External Analysis

Question 1

External Analysis - Objectives and Dimensions

Answer 1

The objective is to identify Opportunities and Threats

1. General environment
2. Industry environment
3. Competitor environment

You have to scan, monitor, forecast, assess

Question 2

General Environment

Answer 2

1. Demographic
2. Economic
3. Political/ Legal
4. Socio-cultural
5. Tech
6. Global
7. Physical

Question 3

Industry environment - Porter’s 5 forces

1. Threat of new entrants

Answer 3

> Threaten market share of existing competitors.

Determined by function from barriers to entry and expected retaliation

Come from start-ups, horizontal and vertical integration

Question 4

Industry environment - Porter’s 5 forces

2. Rivalry among competing firms

Answer 4

> Numerous or equally balanced competitors
> Slow groth in industry
> High fixed costs
> High strategic stakes
> High exit barriers

Question 5

Industry environment - Porter’s 5 forces

3. Threat of substitute products

Answer 5

Goods that perform the similar function that fulfill same need with better price/ performance ratio

Question 6

Industry environment - Porter’s 5 forces

4. Bargaining power of buyers

Answer 6

> purchase large portions
low switching costs
undifferentiated products
backward integration

Question 7

Industry environment - Porter’s 5 forces

5. Bargaining power of suppliers

Answer 7

> few large companies
> no substitutes
> goods are critical to buyers success
> high switching costs 
> forward integration

Question 8

Competitor Analysis

Answer 8

Competitors are firms operating in the same market offering similar products and targeting similar costumers

Direct vs Indirect

Market commonality and resource similarity determine competition. They have to be monitored and analyzed

This is a dynamic game. They come and go. Can come from substitutes

Analysis:

• What drives them (future objectives)
• What is the competitor doing (current strategy)
• What does the competitor think about the industry (assumptions)
• What are the capabilities and the competitor (strengths and weaknesses)