Chapter 2: Environment and Culture
What is the macro environment?
What is the competitive environment?
How do companies respond to uncertainty?
What is culture?
How does culture affect responses?