Strat Man 5th Ed Ch3 Slctd Slides
- 1. How do we analyse the strategic environment? Video Summary Chapter 3 © Copyright Richard Lynch 2009. All rights reserved
- 2. Analysing the main elements of the environment Environment Resources Purpose Options Options Options Choice Implement This session
- 3. Analysing the strategic environment - 1 The nine basic analytical tools Company or public sector organisation Environment basics Degree of turbulence PESTEL analysis Industry life cycle Key factors for success Five Forces analysis Four Links analysis Competitor analysis Customer analysis See : Lynch, Chapter 3
- 4. Step 1: General evaluation Market size Market definition – what products/services do we include? Is the market big or small? Implications for business opportunity? Market growth Growing fast or slow? Attractive opportunity or really mature? Market share Dominant company? Or fragmented market? See : Lynch Ch 3, Section 3.2
- 5. Step 2: Measure the degree of turbulence Changeability : the degree to which the environment is likely to change Predictability : the degree to which such changes can be predicted When both factors are high, essential to use emergent processes Turbulence level Low High See : Lynch, Ch 3, Section 3.3
- 6. Step 3: Factors influencing many industries PESTEL Analysis Consider the general environment surrounding many businesses under six main headings: P olitical E conomic S ociological T echnological E nvironmental L egal Keypoint: PESTEL is not a ‘formula’, just a useful checklist – it is wise to be selective See: Lynch Ch 3, Section 3.4
- 7. Step 4: Growth and Life-Cycle Analysis Theory suggests that businesses go through various phases of development Strategies will change with each phase Sales Time Introduction Growth Maturity Decline Cash user phases Cash generator phases See : Lynch Ch 3 Section 3.5
- 8. Step 5: Factors specific to the industry Key Factors for Success Many industries or markets have factors that are essential to deliver profits in that market: the key factors for success (KFS) Useful to identify KFS because they will help set the agenda for strategy: if strategy fails to address these issues, it may fail completely Useful also because there are many possible issues that might be considered by strategic management: KFS helps to select the key issues See: Lynch checklist of KFS areas: Section 3.6
- 9. Step 6: Factors specific to competition Five Forces Analysis Customers : have high, medium or low bargaining power based on size of order, etc Suppliers : have high, medium or low bargaining power depending on what they supply – patented, quality, etc Potential entrants : high, medium or low threat of new entrants based on barriers to entry Substitutes : high, medium or low threat based on ease of alternative, etc. Industry competitors Industry competitors : high, medium or low threat based on competitors’ resources, plans, etc. Copyright M.E . Porter 1980
- 10. Step 7: Factors specific to co-operation Four Links Analysis The organisation Informa l co-operative links and networks Formal co-operative links Government links and networks Complementors Underpinning logic: economic benefits derived from working together See : Lynch Section 3.8
- 11. Step 8: Factors specific to immediate competitors The following aspects of the competitor’s organisation need to be explored: Objectives Resources Past record of performance Current products and services Present strategies Examine in depth for a few rivals only See : Lynch Section 3.9
- 12. Step 9: Customer analysis Demand, Segmentation and Positioning The following aspects need to be explored: Customer demand Market segmentation Market positioning Pricing, quality and servicing Present strategies Examine in depth for company’s products Keypoint: Competitive analysis is important in strategy, but ultimately it is the Customers who make the buying decision See : Lynch, Section 3.10