Macro- and micro-environmental Analysis Flashcards
PESTLE stands for
Political
Economical
Social and cultural
Technological
Legal
Enviromental
Examples of political factors
- Government policy
- Political stability/instability
- Corruption
- Foreign trade policy
- Trade policy
- Tax policy
- Labour law
- Environmental law
Examples of Economical factors
- Economic growth
- Exchange rates
- Inflation rates
- Disposable income of consumers
- Unemployment rates
Examples of Social and cultural factors
- Population growth rates
- Age distribution
- Income distribution
- Career attitudes
- Health consciousness
- Lifestyle attitudes – Values / Priorities - Fashion
- Cultural barriers
Examples of Technological factors
- Technology incentives
- Level of innovation
- Automation
- Research and development (R&D) activity
- Technological change
- Amount of tech awareness
Examples of legal factors
- Discrimination laws
- Antitrust laws
- Employment laws
- Consumer protection laws
- Copyright and patent laws
- Health and safety laws
Examples of enviromental factors
- Weather
- Climate / Climate change
- Pollution
- Recycling standards
- Attitudes towards green products
- Pressure from NGO’s (Non-governmental organisations)
To do a successfull macroenviromental analysis you need to
Find reliable sources
Try to determine which factors that have the strongest impact on your industry
Evaluate probabilities and severities for the risks and opportunities identified
Include the time span in which the risks and opportunities may occur
Four different analysis can be made in the microenviroment
Customer analysis
Industry analysis
Competitor analysis
Market analysis
Competitor Analysis five key questions
- Who are our competitors?
- What are their strengths and weaknesses?
- What are their strategic objectives and thrust?
- What are their strategies?
- What are their response patterns?
To identify competitors four categories must be considered
Product form (Similar product with a similar solution)
Product substitutes (Product design and technical solution is different)
Generic competitors (Customer problems are solved in a dissimilar way)
Potential entrants
A companys respons pattern can be
Retaliatory (Responds aggressively to competitive challenges)
Slow reactions due to complacency
Hemmed-in (Difficulties to respond due to strategies, laws etc)
Selectively (Agressive in certain areas (e.g. price) but not in others
Unpredictable
Situational analyis has three layers
Macro
Micro
The company
A market analysis looks at
- Size
- Market growth
- Market profitability
- Cost structures in the industry
- Distribution systems
- Trends and developments
- Key Success Factors
With new products customers are split into different categories based on when they buy the product
- Innovators – Ca 2,5% of those customers who will accept an innovation in the end
- Early adopters – Ca 13,5%
- Early majority – Ca 34%
- Late majority – Ca 34%
- Laggards – Ca 16%
When doing industry analysis you look at
Porter’s Five Forces – Used in order to understand the profit potential for an industry
Critical Success Factors – Identified to understand for a company to be successful within a certain industry
Porters five forces
Threat of new entrants
Bargening power of customers
Bargening power of suppliers
Threat of substitute products or service
Dregree of rivalty within industry
When doing a company analysis, use the
SWOT
SWOT stands for
- Strengths (Internal – Controllable)
- Weaknesses (Internal – Controllable)
- Opportunities (External – Uncontrollable)
- Threats (External – Uncontrollable)
When evaluating strengths and weaknesses, only those resources or capabilities that would be valued by customers should be included. Examples are:
- Resources
- Adaptability
- Possibility to change
- Market communication
- Product portfolio analysis
Strategic thrust defines the future direction and areas of potential growth for a business. It can be one or several of four:
- Market penetration/expansion – When you try to increase the market share, using existing
products on existing markets - Market development - When you try to introduce existing products on new/related markets
- Product development - When you try to introduce new/related products on existing markets
- Diversification/Enter new markets - When you try to introduce new/related products on
new/related markets
Four competitive strategies are
Differentiation - stand out from competitors, meet one critera used by many buyers (nissan)
Cost leadership - lower cost than competitors, many customers -> lower prices (walmart)
Differatiation focus - specialise to meet the needs of a small market segment (chemical companies)
Cost focus - dedicate to one segement and avoid overperforming when meeting need (ryanair)
Sources of competitive advantage are
Superior skills
Superior resources
Core competences
How do we locate superior skills and resources?
Examine your value chain.
Look for skills and resources that may form the basis for low-cost of differentiated positions
Creating a differential advantage
- Superior skills and resources are translated into a differential advantage only when the
customer perceives the the firm is providing value above that of the competition. - Differential advantages are created when skills and resources are liked to the key attributes
(choice criteria) that customers are looking for in a market offering - Differential advantages can be created with any aspect of the market offer (marketing mix).
Sustaining a differential advantage
Patents
Brand
Innovative products
Relationships
Eroding a differential advantage
Tech and environment change
Competitors lean to imitate sources of diff adv
Complacency lead to lack of protection
Competitive behaviour
- Conflict – Aggressive competition to drive competitors out of the market
- Competition – Perform better than competitors
- Co-existence – Unawareness / Separation in market segments / Acknowledge territories
- Cooperation – Alliances
- Collusion – Agreements to inhibit competition
Attack marketing strategies
- Frontal attack – Take on the defender head-on
- Flanking – Attacking unguarded positions
- Encirclement - Attacking the defender from all sides
- Bypass – By tech leap-frogging
- Guerilla – Unpredictable smaller attacks
Defence marketing strategies
- Position – Protecting ”our” position/territory
- Flanking – Defending undefended positions
- Mobile - Alternative markets/products
- Counter-offensive – Attack the attacker
- Preemptive – Be the first mover
- Strategic withdrawal – Exiting the market (before it’s too late)
Two swot strategies are
- Conversion: Making waknesses into strengths and threats into oppertunities
- Matching: Making strengths into oppertunities.
