ANALYSING THE BUSINESS ENVIRONMENT

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ANALYSING THE BUSINESS ENVIRONMENT

• Failing to plan is planning to fail!
• The only constant in the modern world is change!

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The Macro Business Environment

• Demographic Environment
• Economic Environment
• Natural Environment
• Technological Environment
• Political-Legal Environment
• Social-Cultural Environment

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The Demographic Environment

• Trends in the demographic environment
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The Economic Environment

• My firms economic environment
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The Natural Environment

• My firms natural environment
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The Technological Environment

• My firms technological environment
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The Political-Legal Environment

• My firms political-legal environment
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The Social-Cultural Environment

• My firms social-cultural environment
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MARKETING STRATEGY TOOLS

• SWOT Analysis
• Five Forces Analysis

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SWOT Analysis

• Strengths
• Weaknesses
• Opportunities
• Threats

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Strengths Weaknesses of a SWOT Analysis

• Firm decides what its strengths are in relation
  to other firms/competitors
• Useful to develop information needed to allow
  better competitive decisions
• SWOT encourages good thinking about strengths,
  weaknesses, opportunities and threats. However,
  it lacks prescriptive power.
• Thus, the need for Five Forces Analysis

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Five Forces Analysis

• The Five Forces Model includes
• Barriers to entry
• Power of suppliers
• Power of buyers
• Rivalry among competitors
• Availability of substitutes

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Industry Analysis with the Five Forces Model

• New Entrants
• What are the barriers to entry?
• Can we raise them? Can they by lowered?
• Characteristics of Potential new entrants
• Likely competitive strategies of these entrants
• When will they enter our market

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Suppliers

• How Large and concentrated are they?
• Can firms switch suppliers easily?
• How important is their product to us?
• How much cost does their product represent?
• What is their relative bargaining power over us?

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Buyers

• How concentrated are our customers?
• Potential for creating a new market or growing
  this one?
• How high are switching costs?
• How price sensitive is each customer segment
• Customers relative bargaining power?

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Substitutes

• What are the substitutes for our product?
• How viable are they as replacements?
• How quickly will they penetrate our market?
• Which players in the industry will see
  substitutes as a chance for diversification?

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Competitors

• Who are our major competitors today?
• What are their relative industry positions?
• What is the competitive advantage of each?
• How is product differentiation achieved?