Environmental scanning refers to possession and utilisation
of information about occasions, patterns, trends, and relationships within an
organization's internal and external environment. It helps the managers to
decide the future path of the organization.
SWOT Analysis Framework
The SWOT matrix is also known as a TOWS matrix.
- S-O strategies pursue opportunities that are a good fit to the company's strengths.
- W-O strategies overcome weaknesses to pursue opportunities.
- S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.
- W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.
More notes on Marketing environment (Micro-environment & Macro-environment); Click the link below:
For more notes on Environmental analysis (SWOT, PESTLE Analysis, Porter's five forces mode,
Boston Consulting Group(BCG) Matrix & Ansoff's matrix): click the link below:
Driving forces analysis
The 2 aspects of driving forces analysis
1.
Identifying what the driving forces are.
2.
Assessing the impact they will have on the
industry.
Identifying what the driving forces
1.
Growing use of the internet and emerging new
internet technology applications -(new distribution channel, extend geographic
reach, extending rivalry, find best suppliers, revamp internal operations)
2.
Increasing globalisation - open up foreign
markets, locate where production costs lowest, reduction of trade barriers
3.
Changes in the long-term industry growth rate –
affects industry supply and demand, entry and exit and character and strength
of competition
4.
Changes in who buys the product and how they buy
it – different distribution channels, broaden or narrow product lines,
different sales approaches, changes in service offerings
5.
Product Innovation – Strengthens market position
( e.g digital cameras, mobile phones, video games)
6.
Technological change and manufacturing process
innovation – better products at lower cost, new capital requirements,
distribution channels and logistics, experience and learning curve effects
7.
Marketing Innovation – spark buyer interest,
increase demand, increase differentiation, lower unit costs e.g internet
marketing
8.
Entry or exit of major firms – entry of foreign
competitors, firms from another industry, exit of firms reduces rivals,
increase dominance of leaders, cause rush to capture market share left behind
Assess impact - What
difference will the forces make?
·
Are driving forces causing demand for industry
to increase or decrease?
·
Are driving forces acting to make competition
more or less intense?
·
Will the driving forces lead to higher or lower
industry profitability?
Strategic group mapping
Strategic group mapping is a technique for looking at your
position in your sector, field or market.
Strategic group mapping is analytical tool used for showing
the different market or competitive positions that rival firm occupy in the
industry. It is very important to analyse the industry's competitive structure
and identify the strategic groups.
Purpose of strategic group maps:
1.
Identification of close and distant rivals. This
is important to know because close strategic groups have stronger cross-group
competitive rivalry.
2.
Identification of attractive and unattractive
positions of the firms in industry. The attractiveness depends upon the
industry driving forces, prevailing competitive pressures and profit potentials
of different strategic groups.
3.
Strategic group mapping helps in identifying the
strategic group a firm should consider entering.
4.
It helps in analysing the type and level of
entry barriers the firm will face.
5.
It also examines the number and type of entry
barriers the firm will face.
Steps in the construction of strategic group maps
1.
Analysing the overall industry and identifying
those competitive characteristics that differentiate firms in the
industry. Variables selected as axes for
the map could be identified during the process of industry analysis.
2.
Variables selected as axes for the map could be
products-line breadth (wide, narrow),
price (high, medium, low), quality (high, medium, low), geographic coverage
(local, regional, national, global).
3.
All the firms that fall in the same strategy
space should be allocated to the same strategic group.
4.
Finally sketch circles around each strategic
group, the size of the circles depends upon the share of a strategic group in
the total industry sales revenue.
Example of a strategic group map:
No comments:
Post a Comment