Strategic Market Management, 10th Edition

CHAPTER FIVE

Environmental Analysis and Strategic Uncertainty

We are watching the dinosaurs die, but we don't know what will take their place.

—Lester Thurow, MIT economist

There is something in the wind.

—William Shakespeare, The Comedy of Errors

A poorly observed fact is more treacherous than a faulty train of reasoning.

—Paul Valéry, French philosopher

Thomson Corporation, in 1997, was a Toronto media company that owned some 55 daily newspapers that were doing well.¹ CEO Richard Harrington, however, observed several trends in the environment that caused him to move the firm away from newspapers. He could see that the Internet was going to undercut classified advertising and that cable television and the Internet were going to steal readers. Despite the fact that the company was profitable, he made the rather dramatic decision to divest newspapers and to move the firm into delivering information and services online to the law, education, healthcare, and finance industries. As a result of that decision, Thomson thrived while other newspaper-based firms are struggling. The decision was based on projecting existing environmental trends and acting upon them.

In this chapter, the focus changes from the market to the environment surrounding the market. Being curious about the area outside the business is one route to generating creative ideas that could lead to products and strategies. It is also a way to anticipate threats and put a strategy in place, as Thomson did, to neutralize ...