Question

can you give me short summary abstract and conclusion on the below which is taken from chapters 5,6 in Strategic Market Management, 9th Edition, by David A. Aaker

Environmental Analysis and Strategic Uncertainty

Environmental Analysis

• Technology Trends – To what extent are existing technologies maturing? – What technological developments or trends are affecting or could affect the industry? • Government/Economic Trends – What changes in regulation are possible? What will their impact be?   – What are the political risks of operating in governmental jurisdiction? – What are the economic prospects and inflation outlets for the countries in which the firm operates? How will they affect strategy?

Environmental Analysis

• Consumer Trends – What are the current or emerging trends in lifestyles, fashions, and other components of culture? Why? What are their implications, What demographic trends will affect the market size of the industry or its submarkets? What demographic trends represent opportunities or threats?

• Innovations – Transformational, changes what people buy,changes the assets and competencies needed ,– Substantial—significant change as in a new generation offering ,Incremental,makes the offering more attractive or less costly

Environmental Analysis

• Being Green : Motivation, Practical functional benefits to customers and firms, Attack global warming, Generate respect from customers/employees

• General External Analysis Questions – What are the significant trends and future events? – What threats and opportunities do you see? – What are the key areas of uncertainty as to trends or events that have the potential to impact strategy? • Evaluate these strategic uncertainties in terms of their impact and immediacy. • Scenarios – What strategic uncertainties are worth being the basis of a scenario analysis?

Scenario Analysis: Identify Scenarios, Relate Scenarios to Existing or Proposed Strategies ,Estimate Scenario Probabilities

Environmental analysis of changes in technology, demographics, culture, the economy, and governmental actions can detect opportunities or threats to an organization.

• The green movement provides opportunities to connect to customers and employees.

• Impact analysis involves assessing the impact and immediacy of the trends and events that underlie each strategy uncertainty.

• Scenario analysis, a vehicle to explore different assumptions about the future, involves the creation of two to three plausible scenarios, the development of strategies appropriate to each, the assessment of scenario probabilities, and the evaluation of the resulting strategies across the scenarios.

Internal Analysis

Financial Performance – Sales and Profitability

• Sales and Market Share • Profitability • Measuring Performance: Shareholder Value Analysis

Shareholder Value Analysis: Cost of equity—weighted average of cost of capital and cost of debt – e.g. Capital $1 billion (12%); Debt $3 billion (4%) then the cost of capital is 6%

• Each business aims at ROA to exceed cost of equity, so shareholder can improve stock investment

Shareholder Value Risks

• ROA estimate requires knowing the cash flow of any investment and the assets employed—could encourage short term results • Reducing assets employed by outsourcing could result in loss of control of business • Reducing investment could affect offering • Increasing debt to reduce cost of equity could be risky

Performance Measures Reflecting Long-Term Profitability: Customer Satisfaction/ Brand Loyalty, Relative Cost, Brand/Firm Associations, Product/Service Quality, New Product Activity, Manager/Employee Capability/Performance, Long Term Profits, Heritage and Values, Current Performance: Long Term Profits,

Strengths and Weaknesses

• Strategies leverage strengths and neutralize weaknesses

• Point of advantage vs. points of parity vs. liability

Threats & Opportunities

• Key output of external analysis

• Evaluate as to: – Immediacy – Impact

Structuring Strategic Decisions

Strategy Decisions: Strategic Investment, Value Proposition, Assets and Competencies, Functional Strategies and Programs

Organizational Strengths and Weaknesses

Competitor Strengths and Weaknesses

Market Needs, Attractiveness, and Key Success Factors

Sales and profitability analysis provide an evaluation of past strategies and an indication of the current market viability of a product line.

• Shareholder value holds that the flow of profits emanating from an investment should exceed the cost of capital (which is the weighted average of the cost of equity and cost of debt). Routes to achieving shareholder value – such as downsizing, reducing assets employed, and outsourcing – can be risky when they undercut assets and competencies.

• Performance assessment should go beyond financials to include such dimensions as customer satisfaction/brand loyalty, product/service quality, brand/firm’s associations, relative cost, new product activity, and manager/employee capability and performance.

• Assets and competences can represent a point of advantage, a point of parity, or a liability. Threats and opportunities that are both imminent and important should trigger strategic imperatives, programs with high priority.

Answer 1

There is new and improved interest in technology. The existing technologies are maturing and they are affecting the systems all around. There is an instead sense of development and seeking change. There is digital maturity and the companies are seeking change and help of other sources. The improved technology helps in developing the workforces and innovation. The strategic planning focuses on organizational change.

The technological changes have impacted and altered the level of consumption and established new consumption patterns. It has brought e commerce to the forefront and the revolution has also caused several technological changes and global agreements. The economic systems have influenced marketing strategy. The use of government fiscal policy and monetary policies, several other implications of policies have added changes to the marketing strategy.
There are emerging cultural trends that have an effect on strategic environment and marketing practices. There is an evolution of network ethic and new opportunities are opening up. There is growing emphasis on technological changes with influence of cultural context of consumption.

There is new and improved interest in technology. The existing technologies are maturing and they are affecting the systems all around. There is an instead sense of development and seeking change. There is digital maturity and the companies are seeking change and help of other sources. The improved technology helps in developing the workforces and innovation. The strategic planning focuses on organizational change.

The shareholders value stresses on the focus of value creation important than the generation of profits. There is expectation if shareholders on the return of investment and value based management focuses on the idea that the cost of capital employed for generating is used for measuring the value. The primary focus of the management is used for generating acceptable return for equity investments.