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External Environment (External environ analysis (Scanning (Study of all…
External Environment
External environ analysis
Done to cope with ambiguity and lack of data in environ
Scanning
Study of all segments in general environ, checking for early signals for changes and trends
Usually unconnected data that needs to be analysed
eg. News Event detection systems used in social media
Internet (cookies)
Monitoring
Things noted in scanning monitored to see if they become impo trends
Idea of implications of trend, stakeholders of it, and stakeholders perception of firm
Impo specially in high uncertainty places, good if a director sits on other boards
Forecasting
how long, till when, how costly etc
Assessing
objective is to determine timing and significance of effects / trends observed
Eye open for opp and threats
Sources: trade publications, newspapers, business publications, academic research and public polls (Physical)
trade shows, suppliers, customers, employees of public sector orgs, internet etc
Segments of general environ
Demographic segment
Population (size, growth rate etc)
Age structure
Geographic distribution (and movement)
Any significant changes must be explanable
ethnic mix
Income distribution
Economic Segment
high uncertainty - lower growth
diff to predict
Avoid slow growth areas, prefer high growth ones
Political / legal
how orgs influence governments
influence of gov actions on them
Transformation of state owned firms to private
Sociocultural segment
society's attitudes and cultural values
influence entry into new markets and new firms in a country
needed to stay relevant in minds of customers
Tech Segment
To thrive benefits of early adoption / prep
Global
important political events
new / changing global markets
If my product able (relatively easily) to sell abroad
which countries have excess capacity
Some firms enter external markets as niches
Sustainable Physical environ
changes in physical environ / business practices intending to create a sustainable environ
Strategic Group
Set of firms emphasizing similar strategic dimensions & using similar strategies
In group competition higher
Generally offer about same products to same customers
Porters 5 forces differ by each strategic grp
After they form, membership stays about the same
Competitor Analysis
Future objectives
what competitor is doing and can do
assumptions (of competitor)
strengths and weaknesses (capabilities)
Ethical considerations
what's good
Publicly available info (court reocrds, help wanted adverts, annual and financial reports, unfirom commercial code filings)
Attending trade fairs, shows, brochures, view exhibits and listen to discussions about their products
General, Industry and Competitor Environ
General
demographic
Economic
Political / legal
socioculutral
tech
global
sustainable physical environment segment
Cannot control, attempt to predict then estimate effect on it
Industry
Directly effects firm
Porters 5
new entrants
barriers to entry
economies of scale
product differentiation - perceived uniqueness of current brands
Capital req
Switching costs - offer low price or super better product
Access to distribution channels
Disadvantages independent of scale (ie. good locaiton) - can country buy stuff like home delivery
Gov policy
expected response of current players
Swift when
existing have major share
Substantial resources
slow industry growth
to counter, initially look for an undeserved niche
supplier power (high when)
few large firms
no satisfactory substitutes
industry firms not a sig buyer
supplier goods critical
high switching costs
poses credible threat to integrate forward to buyer's industry (When high resources + diff product)
Can mitigate by developing trust and long term relationships
buyer power
purchase large portion of total industry produce
result in sig portion of seller's revenue
can easily switch to another product
industry products indifferentiated
More info on manufactures costs
threat of substitutes
if subst much better value offering
own product less differentiated
low switching costs
intensity of rivalry of existing firms
compete in
price
service after sale
innovation
quickness to market
Other stuff to think abt
High when slow industry growth
High storage costs / fixed costs
High when numerous equally balanced competitors
When viewed as commodity
High when high strategic stakes
High when high exit barriers
Specialized assets (ie . patents)
High fixed costs of exit
Strategic interrelationships
Emotional barriers
Gov and social restrictions
Find place where it influence em or defend against em, that impacts if it can earn above avg profits (therefore focuses on industries profitability potential)
Competitor Analysis
focused on predicting competitors intentions, actions and responses
Integrate insights from all 3 to make better competitive decisions
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