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In today's complex business landscape, understanding the external environment—including industry, market dynamics, and competition—is crucial for success. This analysis covers vital aspects such as market size, trends, buyer behavior, and the impact of economic factors like inflation and exchange rates. It also examines the legal and political climate, ethical considerations, and key success factors across various sectors. By leveraging insights into supplier power and industry life cycles, businesses can forge effective relationships and develop strategies to gain competitive advantages.
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EXTERNAL ENVIRONMENT • INDUSTRY, MARKETS • COMPETITION • ECONOMY • LEGAL, POLITICAL, SOCIAL
INDUSTRY, MARKETS • CUSTOMER/CONSUMER • WHO • WHERE (AREA, COUNTRY) • WANTS, NEEDS • BUYING BEHAVIOR • BUYER • POWER • RELATIONSHIPS/ALLIANCES
INDUSTRY, MARKETS (CONT’D) • MARKET SIZE, TRENDS • SUBSTITUTES • DISTRIBUTION SYSTEM • STAGE, PRODUCT LIFE CYCLE
INDUSTRY, MARKETS (CONT’D) • STAGE, INDUSTRY LIFE CYCLE • FRAGMENTED • CONSOLIDATED • TECHNOLOGY AS THE PRODUCT • SUPPLIERS • POWER • RELATIONSHIPS/ALLIANCES
COMPETITION • NATURE OF • WHO, WHERE • STRATEGY • ADVANTAGES - SUSTAINABLE • DISADVANTAGES
COMPETITION (CONT’D) • RIVALRY • ENTRANTS, EXITS • SUBSTITUTES
Industry Map / Strategic Groups Mercedes Jaguar BMW High General Motors Ford Chrysler Nissan Toyota Honda VW Price/Quality Hyundai Yugo Low Few Many Number of Market Segments Served
Strategic Groups Candlelight Dining Unoccupied Product Space Atmosphere Fast Food Average Gourmet Quality of Food
Strategic Group Map Price 18 17 16 Co B 15 14 Co D 13 Co A 12 Co C 11 10 Q3 Q2 Q1 Quality (1=highest) What is the strategy? Is the strategy “right?”
ECONOMY • EFFECTS ON DEMAND • EXCHANGE RATES • EMPLOYMENT RATES • INFLATION • STABILITY
LEGAL, POLITICAL, SOCIAL • LAWS, REGULATIONS • VARY BY MARKET • VARY BY COUNTRY • ETHICS • TRENDS • IMPORT/EXPORT LAWS
KEY SUCCESS FACTORS “ABSOLUTE” REQUIREMENTS Airlines: low unit cost Air delivery: worldwide dist.