Strategy and Governance - Internal & External Analysis Flashcards
What are the four terms of a SWOT analysis
- Strength
- Weakness
Internal - Opportunity
- Threat
External
What are some questions to ask for the SWOT analysis
Strength - What advantage do you have? What do you do well?
Weaknesses - Do you lack resources or capabilities? Where do you need to make improvements?
Opportunities - Are there trends or changing demographics that can be exploited?
Threats - What is happening in the marketplace that could harm you? Are there trends or changing demographics that result in challenges?
What are some methods that can be used for SWOT analysis together
You can use:
1. Strength & Opportunities together - the best prospect of comprising internal strength and external opportunities
2. Weaknesses & threats - May wish to avoid investment and or withdraw from activities in areas containing internal weaknesses & external threat
3. Weaknesses & Opportunities - Not good at activity, but the activity has potential Ex. new capabilities and resources.
What are the six factors of PESTEL and why are they used?
PESTEL is an external factor that influences business success
Political - Tax policy, Financial policy, trade tariffs, political stability
Environmental - Climate, weather, geography, climate change, quality of air
Social - Cultural trends, demographics, education, career attitudes, gender, religion
Technological - Automation, R&D, Innovation, rate of technology change
Economical - Inflation rates, interest rates, economic stability
Legal - Consumer law, Human rights, Patent law, health and safety
What are the five factors in Porter’s five forces
- Threats of barrier to entry - Time and cost of entry, specialized knowledge or processes, economies of scale
- Threats of a substitute - Performance of substitute, product/ services, cost of the customer to adapt to substitutes
- Buyer Power - # of customers, size of the order, competitor difference, price sensitivity
- Supplier Power - Number of suppliers
- Competitive rivalry - Four factors contribute to overall competitive rivalry
Provide the industry life cycles
- Introduction - Competitors must focus resources on creating awareness and demand. Expenses are high, R&D
- Growth - Consumers are now aware of the product or service and demand increases, tend to only be for fewer companies
- Maturity - The market is well established and stays competitive, and companies will continue controlling costs and competing prices
- Decline - Slow and prolong, may be outdated. Demand diminishes and revenue declines, exit strategy repurposes
For the product life cycle, the decline may not mean the organization’s death. The biggest risk is that senior decision-makers incorrectly believe that a successful business will weather any storm
Explain what is environmental scanning.
- Is the process of gathering information about the environment in which an organization will be functioning to provide information for decision-makers on future events
- Some analysis that can be used for environmental scanning is
1. Analysis of macro forces (PESTEL)
2. Stakeholder analysis
3. Industry analysis - value chain/ Profit pool
4. Internal Analysis - Resources, capabilities, and core competencies
Once the SWOT analysis and environmental scanning is completed, what is to be done next?
The next stage is for the information to be carried forward to strategy formulation
- Environmental scanning relies on understanding on macro- macro-level (forces) and analysis of specific industry environment & internal core competencies & stakeholder needs
- External information requires to engage in a comprehensive scan and analysis
- Capture events and circumstances that have occurred in the past. Highlighted change
What are macro forces and explain the different types
Macro forces are external social environmental is essential to environmental scanning.
It affects organizations in complex and interrelated ways
- Economic forces - is the most scrutinized part. Involves interest rates, gross domestic product (GDP), and Consumer price index. Looks beyond the order of organization
- Demographics forces - The study of human population. It involves ages, life span, ethnicity, mortality rate, fertility rate, geographic distribution
- Social & cultural forces - that drive behavior changes driven by factors such as increased unionization, the advent of mobile technology, immigration, and population mobility
- Environmental forces - for awareness and recognition of the impact of climate change to focus on environmental issues engaging analysis
Explain the different forces used for political, legal and technological
- Political upheaval such as war, and change in policies, Can be elements of external environmental scan.
- High-level change in infrastructure can have an impact on market access
- Gov’t control legislation - Legal forces are for a law that an organization is subject to, but the nature of the environment
- Some industries such as insurance and banking tend to have more activity than others, new legislation - Technologies are altering the nature of the competitive environment organization operate rate of change
Disruptive innovation - Open new market for previously non-existent technology which can disrupt or demonstrate existing markets
What are some industry analysis characteristics and key success factors
The characteristics are the industry analysis - Geographical area of major plays, size, and structure of the market.
Demographic of customer base, resource intensity, level of innovation
The key success factor is the element of strategy of the strategy of the business plan that can make or break an organization
Ex. Organizations in the industry are international firms, have global connections, and can be essential for success
Explain how internal analysis is used and what some examples of this
Internal analysis - involves organization analyzing its efficiencies and deficiencies, then assessing how these fit within the industry and broader social context
- System and process
- Are the infrastructure of an organization. Examination of internal systems and processes should provide insight into the area in which a firm is exceptionally effective - Culture
- Encompasses belief, morals, law, custom, behavior and any other characteristics and habits exhibited by the member
- Difficult to change the culture. Senior management team and BOD must pay attention to the culture - Financial capital
- Defers to the monetary resources that a business requires to acquire and use the item needed to operate the organization
Provide some more examples of internal analysis
- Human Capital - Combination of human attributes that contribute to the ability to perform labor ultimately producing economic value
Ex. knowledge, experience, competencies, relationship creativity - Intellectual capital
- Can be used in both a legal and general issue
- The specific concept or invention unique to an organization and protected by law firm used by anyone
- Aggregated knowledge that ultimately, resides in the heads of the employees
What is stakeholder analysis
It involves identifying internal and external establishing their importance to the organization and understanding their needs to the requirement
- Focus on the most relevant and important perspective to consider when performing all other analysis
- Becomes challenging to formulate a strategy that will satisfy each stakeholder with an interest in the organization
