macroenvironment, industry and sector analysis Flashcards
definition of environmental analysis
the process of scanning and evaluating an organizations various external sectors to determine positive and negative trends that could impact organisational performanance - how managers determine the opportunities and threats which face their organisation
what is hyper competition?
if competitors are making frequent , bold and aggressive movements this creates the environment of disequilibrium and constant change
actors in the organisation
investors, rivals, allies, suppliers, politicians, employees, customers
influences to the organisation
currencies, employment , NGOs
terrorism
regime change
regulation
trade union
inflation
culture
social change
economic cycles
technology
PEST analysis
p- political trends
e- economic trends
s- social trends
t - technological trends
Political trends - elaborate
ØStability
* Ø Local
* Ø National
* Ø Alliance (e.g. EU)
ØTaxation policy
ØForeign trade regulations
ØRegulatory Environment
* Ø Ownership
ØEmployment law
Opening a new part of a franchise – pick a country with stable politics
Current employment law in the UK – employees have greater rights from the moment they join – higher costs to employer – higher burden to business
Economic Trends - elaborate
ØBusiness cycle e.g. growth or recession
ØGDP trends
ØInterest rates
ØMoney supply
ØInflation
ØUnemployment levels
ØAverage incomes
ØProperty prices
Social Trends - elaborate
ØDemographics - aging population and decreasing birth rate
ØIncome distribution
ØSocial mobility and networking
ØValues and norms
ØWork and leisure patterns
ØConsumer preferences
ØLevels of education
technological trends: elaborate
ØR&D investment
* Ø Governmental
* Ø Firm level
ØPatent rates
ØProduct introduction rates
ØAdoption rates
ØScientific breakthroughs
ØRates of obsolescence
ØConvergence
important things to know about your competition
- What are your competitors’ strengths and weaknesses…be specific , do research
- What are their objectives
- What are their strategies
- How will they respond to near term trends in the environment
- How vulnerable are the competitors to the strategies you are considering
How can you draw customers across – getting better at their strengths and exploiting on weaknesses
mobility barrier - definition
factors within an industry that inhibit movements of companies between strategic groups
they prevent quick imitation of successful strategies
what do mobility barriers stem from?
they stem from reputational disadvantages and deficiencies in capabilities an resources
five forces framework - developed by…
michael porter
what is the five forces good for
aid in the visualisation of competition within the industry - how value is created and assigned
this framework provides insights into performance of the company , industry structure and aids in enhancing and defending competitive position
what is the five forces
- Competitive rivalry
- Threat of new entrants
- Barganing power of suppliers
- Bargaining power of buyers
Threat of substitutes
factors influencing competitive rivalry
concentration
differentiation
excess capacity
exit barrier
cost conditions
diversity of competitors
industry life cycle
supplier power
switching power
concentration
forward integration
differentiation
importance: total purchase, volume, strategy (cost/differentiation)
buyer power
hold sway
quality
high buyer power- assumed - but critically analysed
choice
Powerful buyers can force price down or demand more value for the price – inturn creating more value for themselves
factors influencing substitution
product for product substitution
doing without
switching power
generic substitues
substitution of need
types of entry barriers
differentiation
economics of scale
capital requirements
access to distribution channels and inputs
absolute cost advantage
retaliation
government and legal barriers
