MGMT 478 Chapter 4
4 Key characteristics of eco-efficiency corporations
1. Eco-efficient firms are proactive, not reactive. 2. Eco-efficiency is designed in, not added on. 3. Flexibility is imperative for Eco-efficient strategy implementation. 4. Eco-efficiency is encompassing, not insular.
Social Changes (3 of them)
1. The most profound social change in recent years has been the entry of large numbers of women into the labor market. This change caused an expansion in the variety of products offered. 2. Accelerating interest of consumers and employees in quality of life issues. Workers have been increasingly demanding flexible hours, sabbaticals, or four day weeks. 3. Shift in the age distribution of the population, as the US is heading towards an older average age (34.9 in 2000 to 43.7 in 2030); causing a shift in the marketing activities of firms.
OPEC
Organization of Petroleum Exporting Countries
Industry
a group of companies that provide similar products and services
Technological forecasting
the quasi-science of anticipating environmental and competitive changes and estimating their importance to an organization's operations
Ecology
the relationships among human beings and other living things and the air, soil, and water that supports them
Economies of scale
the savings that companies achieve because of increased volume
Five Forces Diagram
The collective strength of new entrants, suppliers, substitutes, buyers, and industry competitors determines the ultimate profit potential of an industry
Contending Forces
The strongest competitive force or forces determine the profitability of an industry and so are of greatest importance in strategy formulation.
Mega Institution
Top firm of an industry, a company of unprecedented scale and scope that has an undeniable lead over competitors.
A Firm's Remote Environment
Economic- companies must consider economic trends that affect its industry. On both national and international level, managers must consider the general availability of credit, the level of disposable income, and the propensity of people to spend. Interest rates, inflation, GDP are also important. • Social- the beliefs, values, attitudes, and opinions, and lifestyles of person's in the firms external environment, as developed from cultural, ecological, demographic, religious, educational, and ethnic conditioning. • Political- Negative (Laws and regulations.) Positive (Research grant, government subsidies, patent laws) • Technological- keeping up to date with tech in the industry. • Ecological- pollution, global warming, etc.
Social Factors
Social factors that affect a firm involve beliefs, values, attitudes, opinions, and life-styles of persons in the firm's external environment, as developed from cultural, ecological, demographic, religious, educational, and ethnic conditioning.
Economic Factors
The Economic factors that affect a firm concern the nature and direction of the economy in which a firm operates. Each firm must consider economic trends in the segments that affect its industry. Nationally and Internationally, managers must consider the general availability of credit, level of disposable income, and the propensity of people to spend.
Product differentiation
the extent to which customers perceive differences among products and services
External environment
the factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes
Industry environment
the general conditions for competition that influence all businesses that provide similar products and services
Operating Environment
Competitors, Creditors, Customers, Labor, Suppliers
Cost Disadvantages Independent of Size
Entrenched companies may have cost advantages not available to rivals, no matter what their size and attainable economies of scale.
Remote Environment
Economic, Social, Political, Technological, Ecological
Switching Costs
Fixed cost that buyers face in changing suppliers (such as the cost to train employees to use a special software a new supplier uses for ordering)
Customer Function
Gov. demand for products and services can create, sustain, enhance, or eliminate many market opportunities. (for example, the war against terrorism created enormous investment in aviation and military technology)
Supplier Function
Government decisions regarding the accessibility of private businesses to government-owned natural resources and national stockpiles of agricultural products will affect profoundly the viability of the strategies of some firms.
EEC (European Economic Community)
Members include most of western Europe, eliminated quotas and established a tariff-free trade area for industrial projects among its members. It has helped its member countries compete more effectively in non-European international markets.
Remote environment
economic, social, technological, and ecological factors that originate beyond, and usually irrespective of, any single firm's operating situation
Power Curve
exhibiting a set of companies with extremely large incomes, followed quickly by a much larger array of companies with significantly smaller incomes that are progressively smaller than one another
Operating environment
factors in the immediate competitive situation that affect a firm's success in acquiring needed resources
Barriers to entry
the conditions that a firm must satisfy to enter an industry
Pollution
threats to life-supporting ecology caused principally by human activities in an industrial society
Powerful Buyers
A buyer group is powerful if: 1. It is concentrated or purchases in large volumes. 2. The products it purchases from the industry are standard or undifferentiated. 3. The products it purchases from the industry form a component of its product and represent a significant fraction of its cost. 4. It earns low profitxs, which create incentive to lower its purchasing costs.
Technological Factors
A firm must be aware of technological changes that might influence its industry. Creative technological adaptations can suggest possibilities for new products or for improvements. A tech. breakthrough can have a sudden and dramatic effect on firm's environment.
Powerful Suppliers
A supplier group is powerful if: 1. it is dominated by a few companies and is more concentrated than the industry it sells. 2. Its product is unique or at least differentiated, or if it has built-up switching costs. 3. It is not obliged to contend with other products for sale to the industry. 4. It poses a credible threat of integrating forward into the industry's business. 5. The industry is not an important customer of the supplier group.
Industry Environment
Entry Barriers, Supplier Power, Buyer power, Substitute availability, Competitive rivalry
EEC
European Economic Community
Benefits of Eco-Efficiency
Implementation of environmental policy has become a point of competitive advantage. Rational goal of business should be to limit its impact on the environment, ensuring long-run benefits to both the firm and society.
Ecological Factors
Most prominent factor in the remote environment is often the reciprocal relatwionship between business and the ecology. Economic growth can contribute to ecological damage. Business' are now being held more responsible for their waste. The gov. has made numerous interventions into the conduct of business for the purpose of bettering the ecology.
Political Factors
The direction and stability of political factors are a major consideration for managers on formulating company strategy. They define the legal and regulatory parameters within which firms must operate. Political constraints are placed on firms through fair-trade decisions, anti trusts, tax programs, min. wage etc... Political factors may limit or benefit firms.
Capital Requirements
The need to invest large financial resources to compete creates a barrier of entry, particularly if the capital required is for large and unrecoverable costs such as R&D.
Eco-efficiency
company actions that produce more useful goods and services while continuously reducing resource consumption and pollution
