Running Head: Group Assurance of Learning Exercise 2
1
Group Assurance of Learning Exercise 2
Liberty Graduate School
Strategic Planning/Business Policy
BUSI-690-396/BUSI-400-396
August 5, 2016
Group Assurance of Learning Exercise 2
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Section 1 - Answer questions 3-26, 3-27, 3-31, 3-35, and 3-39
3-26. Explain how to conduct an external strategic management audit.
There are several key phases to performing and external strategic management audit. The
first phase includes gathering as many managers, employees, and direct stakeholders in business
management process. This develops a communication system within the organization and
provides ideas, and better understanding of the firms industry, competitors and markets. The next
phase is compile competitive intelligence and information about economic, social, cultural,
demographic, environmental, political, governmental, legal, and technological trends.[Dav15] In
addition to the information above several additional collection methods can be used to collect
competitive information programmatically and distribute it to the reviewing team members.
These methods include create social listeners within social networks and alerts for competitor
mentions, setting up RSS feeds for industry analysts reports mentioning competitor trademarks
and brand names (available through Google Alerts as well), and scanning competitor sites on a
regular basis for products or service offering changes such as using a tool called
import.io[New14]. All of these methods provide real-time reporting on external factors.
Traditional methods of attaining information are still used but must be carefully monitored
including obtaining information from suppliers, distributors, salespersons, customers, and other
trades sources. The third phase of the external audit is assimilating and evaluating all of the
collected data and creating a prioritized list of opportunities and threats. From this list managers
should select the top 20 most important opportunities and threats the business can address and
should be monitoring. It is important to know that these external factors can dynamically change
overtime and should be frequently reviewed to maintain competitive edge.
Group Assurance of Learning Exercise 2
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3-27. Identify a recent economic, social, political, or technological trend that significantly affect
the local Pizza Hut.
Pizza Hut has been in the process of implementing several digital or technology
enhancements for the past few years. Each of these technology enhancements have improved the
overall customer experience and led to the increase Pizza Hut is now seeing today. Pizza Hut
today reports that they receive 46% of delivery and carry-out orders through digital channels, as
compared to their competitors Papa John’s and Domino’s who are reported to have more than
half of all sales from digital[Tay16]. To address this technology trend Pizza Hut has recently
implemented “Visible Promise Time”. This allows customers to set expectations correctly about
ordering there pizza online through digital channels and when they receive it. This is an example
of how technology is creating a better user experience for customers and thus impacting sales
and revenue for the overall company.
3-31. How does the external audit affect other components of the strategic- management
process?
The external audit plays a vital role in the strategic management process by identifying
key opportunities that business can take advantage to maintain a competitive edge, while also
mitigating potential external threats the company might or is facing from competition.
Companies that implement external audits tend to see increases in revenue and growth in overall
market share. In addition through the collection of information and auditing of the information
companies are able to identify new trends that can be leverage to create new products or services
or reach niche markets before competition.
Group Assurance of Learning Exercise 2
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3-35. Let’s say your boss develops an EFE Matrix that includes 62 factors. How would you
suggest reducing the number of factors to 20?
When using an EFE Matrix, it is important to remember it is not about the number of
factors included in the matrix, but more important how the factor impact the business. The EFE
Matrix is designed to score factor from 1.0 the lowest of importance to 4.0 the highest of
importance.[Dav15] Assuming the 62 factors were provided by management, we would ask
management to evaluate each factor within scoring tied to the number of current internal
resources available. This would demonstrate that while some of the factors appear to be critical
to the business the current resources could not support executing campaigns to make an impact.
This would allow management to keep face and reset expectations from management on what
could be accomplished from internal resources while shortening list to top 20 most impactful
factors.
3-39. Define, compare, and contrast the weights versus rating in an EFE Matrix.
The EFE Matrix weights can be defined as the relative importance of the factor being
successful in the firm’s industry. Opportunities typically receive higher weighting then threats
unless there is a severe or immediate threatening issue. Weighting is determined by comparing
successful to unsuccessful industry competitors or through internal review and voting on
weights. This is different from rating which can be defined a rating system from 1 to 4 for each
external factor that indicates how effectively the firm’s current strategy is responding to the
factor. An example of this rating is a rating of 4 = superior response, 3 = above average response,
2 = average response, and 1 = poor response. Each rating should identify the effectiveness of the
firm’s strategy. Also note that ratings are company based versus weights are industry based.
Group Assurance of Learning Exercise 2
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Section 2- Complete Assurance of Learning Exercise 3C, Step 1
Key External Factors Weight Rating Weighted
Score
Opportunities
1. PepsiCo’s increased Operating profit to 9.9% in 2012 within
the Europe segment
2. Growth of 14.4% in US consumption of Energy drinks
3. PAB segment accounted for 33% of PepsiCo’s 2012 revenue
4. PepsiCo had 1.8% revenue increase in 2012 for Americas
Foods segment
5. PAB segment accounted for 46% of PepsiCo’s assets in 2012
6. PepsiCo 2012 Revenue increased 2.36% in Russia
7. PepsiCo 2012 Revenue increased 1.52% in Brazil
8. Growth of 8.8% in US consumption of Sports drinks
9. Growth of 9.4% in US consumption of Ready-to-drink
coffee
10. Growth of 4.1% in US consumption of bottled water
0.06
4
0.24
0.08
3
0.24
0.07
2
0.14
0.05
2
0.1
0.05
2
0.1
0.03
3
0.09
0.03
3
0.09
0.04
2
0.08
0.06
1
0.06
0.01
1
0.01
Threats
11. Increased health concerns about sugary, carbonated drinks
12. PepsiCo Revenue decreased -17.29% in Mexico in 2012
13. PepsiCo Inc. sales down -1.52% in 2012
14. PepsiCo’s 2012 Operating profit decreased -15.9% in AMEA
segment
15. PepsiCo’s 2012 Operating profit decreased -12.8% in QFNA
segment
16. Per capita soda consumption decline in the USA
17. Decrease of -1.0% in US consumption of carbonated
beverages
18. PepsiCo Americas Beverage segment had 1% decline in
revenue
19. QFNA segment only generated 4% of PepsiCo’s 2012
revenue
20. QFNA segment only generated 1% of PepsiCo’s assets in
2012
0.1
3
0.3
0.09
3
0.27
0.08
3
0.24
0.06
2
0.12
0.05
2
0.1
0.05
2
0.1
0.02
4
0.08
0.02
2
0.04
0.03
1
0.03
0.02
1
0.02
Total
1.00
2.45
Group Assurance of Learning Exercise 2
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Section 3 - Complete Assurance of Learning Exercise 3G, Steps 1–3
Competitive Profile Matrix
PepsiCo
Coca-Cola
Critical Success Factors
Weight
Rating
Score
Rating
Score
Employees
0.05
2
0.10
3
0.15
Net Income
0.20
2
0.40
4
0.80
Revenue
0.20
4
0.80
3
0.60
Revenue ($)/Employees (#)
0.05
2
0.10
4
0.20
EPS (%)
0.20
4
0.80
2
0.40
Stock Price ($)
0.05
4
0.20
1
0.05
Return on Investment (%)
0.20
3
0.60
4
0.80
Total Long-term Debt ($)
0.05
1
0.05
3
0.15
Total
1.00
3.05
3.15
Group Assurance of Learning Exercise 2
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References
David, F. R., & David, F. R. (2015). Strategic Management: A Competitive Advantage Approach, Concepts
& Cases. Saddle River, New Jersey, United States of America: Pearson. Retrieved July 30, 2016
Import.io. (2016, August 5). Extract web data the easy way. Retrieved August 5, 2016, from Import.io:
Extract web data the easy way
Newman, D. (2014, August 26). Social Listening Enables Social Business. Retrieved August 5, 2016, from
Forbes.com: http://www.forbes.com/sites/danielnewman/2014/08/26/social-listening-enables-
social-business/#70b1558c5818
Taylor, K. (2016, April 27). Pizza Hut wants to be like Uber. Retrieved August 5, 2016, from
Businessinsider.com: http://www.businessinsider.com/pizza-huts-new-technology-boosts-sales-
2016-4
