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    Strategy - External Environment

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    marianadutra.ca

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    Strategy - External Environment

    Uploaded by

    marianadutra.ca
    3 views3 pages

    Original Title

    STRATEGY - EXTERNAL ENVIRONMENT

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    Strategy - External Environment

    Uploaded by

    marianadutra.ca

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Evaluating a Company’s External Environment.

    WHAT IS THE COMPANY’S CURRENT SITUATION?

    – need to determine whether current strategy “fits” to decide on long term


    direction – examples gas guzzlers, DVD rentals etc.

    MACRO Environment –

    A. external to business and competition

    - General economic conditions


    - Global forces
    - Social forces
    - Technological factors
    - Political/regulatory/legal factors
    - The natural environment – economic and environmental – crop failure
    - Demographics – baby boomers

    B. Industry and competitive environment – impacted by above macro factors

    - Suppliers
    - Customers
    - Substitute products
    - Buyers
    - New entrants
    - Rival firms
    7 questions to determine competitive environment, KEY is different for each
    player in business -

    1. Does the industry offer attractive opportunities for growth?

    - industry life cycle – size of market, growth rate

    2. What kinds of “competitive forces” are industry members facing, and how
    strong is each force? 5 – strongest determines level of comp. and profitability

    - substitute products – timing, image


    - supplier bargaining power – fewer the number the more power
    - buyer bargaining power – rationale for choice, price elasticity
    - potential new entrants – discuss barriers to entry
    - competition amongst sellers
    Competitive strategies – discounting, advertising, improved quality or
    performance, customization of product, dealer network, warranties, financing
    Goal – Match strategy to competitive conditions!

    1. pursue avenues that shield firm from competitive pressures


    2. initiate actions to shift competitive forces in company’s favour
    3. spot expansion opportunities where competitive pressures are weakest

    3. What factors are driving industry change, and what impacts will they have?

    - identify drivers of change, how is industry being affected, prepare for impacts

    Drivers of change……..

    - industry long term growth rate


    - globalization
    - who buys product and how do they use it
    - technological change
    - internet capabilities and applications
    - product and market innovation
    - entry or exit of major firms
    - expansion of technical know how globally
    - improvements cost/efficiency in closely adjoining markets/products(bulbs)
    - reductions in uncertainty/business risk
    - regulatory influence or government policy
    - changing societal concerns, attitudes and lifestyles

    4. How are industry rivals positioned?

    - build strategic group maps based on positioning in market and competition of


    specific rivals or competitors – determine competitive position! What is “real”
    nature of competition – ie. Ketchup? Heinz and all others – profits, market share,
    market leader etc.

    5. What strategic moves are rivals likely to make next? Competitive intelligence.

    - competitor success – likely to hold course


    - competitor failure or stress – change likely
    - competitor current situation – likely to grow or shrink
    - expected industry leadership changes
    - rivals in bad shape – must increase sales or market share – pricing change?
    - competitor expected to entry or exit specific markets
    - new entrants or product intro
    - acquisitions, consolidations, co-branding

    6. What are the key future competitive success factors?

    - product and service attributes


    - operational approaches
    - resources/competitive capabilities
    - shortcomings creating competitive disadvantage

    7. Does the industry offer good prospects for attractive profits?


    - industry growth potential, current market position – leader, early adopter
    - competitive forces – price or margin destruction – SWOT
    - impact on profits by industry “drivers of change” – TV pricing
    - key industry success factors

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