MGMT 690 WK2 IP

When done right, global marketing plan has enormous benefits to a company as it is able to give the company a strong competitive advantage as well as improve the effectiveness of its products or services. To do it right, there are necessary tools that are needed. These tools are significant to coordinate an analysis of the industry and competitors in order to know the competitive effectual of an industry. There are numerous tools that best fit this purpose. They include Competitive Forces Model (Porter’s 5 Forces), Broad Factors Analysis (PEST Analysis) and SWOT Analysis.

Competitive Forces Model also known as Porter’s 5 Forces is an important tool which gives an accurate hunch about the industry as well as making the analysis easier. This tool deals with threat of potential entrants, intensity of the industry rivalry, bargaining power of suppliers, threat of substitute goods or services, and bargaining power of buyers. The other tool of Broad Factors Analysis also known as PEST Analysis is significant when analyzing the external environment of the industry. Majorly, it deals with four components which include Economic. Political, technological and social component. SWOT Analysis entails of Strengths, Weaknesses, Opportunities and Threats of a company which are significant in assessing the company’s environment be it internal or external.

Competitive Forces Model is an important tool to analyze the market because of its key components (Baburaj &Narayanan, 2016). For example, it is necessary to know who the other participants in a given market are in order to know the level of competition the industry will face. If a certain goods are not differentiated, competition intensity will always be high. It is also significant for a company to know the ease of entering the market. Difficult entry gives the company enjoying the competitive advantage more benefits for longer periods compared to an easy entry. Small number of suppliers gives the suppliers a higher bargaining power than the firms in production. It is necessary to find out the supplier producer equation before entering a market. Additionally it is also important to know the bargaining powers of buyers. Fewer customers in the market means they have more power in the market and they can negotiate lower prices which might end up being a threat to the company’s revenue.

Broad Factors Analysis is also the best tool to analyze the market as it offers a different framework in its analysis. Internal and external variables such as political, economic, technological and social variables are important in analyzing industry and competitors. For example it is crucial to know the regulatory environment of a certain industry before a company enters that market. What are the barriers of trade surrounding that industry? How often do changes in government regulations occur? How are the tax policies and employment laws be like? These are significant political questions that a firm must analyze before entering the global market (Corporate Finance Institute, 2020). On the other hand it is also crucial to know the inflation rates, interest rates, GDP growth rates, foreign exchange rates, education level, population growth, age cohort changes, scientific advances, emerging technologies, research development investment, and diffusion of technologies in order to analyze economic factors, social-demographic factors and technological changes respectively.

To use these tools, the company will identify the position it is before indulging in the market at hand. Identifying its key strength will help identify the best way it will compete with other participants in the market. The company needs to differentiate its products and services before entering the market in order to have a competitive advantage with other similar products and services in the market. It would be better for the company to go for market with difficult entries. For instance, after its entry, with differentiated products at hand, the company would gain a niche in the market thus elevating its competitive advantage for longer periods before another competitor enters and acquire a niche in the market. The company can as well acquire a hold on the operations of the industry by shaping its supply and production operations. The company can have its own supplier therefore attaining a higher bargaining power on supply therefore cutting its production costs enabling it to field lower prices to its buyers. On the other hand, it is necessary for the company to keep in mind that industry analysis is somewhat subjective since the outcome is not always a success. Political changes, economic changes and technological changes should be at the core in decision making as they are subject to fluctuations as illustrated by Broad Factors Analysis tool (Wibowo, 2019).

References