The External Environment
Hyper Competition
A condition of rapidly escalating competition based on price-quality positioning, competition to create new know-how and establish first-mover advantage, competition to protect or invade established product or geographic markets, and competition based on deep pockets and the creation of even deeper pocketed alliances
Porter's Five Forces Model
Bargaining Power of Customers, Bargaining Power of Supplier, Threat Of Substitute, Threat Of New Entry
DECLINE
Demand for industry product declines, competition increases, failing competitors either exit the market or are acquired by rival firm
INTRODUCTION
Industry competitors seek to develop the winning technology/ business
GROWTH
Industry products gain acceptance and rapid growth in product demand attracts new competitors
the most comprehensive and used approach for grouping and reviewing macro-environment trends in strategic management.
PESTLE Framework
MATURITY
The market stabilizes as demand level off the industry is now dominated by a few large competitor
LEGAL
There are certain laws that affect the business environment in a certain country while there are certain policies that companies maintain for themselves.
ECONOMICAL
These factors are determinants of an economy's performance that directly impacts a company and have resonating long term effects.
POLITICAL
These factors determine the extent to which a government may influence the economy or a certain industry.
ENVIRONMENTAL
These factors include all those that influence or are determined by the surrounding environment
TECHNOLOGICAL
These factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably.
SOCIAL
These factors scrutinize the social environment of the market, and gauge determinants like cultural trends, demographics, population analytics, etc.
Bargaining Power of Supplier
This force analyzes how much power a business's supplier has and how much control it has over the potential to raise its prices, which, in turn, lowers a business's profitability
Threat Of New Entry
This force considers how easy or difficult it is for competitors to join the marketplace.
Bargaining Power of Customers
This force examines the power of the consumer, and their effect on pricing and quality.
Threat Of Substitute
This force studies how easy it is for consumers to switch from a business's product or service to that of a competitor.
5 Competitive Forces
identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths.
Industry life cycle
introduction, growth, maturity, and decline stages
pestle
it allows a company to form an impression of the factors that might impact a new business or industry.
PESTLE Framework
studies the key external factors (Political, Economic, Sociological, Technological, Legal and Environmental) that influence an organization.
STRATEGIC FIT
the matching the opportunities of the external environment with an organization's internal capabilities.
L in PESTLE
•Discrimiation laws •Antitrust aws •Employment laws •Consumer protection laws •Copyright and patent laws •Health and safety laws
E in PESTLE
•Economic growth •Exchange rates •Interest rates •Inflation rates •Unemployment rates
P in PESTLE
•Government policy •Political stability •Corruption •Foreign trade policy •Tax policy •Labor law •Trade restrictions
S in PESTLE
•Population growth rate •Age distribution •Safety emphasis •Health consciousness •Lifestyle attitudes •Cultural barriers
8 Sources Of Barriers To Entry
•Supply-side economies of scale •Demand-side benefits of scale •Customer switching costs •Capital requirements •Incumbency advantages •Unequal access to distribution channels •Restrictive government policy •Expected retaliation
T in PESTLE
•Technology incentives •Level of innovation •Automation •R&D activity •Technological change •Technological awareness
E in PESTLE ( LAST)
•Weather •Climate •Environmental policies •Climate change
