Page 112 -

78 PART 2 • STRATEGY FORMULATION

offer extended warranties or special services to gain customer loyalty whenever the bar-
gaining power of consumers is substantial. Bargaining power of consumers also is higher
when the products being purchased are standard or undifferentiated. When this is the case,
consumers often can negotiate selling price, warranty coverage, and accessory packages to
a greater extent.
The bargaining power of consumers can be the most important force affecting com-
petitive advantage. Consumers gain increasing bargaining power under the following
circumstances:
1. If they can inexpensively switch to competing brands or substitutes
2. If they are particularly important to the seller
3. If sellers are struggling in the face of falling consumer demand
4. If they are informed about sellers’ products, prices, and costs
5. If they have discretion in whether and when they purchase the product 14

Sources of External Information

A wealth of strategic information is available to organizations from both published and
unpublished sources. Unpublished sources include customer surveys, market research,
speeches at professional and shareholders’ meetings, television programs, interviews, and
conversations with stakeholders. Published sources of strategic information include
periodicals, journals, reports, government documents, abstracts, books, directories, news-
papers, and manuals. The Internet has made it easier for firms to gather, assimilate, and
evaluate information.
There are many excellent Web sites for gathering strategic information, but six that the
author uses routinely are listed here:
1. http://marketwatch.multexinvestor.com
2. http://moneycentral.msn.com
3. http://finance.yahoo.com
4. www.clearstation.com
5. https://us.etrade.com/e/t/invest/markets
6. www.hoovers.com

Most college libraries subscribe to Standard & Poor’s (S&P’s) Industry Surveys.
These documents are exceptionally up-to-date and give valuable information about many
different industries. Each report is authored by a Standard & Poor’s industry research
analyst and includes the following sections:

1. Current Environment
2. Industry Trends
3. How the Industry Operates
4. Key Industry Ratios and Statistics
5. How to Analyze a Company
6. Glossary of Industry Terms
7. Additional Industry Information
8. References
9. Comparative Company Financial Analysis

Forecasting Tools and Techniques

Forecasts are educated assumptions about future trends and events. Forecasting is a
complex activity because of factors such as technological innovation, cultural changes,
new products, improved services, stronger competitors, shifts in government priorities,
changing social values, unstable economic conditions, and unforeseen events. Managers
often must rely on published forecasts to effectively identify key external opportunities
and threats.