Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
EXTERNAL ANALYSIS  The General EnvironmentThe Competitive Environment
EXTERNAL ANALYSIS•   Clear Idea of the Industry•   Industry & Sector•   Industry & Market Segment•   Changing Industry Bou...
Defining the Industry• An industry is a group of companies offering  products & services that are close substitutes  for e...
Industry & Sector• Sector – a gp. of closely related industries of  which it is a part.• E.G Telecommunication sector has ...
Changing Industry Boundaries• This seems to be a very thin line between  industries• How Technological Change has altered ...
Strategic Group Within Industries• Companies within an Industry can differ on  various lines such as distribution channels...
Implications of Strategic Group• Companies closest competitors are those within the  same strategic group i.e companies wi...
Role of Mobility Barriers• Some strategic groups within an industry are  more desirable than others, that is there may  be...
Role of Mobility Barriers• Taking advantage of this opportunity may be  difficult because of the mobility barriers  betwee...
Industry Life Cycle Analysis• External factors (opportunities & Threats) will  have a varied impact on an industry  depend...
Industry Life Cycle Five Stages•   Embryonic•   Growth•   Shakeout•   Mature•   Decline
Industry Life Cycle
Embryonic Industries•   Growth is slow•   Buyers are unfamiliar•   Distribution channels are poorly developed•   Prices ma...
Growth Industries• Demand of the product takes off/New  Customers• Distribution channels improve• Prices change• New Rival...
Industry Shakeout• Demand reaches saturation levels• Few potential new buyers• Rivalry becomes intense as growth can only ...
Mature Industries• Market is totally saturated• Brand loyalty• Entry of potential competitors is diminished &  the prices ...
Declining Industries•   Technological substitution•   Social changes•   International competition•   Falling demand leads ...
Industry Environment• External Environment• Internal Environment
External Environment• Competitive Environment• General Environment
Competitive Environment• Identification of the competitive forces that  have a bearing on industries opportunities &  Thre...
Porter’s Five Forces Model•   Risk of Entry of Potential Competitors•   Intensity of Rivalry among established firms•   Ba...
Porters Five Force Model
1.    Risk of Entry of Potential                Competitors• It is in part a function of the height of Barriers  to Entry ...
Brand Loyalty can be achieved through•   Continuous advertising•   Patent Protections•   Continuous Innovation•   High Pro...
Absolute Cost Advantage can arise                from• Superior production operations/processes• Control of Particular Inp...
Economies of Scale can be achieved               through• Cost reduction through Mass Production• Discounts on Bulk purcha...
Customer Switching Costs• Time• Energy• Money
Government Regulations• When government regulations are high it is  difficult for new entrants to enter into the  industry...
2. Rivalry Among Established                Companies• Intense rivalry constitutes a strong threat to  profitability & it ...
Industry Competitive Structure• Fragmented Industry• Consolidated Industry
Industry Demand• Growing Demand• Declining Demand
Exit Barriers• When exit barriers are high companies  become locked in an industry & a static or  declining demand will me...
Exit Barriers include•   Investment in assets•   High Fixed cost of exit•   Emotional attachment to an industry•   Economi...
3. Bargaining power of Buyers•   More Suppliers Few Buyers•   Buyers Purchase in Large quantities•   Switching costs for t...
4. Bargaining Power of Suppliers• Powerful suppliers are a threat & suppliers can be  powerful when1. Few substitutes for ...
5. Threat of Substitutes• If the substitutes are high threat to the  existing profits is more, and one can not raise  pric...
Sixth Force Complementors• More complementors in an industry can boost  the demand and create more opportunities
General Environment/ Macro              Environment• PEST Analysis• Any change in any of the above mentioned  factors will...
Upcoming SlideShare
Loading in …5
×

External analysis

7,732 views

Published on

External Analysis in Strategic Management.

  • Writing good research paper is quite easy and very difficult simultaneously. It depends on the individual skill set also. You can get help from research paper writing. Check out, please ⇒ www.HelpWriting.net ⇐
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD THIS BOOKS INTO AVAILABLE FORMAT (Unlimited) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { https://soo.gd/qURD } ......................................................................................................................... Download Full EPUB Ebook here { https://soo.gd/qURD } ......................................................................................................................... Download Full doc Ebook here { https://soo.gd/qURD } ......................................................................................................................... Download PDF EBOOK here { https://soo.gd/qURD } ......................................................................................................................... Download EPUB Ebook here { https://soo.gd/qURD } ......................................................................................................................... Download doc Ebook here { https://soo.gd/qURD } ......................................................................................................................... ......................................................................................................................... ................................................................................................................................... eBook is an electronic version of a traditional print book THIS can be read by using a personal computer or by using an eBook reader. (An eBook reader can be a software application for use on a computer such as Microsoft's free Reader application, or a book-sized computer THIS is used solely as a reading device such as Nuvomedia's Rocket eBook.) Users can purchase an eBook on diskette or CD, but the most popular method of getting an eBook is to purchase a downloadable file of the eBook (or other reading material) from a Web site (such as Barnes and Noble) to be read from the user's computer or reading device. Generally, an eBook can be downloaded in five minutes or less ......................................................................................................................... .............. Browse by Genre Available eBooks .............................................................................................................................. Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, ......................................................................................................................... ......................................................................................................................... .....BEST SELLER FOR EBOOK RECOMMEND............................................................. ......................................................................................................................... Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth,-- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,-- Call Sign Chaos: Learning to Lead,-- StrengthsFinder 2.0,-- Stillness Is the Key,-- She Said: Breaking the Sexual Harassment Story THIS Helped Ignite a Movement,-- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones,-- Everything Is Figureoutable,-- What It Takes: Lessons in the Pursuit of Excellence,-- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money THIS the Poor and Middle Class Do Not!,-- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,-- Shut Up and Listen!: Hard Business Truths THIS Will Help You Succeed, ......................................................................................................................... .........................................................................................................................
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

External analysis

  1. 1. EXTERNAL ANALYSIS The General EnvironmentThe Competitive Environment
  2. 2. EXTERNAL ANALYSIS• Clear Idea of the Industry• Industry & Sector• Industry & Market Segment• Changing Industry Boundaries• Strategic Groups within industries• Industry Life cycle analysis
  3. 3. Defining the Industry• An industry is a group of companies offering products & services that are close substitutes for each other – that is products or services that satisfy the same customer needs• A company’s closest competitors or its rivals are those that satisfy the same customer needs• Examples Personal Computer industry,
  4. 4. Industry & Sector• Sector – a gp. of closely related industries of which it is a part.• E.G Telecommunication sector has two industries – Telecommunication equipment industry & Telecommunication service industry
  5. 5. Changing Industry Boundaries• This seems to be a very thin line between industries• How Technological Change has altered the industry boundaries – Telecommunication and computer industries
  6. 6. Strategic Group Within Industries• Companies within an Industry can differ on various lines such as distribution channels, market segments, quality, technology, leadership, customer service & pricing etc & as such they may be having different positioning strategies. Such companies may formulate themselves into groups and each group having a different strategy. Each such group within an industry is refereed to as a strategic group E. G in Pharama we may have Generic and Proprietary Groups.
  7. 7. Implications of Strategic Group• Companies closest competitors are those within the same strategic group i.e companies within a strategic group are direct substitutes for each other. E. G in the retail industry there may be group of discounters who are competing with each other• Each Strategic Group within an industry may be having a different sets of opportunities or threats (Porters five forces and the degree of complimentarily will vary from one strategic group to another E. G Pharmaceuticals (Generic & Proprietary
  8. 8. Role of Mobility Barriers• Some strategic groups within an industry are more desirable than others, that is there may be more opportunities or less threats in a strategic group resulting in more profits and weak competitive forces (porters). In such situation companies from one strategic group may try to alter their positioning approach & move to compete in the strategic group.
  9. 9. Role of Mobility Barriers• Taking advantage of this opportunity may be difficult because of the mobility barriers between strategic groups.• These include barriers to entry or exit• For example A company in a generic strategic group will encounter mobility barriers if it tries to enter a proprietary group as it will lack R & D skills and building these skills will be an expensive proposition
  10. 10. Industry Life Cycle Analysis• External factors (opportunities & Threats) will have a varied impact on an industry depending upon at what stage of the life cycle industry is.• The similarities & differences between companies in an industry often become more pronounced overtime.• The strategic group structure may also change as the industry evolves
  11. 11. Industry Life Cycle Five Stages• Embryonic• Growth• Shakeout• Mature• Decline
  12. 12. Industry Life Cycle
  13. 13. Embryonic Industries• Growth is slow• Buyers are unfamiliar• Distribution channels are poorly developed• Prices may be high• Products poorly designed• Innovators have a great opportunity to master the art and be the leaders.
  14. 14. Growth Industries• Demand of the product takes off/New Customers• Distribution channels improve• Prices change• New Rivals can be absorbed
  15. 15. Industry Shakeout• Demand reaches saturation levels• Few potential new buyers• Rivalry becomes intense as growth can only be achieved through replacement• Price war• Competition for market share• Variation between growth in demand and capacity
  16. 16. Mature Industries• Market is totally saturated• Brand loyalty• Entry of potential competitors is diminished & the prices and profits can increase• Consolidation• Price leadership agreement / but this can break and price war can start again
  17. 17. Declining Industries• Technological substitution• Social changes• International competition• Falling demand leads to emergence of excess capacity
  18. 18. Industry Environment• External Environment• Internal Environment
  19. 19. External Environment• Competitive Environment• General Environment
  20. 20. Competitive Environment• Identification of the competitive forces that have a bearing on industries opportunities & Threats• Michael E Porters Five forces model identifies five forces that shape competition within an industry
  21. 21. Porter’s Five Forces Model• Risk of Entry of Potential Competitors• Intensity of Rivalry among established firms• Bargaining power of buyers• Bargaining power of suppliers• Threat of Substitutes Sixth Force is Complementors
  22. 22. Porters Five Force Model
  23. 23. 1. Risk of Entry of Potential Competitors• It is in part a function of the height of Barriers to Entry which can be made stronger through1. Brand Loyalty2. Absolute Cost Advantage3. Economies of Scale4. Customer Switching Costs5. Government Regulations
  24. 24. Brand Loyalty can be achieved through• Continuous advertising• Patent Protections• Continuous Innovation• High Product quality• After sale service
  25. 25. Absolute Cost Advantage can arise from• Superior production operations/processes• Control of Particular Inputs• Access to Cheaper Funds
  26. 26. Economies of Scale can be achieved through• Cost reduction through Mass Production• Discounts on Bulk purchases of Raw material• Spreading Fixed Production costs over a large production volume• Spreading marketing & promotion costs over large production volume
  27. 27. Customer Switching Costs• Time• Energy• Money
  28. 28. Government Regulations• When government regulations are high it is difficult for new entrants to enter into the industry/market
  29. 29. 2. Rivalry Among Established Companies• Intense rivalry constitutes a strong threat to profitability & it is a function of1. Industry Competitive Structure2. Demand Conditions3. Exit Barriers
  30. 30. Industry Competitive Structure• Fragmented Industry• Consolidated Industry
  31. 31. Industry Demand• Growing Demand• Declining Demand
  32. 32. Exit Barriers• When exit barriers are high companies become locked in an industry & a static or declining demand will mean excess capacity resulting in declining price wars
  33. 33. Exit Barriers include• Investment in assets• High Fixed cost of exit• Emotional attachment to an industry• Economic Dependence on an industry
  34. 34. 3. Bargaining power of Buyers• More Suppliers Few Buyers• Buyers Purchase in Large quantities• Switching costs for the buyers are low• Buyers can threaten to enter into the market
  35. 35. 4. Bargaining Power of Suppliers• Powerful suppliers are a threat & suppliers can be powerful when1. Few substitutes for the product suppliers supply2. When industry is not an important customer to the suppliers3. Large switching costs4. Suppliers threaten to enter into the industry themselves5. Companies in an industry can not enter into the suppliers market
  36. 36. 5. Threat of Substitutes• If the substitutes are high threat to the existing profits is more, and one can not raise prices enormously• If the substitutes are few or non existent companies can charge higher prices
  37. 37. Sixth Force Complementors• More complementors in an industry can boost the demand and create more opportunities
  38. 38. General Environment/ Macro Environment• PEST Analysis• Any change in any of the above mentioned factors will have a direct impact on Porters 5 forces and this can alter the equation positively or Negatively

×