Dhana Rizky Ramadhan_120310190051_Week 4

Environmental Scanning and Industry Analysis
External Environmental Variables
Natural environment
Societal environment
Task environment
Industry analysis
Factors
Current Sociocultural Trends
Increasing environmental awareness
Growing health consciousness
Expanding seniors market
Impact of millennials
Declining mass market
Changing pace and location of life
Changing household composition
Increasing diversity of workforce and markets
Technological Breakthroughs
Portable information devices and electronic networking
Alternative energy sources
Precision farming
Virtual personal assistants
Genetically altered organisms
Smart, mobile robots
Sociocultural
Technological
Economic
Ecological
Political-Legal
Profit Potential of Industry
1. Leverage of suppliers
2. Superior or lower-cost substitute product
3. Competition among existing companies
4. Openness to new competitors
5. Buyer's influence
Threat of New Entrants
The ability of new companies to enter into an industry.
Entry barrier
An obstruction that makes it difficult for a company to enter an industry
Definition
Example
Economies of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages independent of size
Government policies
Rivalry Among Existing Firms
Factors
Number of competitors
Definition
A competitive move by one firm can be expected to have a noticeable effect on its competitors and thus may cause retaliation.
Rate of industry growth
Product or service characteristics
Amount of fixed costs
Capacity
Height of exit barriers
Diversity of rivals
Threat of Substitute Products or Services
The identification of possible substitute products means searching for products that can perform the same function, even though they have a different appearance.
The Bargaining Power of Buyers
Definition
The pressure that customers/consumers can put on businesses to get them to provide higher quality products
Example
Large purchases
Backward integration
Alternative suppliers
Low cost to change suppliers
Product represents a high percentage of buyer’s cost: Incented to shop around
Buyer earns low profits: Cost/service sensitive
Product is unimportant to buyer
The Bargaining Power of Suppliers
Definition
The supplier's power depended on
Industry is dominated by a few companies
Unique product or service
Unique product or service
Substitutes are not readily available
Ability to forward integrate
Unimportance of product or service to the industry
Relative Power of Other Stakeholders
Government
Government
Creditors
Trade associations
Special-interest groups
Unions
Shareholders
Complementors
Industry Evolution
Fragmented industry
Consolidated industry
Multi-domestic industries
Global Industries
Regional industries
No firm has a large market share and each firm only serves a small piece of the total market in competition with other firms
Domination by a few large firms, each struggles to differentiate products from its competition
Sub Topic
Specific to each country or group of countries
Operate worldwide with multinational companies
Multinational companies primarily coordinate their activities within regions
Strategic Groups
Definition
A set of business units or firms that pursue similar strategies with similar resources
Types
Defenders
Prospectors
Analyzers
Reactors
Forecasting Techinques
Extrapolation
Brainstorming
Expert opinion
Delphi technique
Statistical modeling
Prediction markets
Cross-impact analysis (CIA)
Competitive Intelligence
Definition
A formal program of gathering information on a company’s competitors
Sources
Information brokers
Internet
Industrial espionage
Investigatory services
Market Stability
Threatened by
Short product life cycles
Short product design cycles
New technologies
Frequent entry by unexpected outsiders
Repositioning by incumbents
Tactical redefinitions of market boundaries as diverse industries merge
Physical resources, wildlife, and climate that are an inherent part of existence on Earth
Those elements or groups that directly affect a corporation and, in turn, are affected by it
An in-depth examination of key factors within a corporation’s task environment
Example
Government
Local communities
Supplier
Competitors
Customer
Creditors
Definition
Humankind’s social system
Porter Analysis
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