Global transportation

THE FIELD PROJECT - Business 302

Purpose

The purpose of having you prepare an environment report for an industry is to give you

experience in applying the concepts of this course to an actual business situation. When the

environment remains stable, the importance of an environment analysis is minimal. However,

when faced with a dynamic environment the analysis of the environment and the

corresponding report are extremely important. An analysis of the environment is the basis for

developing a strategic plan and a marketing plan, which are required components for business

loans. A firm that does not constantly monitor its future environment for salient changes is

more likely to find itself out of step and ultimately, out of business.

The environment analysis of the Strategic Business Area (SBA) you prepare is to be

written from the perspective of an outside business consultant as an objective report on the

aspects of a firm’s environment. The report should provide insights that would enable a

management team or others in a firm to evaluate any proposed strategy. The report is not to

include any strategy, evaluation or strategy, or response.

Topics and Nature of Report

The basis of your report is concentrating in the Task Environment elements of the Griffin Model

and the Five Forces of the Porter Model. As you discover more about the environment, new

issues may be discovered about salient aspects of the environment that may lead to different

emphases. The first step is to identify five major trends, threats, and opportunities that will

exist in the SBA. The second step is to conduct an overview of the different aspects of the

environment (General: Economic, Social-Cultural, Political-Legal, Technological, and

International; Task: Competition, Customers, Regulators, Unions/Labor, Suppliers, Strategic

Allies, and Owners; Porter’s Industry Competitive Model). Jot down things about each

factor/dimension that you initially think may be important to the organization. Then conduct a

more in-depth research in each of the areas.

Throughout the course, material has been presented on each facet of the environment.

The Case Guide Analyses and class lectures give information on the General Environment as

well as information on task factors. Most of these overheads identify different types of

information that one could/should examine and/or include on each of these factors.

For each task factor it is important to identify 1) Who they are, and 2) What are their

characteristics, orientation, behaviors, etc. which make (or potentially make) them important to

a firm doing business in the SBA. Importance is determined by the potential to serve as a

stimulus (positive or negative/opportunity, threat or trend) for some type of firm response.

Conclude by outlining your general recommendation(s) about the industry sector.

Strategic Business Area (SBA) Identification

For all firms the need/demand is the important factor. You are expected to develop an

identification of the future needs of the SBA, the technology that will be utilized to satisfy the

need, the geographical area and the client type you will try to satisfy. The concept of Strategic

Business Area and the Strategic Segmentation Tree are attached at the end of the report. Start

your report by describing which of the SBA you will be concentrating on and the future Time

Target.

You are expected to develop a customer profile (of the businesses, individuals, or

families) for the organization. This will include their demographics/psychographics and other

characteristics, buying patterns, or buying behaviors that are relevant. For all SBAs there must

be some consideration of the competitive environment. Even if a firm has a monopoly,

consider if there is the threat of substitute products or other competitive forces on the horizon.

Identify the different types of competitors (brand, product, or generic competitors), their

strengths or weaknesses, and anything you can determine about their strategies.

Time Target and Life Span

At this stage you need to estimate the time period you will focus your analysis into the future.

Attention: the immediate “future” environment is not of particular help since by the time the

firm develops a response plan the immediate future will have passed. You need to

concentrate your research in assessing the SBA’s potential during the life span period.

Level of Future Turbulence of the SBA

Using tables H-1-1 and H-1-2 assess the level of future turbulence of the SBA. You can assess

the level of turbulence by:

a. asking experts in the field, and

b. using reference information on the SBA.

Construct the future level of turbulence by circling the relevant columns for each attribute in

Tables H-1-1 and H-1-2. Average the result and come up with a single number of turbulence

level for each one of the tables.

Since managers typically find it difficult to fill out complex tables, it is recommended

that you “translate” them into a questionnaire format. An example is attached at the end of

the report. However, you can also have them fill in the tables directly.

Sources of Information

This project is designed to be a research/field project. You will need to talk with people who

can provide you some of the needed background information, e.g. people in the industry or

people knowledgeable about different aspects of the SBA. Other needed information will be

found through secondary sources. The Business Librarian holds sessions on how to use the

library resources and how to find various types of business information. You may wish to use

on-line services, industry reports, or other published reports. Several local organizations

publish reports and information on the business environment in the San Diego and other areas.

The Economic Development Corporation (EDC); local Chamber of Commerce, Private Industry

Council (PIC), and others will be able to glean a great amount of information as well as direct

through electronic media. Many reports are also published in local publications as the San

Diego Business Journal, The San Diego Transcript or the business section of local papers.

Writing the Report

The writing style should be terse and to the point. Write objectively and avoid using “loaded”

or “value laden” words or terms. While you may feel emotionally about an issue, try and keep

your writing objective. What a firm “should” or “should not” do. An analysis of the

environment, as it will exist is to be written descriptively, not in a prescriptive manner.

The analysis is to be double-spaced, using a font no smaller than 12 pt. The maximum

number of pages to be submitted is 15, including references and any appended material. The

report format and style must be consistent throughout the paper. Please use an “accepted”

style, such as Chicago Manual of Style, Writing Research Papers: A Complete Guide, The

American Psychological Association (APA) Style, or any other style manual that is accessible to

you from the library or other source.

The report is to be organized in a logical sequence. Within each dimension or factor you

may wish to have sub-sections concerning different customer segments or sections concerning

demographic characteristics (age, income, education, marital status, ethnic background, etc.),

one concerning buying patterns, and perhaps another about what they value of the benefits

they are seeking.

Your report should have an appropriate title page. At minimum the title page is to

include the title of your paper, the course information, your team’s names, and date. There

should be page numbers on each page (not including title page). Headings and sub-headings

should be used to identify different sections and topics. When double-spacing text, it is

appropriate to indent the first line of each new paragraph. Each report is expected to have a

Bibliography, Sources, or Reference section. You should also list the full names, company

affiliation, and titles of the people you interview. Consult a style manual for the appropriate

format. There is no need to have a report cover; a report stapled in the upper left corner is

preferred.

Remember that I am available to answer questions and can be used as a resource;

however, I do not read drafts of your paper. Final projects may be submitted at any time prior

to or during designated time period.

PROJECTS WILL NOT BE ACCEPTED AFTER THE DESIGNATED TIME.

CONCEPT OF STRATEGIC BUSINESS AREA

In strategic decision making in turbulent environments, the commonly used marketing concept

of Market Segmentation is replaced by the concept of Strategic Segmentation.

Strategic Segmentation subdivides the environment into Strategic Business Areas

(SBAs) which offer distinctive future growth/profitability/turbulence prospects and/or require

distinctive success strategies.

The dimensions of an SBA are the following:

1. A NEED which will exist in the environment

For example: Need for personal urban transportation

2. A TECHNOLOGY which will serve this need in the future.

Examples:

1) Automobile powered by an internal combustion engine

2) Automobile powered by an electric motor

3) A suburban train powered by a super conductive electric motor

4) Bus powered by electric motor

5) Bus powered by natural gas

3. A GEOGRAPHIC LOCATION in which this need will exist.

Examples:

1) USA (or east coast of USA)

2) Japan

3) Russia

4) European Union

4. A TYPE OF CUSTOMER which will have the need.

Examples:

1) Individuals commuting to work

2) Families

3) Tradesmen

4) Auto rental firms

5. In some instances, a fifth segmentation dimension becomes necessary. This

dimension is the CHANNEL OF DISTRIBUTION through which the need is served.

Examples:

1) Direct from manufacturer to customer

2) Through intermediate distributors

3) Through retail stores

AN SBA IS A COMBINATION OF NEED/TECHNOLOGY/LOCATION/CUSTOMER TYPE

The distinctive characteristics of an SBA which are important in strategic decision making are:

1. GROWTH/PROFITABILITY which the SBA will offer to successful competitors.

2. Level of TURBULENCE AND UNCERTAINTY which competitors will encounter in the

SBA.

3. STRATEGIES which are going to be successful in the SBA.

4. ORGANIZATIONAL CAPABILITY which the competitors will need to have in order to

succeed in the SBA.

5. STRATEGIC INVESTMENT which a firm will have to make into the SBA in order to

succeed.

In today’s and future environments, a need is likely to be served by more than one technology,

exist in different geographic settings, and possessed by more than one type of customer.

The process of Strategic Segmentation consists of constructing a SEGMENTATION TREE

which is illustrated in the following figure.

As the Figure bellow shows, a single NEED can generate a large number of SBAs.

STRATEGIC SEGMENTATION TREE

TIME TARGET AND LIFE SPAN

Estimate the number of T1 it takes from start to finish in your chosen SBA to develop and

launch a new generation of products/services based on a new technology. We will call T1 the

TIME TARGET.

Enter T1 below.

Estimate the number of years from launching time T1 to time T2 during which the new

generation of products/services will remain profitable. We will call T1 to T2 person the

profitable LIFE SPAN of the next generation of products/services based on a new technology.

Enter T2 below.

You are writing the project for a manager who needs to know what the environment will look

like when is ready to launch the product/service in the industry on T1. This is the soonest

possible time that one can prepare a product/service and bring to market.

THE ANALYSIS OF THE ENVIRONMENT IN THIS PROCEDURE MUST BE FOCUSED ON

THE TIME TARGET

ADDITIONAL QUESTIONS FOR THE QUESTIONNAIRE

Remember, you will have to know what all these terms and concepts mean, as well as be able

to explain their meaning to managers in their language.

In addition to the general questions shown in the tables, you may find additional

questions which will be important for the evaluation of the SBAs. Before executing the forms

with the client, determine such additional questions and construct the answers for each of the

levels specific in the table.

Translation of the Tables in Questionnaire

Since managers typically find it difficult to fill out complex tables (such as tables H-1), before

executing the questionnaire, translate the tables into convention form. A questionnaire

example of this translation is shown below:

From Figure H-1-1

1. How would you assess the pressure your firm will receive from your customers in the

next 5-7 years?

a. None

b. Weak

c. Strong

d. Demanding

e. Threatening

2. In your view, what will be the critical marketing success factors in your industry during

the next 5-7 years?

a. Control of the Market

b. Dominant market Share/Low Production Costs

c. Product Appeal/Responsiveness to Customer Needs

d. Anticipation of Changes in Customer Needs/Responsiveness to Changing

Customer Values

e. Identification of Latent Customer Needs

From Figure H-1-2

3. In your view, how frequent will new products be introduced in your industry during the

next 5-7 years?

a. Infrequent (every 5 or more years)

b. Low

c. Moderate

d. High

e. Very High (several per year)

FIGURE H-1-1 LEVELS OF MARKETING TURBULENCE

ATTRIBUTE

LEVEL OF FUTURE

TURBULENCE

S

(STABLE) 1

R

(REACTIVE) 2

A

(ANTICIPATING) 3

E

(EXPLORING) 4

C

(CREATIVE) 5

(1)

Market

structure

Monopoly

Oligopoly

Oligopoly

Multi-

competitive

Major new

entrants

(2)

Pressure by customers

None

Weak

Strong

Demanding

Threatening

(3)

Product image differentiation

None

Low

Moderate

High

Drastic

(4)

Critical

marketing success factors

Control of

market

-Dominant

market share -Low

production costs

-Product appeal -Responsiveness

to customer needs

-Customer satisfaction

-Anticipation of

changes in needs

-Responsiveness to changing

customer values

Identification

of latent needs

FIGURE H-1-2 LEVELS OF INNOVATION TURBULENCE

ATTRIBUTE

LEVEL OF FUTURE

TURBULENCE

S

(STABLE) 1

R

(REACTIVE) 2

A

(ANTICIPATING) 3

E

(EXPLORING) 4

C

(CREATIVE) 5

(1)

Frequency of new product in industry

Infrequent (every 5 or

more years)

Low

Moderate

High

Very High

(several per year)

(2)

Length of

product life cycle

Very long (5

years of longer)

Long

Moderate

Short

Short (less

than 1 year)

(3)

Number of competing

technologies

None

None

None

More than

one

Several

(4)

Technological

change

None

Slow

evolution of historical

technology

Fast evolution

of historical technology

Entry of

technologies new to

industry

Entry of

novel technologies

(5)

Product

performance differentiation

None

Low

Moderate

High

Drastic

(based on novel

technologies)

(6)

Critical

innovation success factors

Cost

Reduction

Reactive product

improvement

Aggressive

product improvement

Related new

product innovation

Creation of

radically new products