Professional Documents
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Environment
Environment
Economic
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Industry
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Threat of new
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Power of suppliers
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Power of buyers
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Product substitutes
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Intensity of rivalry
En
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Competitor
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What do they have in
common ?
Branded food and beverage
Telecommunications
Financing of personal loans
External Environmental
Analysis
A continuous process which includes
● Scanning: Identifying early signals of environmental
changes and trends
● Monitoring: Detecting 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
Analysis of general
environment
Analysis of industry
environment
Analysis of competitor
environment
The External
Environment
Strategic Intent
Strategic Mission
General Environment
Sociocultural segment Economic segment
Inflation rates
Women in the workplace Interest rates
Attitudes about quality of work life Budget deficits or surpluses
Concerns about environment Personal savings rate
Shifts in work and career preferences Business savings rates
Shifts in product and service preferences Gross domestic product
Technological SegmentDemographic
Segment
Product innovations
Population size
Applications of knowledge Age structure
Focus on R&D expenditures
Geographic distribution
New communication technologies
Ethnic mix
Income distribution
Can firms anticipate new
entrants to the market?
( Retailing)
India's retail market is forecast to double in
another six years from the current $375 billion
Earlier, Wal-Mart had faced tough opposition
in India from small traders and the Left parties
government should look at opening up retail
by bringing in foreign direct investment," said
Rajan Bharti Mittal
Britain's Marks and Spencer and Tesco also
have concluded alliances with local Indian
partners
Industry Environment
A set of factors that directly influences a
company and its competitive actions and
responses
Interaction among these factors determine an
industry’s profit potential
Threat of new entrants
Power of suppliers
Power of buyers
Product substitutes
Intensity of rivalry
Five Forces Model of
Competition
Identify current and potential competitors
and determine which firms serve them
Conduct competitive analysis
Recognize that suppliers and buyers can
become competitors
Recognize that producers of potential
substitutes may become competitors
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Bargaining Power of
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11
Threat of New Entrants
Barriers to entry
Economies of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages independent of scale
Government policy
Expected retaliation
Bargaining Power of
Suppliers
A supplier group is powerful when:
Assumptions
Capabilities
Future objectives Response
Response:
Current strategy What will our competitors
do in the future?
Where do we hold an
Assumptions advantage over our
competitors?
How will this change our
Capabilities relationship with our
competitors?