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AMM-M2-Macro environment and Competitive Forces (PESTEL the combined…
AMM-M2-Macro environment and
Competitive Forces
PESTEL
the combined impact of some factors are more important
should focus on future impact
Politics
the role of the state such as an owner, customer and supplier
policies
taxation
foreign trade regulation
exposure to civil society e.g. lobbyists, campaign groups, social media
Economics
currency, interest rate, economic growth rates, personal disposable income, unemployment rates, differential growth rates around the world
industries vulnerable to economic cycles
Discretionary spend industries such as housing, restaurants and cars
High fixed cost industries such as airlines, hotels and steel
Economic cycle
Kitchin stock cycle (3-4years)
Juglar investment cycle (7-11years)
Kuznets infrastructure cycle (15-25years)
Social
Demographics: ageing populations
Income distribution: changes in wealth distribution
Lifesyle changes
Consumerism
Changes in culture and fashion
Geography: Silicon Valley
Social networks within an organisational field
Sociograms
Power and innovation increase with:
network density
central hub positions
broker positions
Technology
5 indicators of innovative activity
Research
patenting activity
citation analysis
new product announcements
media coverage
Ecological
3 sorts of challenges
Direct pollution
Product stewardship
Sustainable development
Legal
Should also consider informal norms
Varieties of capitalism
Liberal market economies
Coordinated market ...
Developmental market...
Key drivers
of change have differential impact
Forecasting
Approaches (p.38)
Single-point forecasting
Range forecasting
Alternative futures forecasting
Directions of change
Megatrends (eg. aging populations, global warming)
Inflexion points: trends shift sharply upwards or downwards
Weak signals
Scenario analysis
offer plausible alternative views of how the macro-environment might develop in the future, typically the long-term
Defining scenario (subject and time span)
Identify the key drivers for change (criteria: the size of impact; uncertainty; mutual independence)
Developing scenario stories
Identifying impacts
Monitor progress
The competitive forces
1.Competitive rivalry
competitor concentration and balance
industry growth rate
high fixed costs
high exit barriers
low differentiation
The threat of entry
scale and experience: once incumbents have reached large-scale production, it will be very expensive for new entrants to match them and until they reach a similar volume they will have higher unit costs
access to supply or distribution channels
expected retaliation
legislation or government action
incumbency advantages
The threat of substitutes
the price/performance ratio
extra-industry effects
The power of buyers
concentrated buyers
low switching costs
buyer competition threat
low buyer profits and impact on quality
The power of suppliers
concentrated suppliers
high switching costs
supplier competition threat (forward vertical integration: cut out intermediaries)
differentiated products
Complementors
app providers and Apple
Network effects
Facebook
Strategic groups
2 dimensions
the scope of an organisation's activities
the resource commitment
Characteristics shared by top performers, but not by low performers