Chapter 3 WorksheetThe concepts in this worksheet correspond directly with the text. If you do not understand the concept or need to refresh your memory, please refer to the text. I provide the page reference for each of the criteria. You should also use the CD-ROM for concepts that require more detailed explanation than the text provides.The purpose of the external analysis is to identify opportunities and threats for the industry you are analyzing. Do not focus on the company under analysis. Focus on the industry in which the company competes. Make sure your analysis of the facts leads to a logical determination of specific opportunities and threats associated with the criterion you are analyzing. Consider each criterion from a strategic perspective. Use the scientific method (data, analysis of the data, conclusions based on the analysis.) In other words, does your analysis lead you to conclude how or in which ways does the criterion under analysis create opportunities or threats for the industry or specific companies in the industry? State the specific nature of the opportunity or threat. This will strengthen your analysis and help you with your subsequent SWOT analysis.Do not use speculative statements. Typical key words indicating speculation include: if, should, could, would, and may. Avoid contractions in written business reports. You only use contractions in a business report when it involves a direct quote. Avoid vague pronouns. Pronouns such as this, these and it used out of context and without attribution are examples. Often students will have a paragraph in the facts column that consists of several sentences. The students then start the analysis with the pronoun “this”. The reader cannot determine the reference the appropriate idea without considerable guessing.Refer to the examples of prior case analyses provided on the web site to assist you with understanding thedesired quality of analysis and statement of opportunities and threats.Macro-environment forcesCriteria(Refer to page 51.)Facts What does this mean?The economy at large(Address the economic conditions during the timeframe of the case.)Legislative, regulatory and political environmentsPopulation demographics(Population demographics analysis relies on developing various categories of the population and analyzing their impact on the industry. Typical categories include gender, age, education level, geographic location, income, life stage, household size, occupation, and race. In addition to population demographics, this type of categorization includes geographic segmentation (region, city or countrysize, density), benefit segmentation (comfort, convenience, durability, Thompson, Arthur and Strickland, A.J. Strategic Management: Concepts and Readings. McGraw-HillIrwin. NY. 15th EditionChapter 3 Worksheet1health, luxury, safety, status), and volume segmentation (usage, loyaltystatus). Marketing is the usual company source for these types of analysis.)Societal values and lifestylesEthnographics and psychographics provide the following categories: personality,values, and lifestyle.Technology1. What are the Industry's dominant economic features (page 52)?Please note that table 3.1 provides a sample profile of the sulfuric acid industry. Table 3.1 provides examples of the strategic significance of each of the criterion. Make sure you know the industry you are analyzing.Criteria Facts What does this mean?Market sizeScope of the competitiverivalry(The competitive scope criteria addresses geographic scope (Global, National, Regional, Local),product scope, market scope and so on.) Market growth rate and position in the business cycle (development, growth, maturity, decline)Number of rivals and their relative size(Relative size refers to eachrival’s market share based on total sales for the overallmarket or, when applicable,individual market segments.)Number of buyers and their relative size(Address the number of buyers in each market and market segment. Buyer size refers to the buyer’s volume of sales for the industry.) Extent of rivals’ vertical integration (How far forward or backwards havethe rivals extended their value chain?)Extent of rivals’ Thompson, Arthur and Strickland, A.J. Strategic Management: Concepts and Readings. McGraw-HillIrwin. NY. 15th EditionChapter 3 Worksheet2horizontal integration(Horizontal integration applies to using the synergies in your value chain to produce different products or provide services for a different industry or market segment.) Types of distribution channels rivals use to access customers. (Do the channel types vary by customer segment?)Pace of technological innovation in production process innovation Pace of technological innovation in product introduction Extent to which the rivals differentiate their products and/or services Extent to which rivals use economies of scale in:- Purchasing- Manufacturing- Services- Transportation (logistics)- Marketing- Advertising- General and Administration- Other steps in the value chain (Refer to chapter 4 for the description of the value chain.)Extent to which the key industry participants are clustered in one geographic locationExtent to which certain industry activities result from learning and experience curve effectsCapacity surplus or shortage in the industryThompson, Arthur and Strickland, A.J. Strategic Management: Concepts and Readings. McGraw-HillIrwin. NY. 15th EditionChapter 3 Worksheet3(Capacity refers to the totalmanufacturing output capability for the industry. Capacity surplus would indicate that the industry has the capability to produce more products than the market demands.)Capital requirements andthe ease of entry into or exit from the industryIndustry profitability(The annual net profit margin for the industry.)Degree of alliances (You can provide additional economic features applicable to theindustry you are analyzing.)2. What is competition like and how strong are each of the competitive forces (page 54)?Criteria Facts What does this mean?(Does this make the force strong or weakfor the industry?)RIVALRY (pages 55-60)Under this heading you are supposed to address how the criterion affects the rivalry between the competitors. When rivalry increases, it generally is a threat to the industry. When the rivalry decreases, it generally is an opportunity for the industry.How many competitors are there in this industry?What is the relative size (market share based on their percentage of