Environment, Competitor,

Industry and Internal analysis

Environment
 Microenvironment
Company includes management, finance, research and
development, purchasing, operations and accounting.

Suppliers of a company are also an important aspect of

the microenvironment

Customers - different types of customer markets

including consumer markets, business markets,
government markets, international markets.

Marketing intermediaries - sellers, distribution firms,

marketing service agencies, and financial
intermediaries.
 Internal Environment
All factors that are internal to the
organization are known as the 'internal
environment'.
Five Ms which are
Men,
Money,
Machinery,
Materials and
Minutes.
 Five Forces Analysis
To determine the intensity of competition in an industry
Macro Environment - PEST Analysis
 Political Factors
How stable is the political environment?

Will government policy influence laws that regulate or

tax your business?

What is the government's policy on the economy?

Is the government involved in trading agreements such

as EU, NAFTA, ASEAN, or others?
 Economic Factors
This is important when planning for international
marketing.

1. Interest rates.

2. The level of inflation, Employment.

3. Long-term prospects for the economy Gross Domestic

Product (GDP) per capita, and so on.
 Socio-cultural Factors
The social and cultural influences on business vary from
country to country.

What is the dominant religion?

What are attitudes to foreign products and services?

How long are the population living? Are the older

generations wealthy?

Do the population have a strong/weak opinion on green

issues?
 Technological Factors
Technology is vital for competitive advantage, and is a major
driver of globalization.

Does technology allow for products and services to be made

more cheaply and to a better standard of quality?

How is distribution changed by new technologies e.g. via the

Internet, flight tickets, auctions, etc?

Does technology offer companies a new way to

communicate with consumers e.g. banners, Customer
Relationship Management (CRM), etc?
Internal Analysis
 Introduction

Strategic analysis of any Business enterprise involves

two stages: Internal and External analysis.

Internal analysis is the systematic evaluation of the key

internal features of an organization.
 Four broad areas for internal analysis

The organizations resources, capabilities

The way in which the organization configures and co-

ordinates its key value-adding activities

The structure of the organization and the

characteristics of its culture

The performance of the organization as measured by

the strength of its products.
 Analysis of the
business

Value chain Resources,

Cultural and
analysis: configuration capabilities and
structural analysis
and co-ordination core competences

Products and performance

Internal analysis
 Resources
Resources are assets employed in the activities of the
organization.
They can be tangible (machinery, buildings and land) or
intangible (patents, trademarks, copyrights, goodwill
and brand recognition).
They can be obtained externally or internally
generated
They can be specific and non-specific:
Specific resources (skilled worker) can only be used for
highly specialized purposes and are very important to the
organization in adding value to goods and services.
Assets that are less specific are less important in adding
value.
 Categories of Resources

1. Human
2. Financial
3. Physical
4. Technological
5. Informational

Evaluation of resources in terms of availability,

quantity and quality, sources, control systems and
performance.
 General Competences/capabilities

They are assets like industry-specific skills, relationships

and organizational knowledge which are largely
intangible assets.

Competences and capabilities will often be internally

generated, but may be obtained by collaboration with
other organizations.
 Core Competencies

Core competencies are combinations of resources and

capabilities which are unique to a specific organization
and which are responsible for generating its
competitive advantage.
 Criteria to evaluate Core Competencies

Superiority: Is it clearly superior to the competences of

other organizations?

Identifiability: How difficult is it to identify?

Imitability: How difficult is it to imitate?

Durability: How long does it be replaced by an alternative

competences?

Customer orientation: How is the competence perceived

by customers and how far is it linked to their needs?
 Resources: Capabilities: Core competence
human, financial, Industry-specific Distinctive and superior
physical, skills, relationships, skills, technology Perceived
technological, + organizational = relationships, customer
legal, informational knowledge knowledge and benefits/value
Intangible reputation of the firm added
Tangible and and invisible Unique, and
visible assets assets difficult to copy

Inputs to the firms processes

Not all capabilities are core competences only those that add greater
value than those of competitors

Relationships between resources, capabilities and

core competence
 Value Chain Analysis
The value chain is the chain of activities which results
in the final value of a businesss products.

Competitive advantage depends on the ability of the

organization to organize its resources and value-adding
activities in a way that is superior to its competitors.

Value chain analysis is a technique developed by Porter

(1985) for understanding an organizations value-
adding activities and relationship between them.
 Value can be added in two ways:

By producing products at a lower cost than

competitors.

By producing products of greater perceived value

than those of competitors.
 The Value Chain

Primary activities are those that directly contribute

to production of good or services and organizations
provision to customer.

Support activities are those that aid primary

activities, but do not themselves add value.
 Core Activities in Value Chain
Certain activities or combinations of activities are
likely to relate closely to the organizations core
competences, termed core activities. They are:
Add the greatest value
Add more value than the same activities in competitors
value chains
 Portfolio Analysis
Portfolio analysis is used in evaluating the balance of
an organizations range of products.
A key concept with regard to successful product is
that of portfolio.
A broad portfolio can spread risk across more than
one market.
A narrow portfolio mean that the organization
become more specialized in its knowledge of fewer
products and markets
 The BCG Matrix
The Boston Consulting Group (BCG) growth-share matrix is
most often used by organizations in multiproduct and
multimarket situations.
BCG matrix offers a way of examining and making sense of
a companys portfolio of product and market interests.
It based on the idea that market share in mature markets is
highly correlated with profitability and that is relatively less
expensive and less risky to attempt to win share in the
growth stage of the market.
 The Boston Consulting Group matrix

Cash generation

Cash usage
 BCG Matrix: Cash cows
Cash cows: A product with a high market share in
a low-growth market is normally both profitable
and a generator of cash.

Profits from this product can be used to support

other products that are in their development
phase, milked on an on going basis.

Standard strategy would be to manage

conservatively, but to defend strongly against
competitors.
 BCG Matrix: Dogs
Dogs: A product that has a low market share in a
low-growth market is termed a dog in that it is
typically not very profitable.

Once a dog has been identified as part of a portfolio,

it is often discontinued or disposed of.

More creatively, a small share product can be used to

price aggressively against a very large competitor as it
is expensive for the large competitor to follow suit.
 BCG Matrix: Stars
Stars have a high share of a rapidly growing market
and therefore rapidly growing sales.
It is the sales managers dream, but the
accountants nightmare.
It is often necessary to spend heavily on advertising
and product improvement so that when the market
slows these products become cash flow.
If market share is lost, the product will eventually
become a dog when the market stops growing.
 BCG Matrix: Question marks

Question marks are aptly named as they create a

dilemma.

They already have a foothold in a growing market, but

if market share cannot be improved they will become
dogs.

Resources need to be devoted to winning market share.

 Limitation of the BCG Matrix

There are many relevant aspects relating to products

that are not taken into account.

The imprecise nature of its four categories and the

difficulties inherent in predicting future market growth.

Global activity may add extra dimension to the process

of portfolio analysis.