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EXTERNAL ANALYSIS Part 1: PEST+
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ENVIRONMENTAL FACTORS |
Why is this an … |
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OPPORTUNITY |
THREAT |
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POLITICAL
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ECONOMIC
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SOCIAL-CULTURAL
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TECHNOLOGICAL
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Other
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EXTERNAL ANALYSIS PART 2: PORTER’S FIVE FORCES TEMPLATE
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FORCES |
Description |
Strength High/medium/ low |
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THREAT OF NEW ENTRANTS · Economies of scale · Product differences · Brand identity · Switching cost · Capital requirements · Access to distribution · Cost advantages · Government policy · Expected retaliation |
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BARGAINING POWER OF BUYERS · Buy in large volumes · Undifferentiated product · Significant component · Low profits · Unimportant for quality |
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BARGAINING POWER OF SUPPLIERS · Few companies dominate · Differentiated product · No contending products · Forward integration · Important customer |
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THREAT OF INDUSTRY SUBSTITUTES · Relative price performance · Switching costs · Propensity to substitute |
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INDUSTRY RIVALRY AMONG COMPETITORS · Numerous competitors · Industry growth slow · Undifferentiated product · High fixed cost · Capacity augmented in large increments · Exit barriers high · Diverse rivals |
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INTERNAL ANALYSIS: Resourced Based View
1. Audit the resources and assets controlled by the firm. These will include both tangible and intangible assets and organisational capabilities. Review textbook from pp. 75-85
2. Use the following questions to determine whether each of the resources identified provides competitive advantage by asking whether it is:
· VALUABLE – the resource helps the firm reduce costs or improve differentiation
· RARE – few, if any, firms possess this resource
· INIMITABLE – the resource cannot be copied or substituted easily
· ORGANISATIONAL CAPABILITIES – the firm must be able to take advantage of the resource
· Examine whether any of the resources that provide competitive advantage would give sustained competitive advantage by analysing whether they are durable/sustainable.
Tangible Resources
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Financial resources · Capital (assets-liabilities) · Bank balance · Investments · Ability to borrow · Cash flow |
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V R I O |
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Organisational resources · Strategic management processes · Organisational structure · Management info systems (accounting/ IT/stock / quality control) |
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Physical resources · Land +buildings · Machinery + equipment · Furniture + fittings · Stock on hand (raw materials/components, work in progress, finished products) |
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Technological resources · Software, patents, copyrights, ingredients
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Intangible Resources
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Human resources · Skills, knowledge, experience
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V R I O |
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Innovation resources · Organisational culture · Processes · Rewards
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Reputational resources · Organisational culture · CSR · Brand · Customer service · Quality
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Organisational Capabilities
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Functional areas
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Capabilities |
V R I O |
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Distribution
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HRM
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Management Information Systems
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Marketing
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Management
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Manufacturing
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R+D
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For all tables: Which are IMPORTANT strengths and which are weaknesses?
2.1 Value Chain Analysis
2.1 Five Business-Level Strategies
