– prepare a one page (2 single spaced paragraphs) case and current event analysis memo.
1) How does the case specifically apply to the chapter material?
The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis (Ch 2)
Chapter 2 Short version attached
2) How does one WSJ story from the last 7 days apply to the material in the chapter?
Publix continues to enjoy growth in sales, a healthy gross margin and strong financial returns. The company is confident that its steady northward geographic expansion will continue supporting long-term growth for Publix. However, the highly competitive situation the company now faces in Richmond Virginia may be indicative of things to come. Wegmans, Lidl and Aldi very recently entered this market, and Kroger, Walmart, Food Lion and Whole Foods already have a significant presence. The continued expansion of Aldi and Lidl will put considerable price pressure on everyone in the Southeastern grocery market. So the over-saturation Publix is facing in Richmond is, in a sense, a good test case for what the company is likely to experience from now on in many or most of its markets.
Faced with these sorts of challenges, can the company’s labor-intensive, service-first, real estate heavy model continue to support growth in the future? Will customers migrate towards costs savings wherever they may be found, whether at a brick-and-mortar competitor or online? Will Publix’s partnership strategy with Instacart allow it to meet the online challenge? Does the company need to increase investment in its Aprons meal kit and prepared foods or should it focus more on expanding higher margin private label products and organic offerings? Should Publix abandon its long-standing aversion to a loyalty program? Basically, how can Publix position itself for continued growth when faced with this challenging business environment?
External Environmental Analysis
Most firms face external environments that are turbulent, complex, and global—conditions that make interpreting those environments difficult. To cope with often ambiguous and incomplete environmental data and to increase understanding of the general environment, firms complete an external environmental analysis. This analysis has four parts: scanning, monitoring, forecasting, and assessing (see Table 2.2).
Parts of the External Environment Analysis
|Scanning||· Identifying early signals of environmental changes and trends|
|Monitoring||· etecting meaning through ongoing observations of environmental changes and trends|
|Forecasting||· Developing projections of anticipated outcomes based on monitored changes and trends|
|Assessing||· Determining the timing and importance of environmental changes and trends for firms’ strategies and their management|
Identifying opportunities and threats is an important objective of studying the general environment. An opportunity is a condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness. Most companies—and certainly large ones—continuously encounter multiple opportunities as well as threats.
In terms of possible opportunities, a combination of cultural, political, and economic factors is resulting in rapid retail growth in parts of Africa, Asia, and Latin America. Accordingly, Walmart, the world’s largest retailer, and the next three largest global giants (France’s Carrefour, UK–based Tesco, and Germany’s Metro) are expanding in these regions. Walmart is expanding its number of retail units in Chile (404 units), India (20 units), and South Africa (360 units). Interestingly, Carrefour exited India after four years and in the same year that Tesco opened stores in India. While Metro closed its operations in Egypt, it has stores in China, Russia, Japan, Vietnam, and India in addition to many eastern European countries.
A threat is a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness. Intellectual property protection has become a significant issue not only within a country but also across country borders. For example, in 2018 President Trump placed tariffs on goods exported from China into the United States. The primary reason given for the tariffs was the theft of U.S. firms’ intellectual property by Chinese firms. As is common in these cases, China responded by placing tariffs on a large number of U.S. products exported to China, sparking fears of a potential trade war between the two countries with the largest economies in the world. This type of threat obviously deals with the political/legal segment.
Firms use multiple sources to analyze the general environment through scanning, monitoring, forecasting, and assessing. Examples of these sources include a wide variety of printed materials (such as trade publications, newspapers, business publications, and the results of academic research and public polls), trade shows, and suppliers, customers, and employees of public-sector organizations. Of course, the information available from Internet sources is of increasing importance to a firm’s efforts to study the general environment.