Analysis of the External Environment and Competition

Strategic Planning Process Phase 1: Determine where we are now Phase 2: Decide where we would like to be Phase 3: Establish strategies and action plans to achieve mission and goals

Strategic Planning Process Phase 1: Determine where we are now Phase 2: Decide where we would like to be Phase 3: Establish strategies and action plans to achieve mission and goals -Stakeholder Analysis SWOT Analysis Competitor Analysis - Identify sources of advantage - Write a Vision Statement - Write a Mission Statement - Set Goals - Develop Strategic - Develop Action Plans to implement strategies

Phase 1: Determine Where We are Now

Stakeholder Defined A stakeholder is any person, group, or organization that is affected by or can affect the behavior of an organization.

Value of Stakeholder Analysis Forms the basis of the development and refinement of a mission statement. Helps determine organizational goals and strategies.

Stakeholder Identification External Stakeholders Internal Stakeholders

Stakeholder Analysis: External Stakeholders Highly Important ____________________ Moderately Important Less Important Present Level of Effectiveness ____________________

Stakeholder Analysis: Internal Stakeholders Highly Important ____________________ Moderately Important Less Important Present Level of Effectiveness ____________________

SWOT Analysis + - Internal External Strengths Opportunities Weaknesses Threats

Value of SWOT Analysis + - Internal External Strengths Opportunities Helps organization prioritize opportunities and develop realistic, well-informed goals and strategies - Weaknesses Threats

SWOT Analysis Conducting an Internal Analysis Purpose is to identify assets, resources, skills, and processes that represent either strengths or weaknesses for the organization. Evaluating the External Environment Purpose is to identify those aspects of the environment that represent either an opportunity or a threat for the organization.

Internal Analysis Identified by Internal Analysis Strengths Weaknesses Aspects of the organization’s operations that represent potential competitive advantages or distinctive competencies. Weaknesses Areas that are in need of improvement.

External Analysis Identified by External Analysis Opportunities Those environmental trends on which the organization can capitalize and improve its competitive position. Threats Conditions that jeopardize the organization’s ability to prosper in the long term.

Areas That Should Be Evaluated By An Internal Analysis Management Capabilities Information Technology Marketing Finance Research & Development Human Resources

Areas That Should Be Evaluated By An External Analysis General Environment Includes environmental forces that are beyond the influence of the organization and over which it has no (or little) control. Task Environment Includes environmental forces that are within the organization’s operating environment and may be influenced to some degree.

Areas That Should Be Evaluated By An External Analysis General Environment Economic Factors Technological Factors Sociocultural Factors Political-Legal Factors

Areas That Should Be Evaluated By An External Analysis Task Environment Competition Customers Resource Availability

Options for Keeping or Building Strength Internal Strengths Options for Keeping or Building Strength Strength

Options for Minimizing or Overcoming Weakness Internal Weaknesses Options for Minimizing or Overcoming Weakness Weakness

External Opportunities Options for Taking Advantage of Opportunity Opportunity

Options for Minimizing or Overcoming Threat External Threats Options for Minimizing or Overcoming Threat Threat

Key Strategic Factors

Environmental Trends and New Business Opportunities Economic Factors State of the economy Level of disposable income Consumer spending patterns Social Factors Social & cultural trends Demographic changes What people think is “in” Business and/or Product Opportunity Gap Difference between what’s available and what’s possible New Business and Product Ideas Technology Advances New technologies Emerging technologies New uses of old technologies Political & Regulatory Changes Changes in political arena New laws and regulations

Competitor Analysis Slide 1 of 3 What is a Competitor Analysis? A competitor analysis is a detailed analysis of a firm’s competition. It helps a firm understand the competitive positions of its major competitors, and the opportunities it has to obtain a competitive advantage in one or more areas. These are important issues, particularly for new ventures.

Competitor Analysis Slide 2 of 3 Types of Competitors Direct competitors These are the businesses that offer identical or similar products to the products of the firm completing the analysis. Indirect competitors These are businesses that offer close substitutes to the product the firm completing the analysis sells.

Competitor Analysis Slide 3 of 3 Types of Competitors (continued) Future competitors These are companies that are not yet direct or indirect competitors, but could move into one of these roles at any time.

Competitive Intelligence Slide 1 of 2 Sources of Competitive Intelligence Attend conferences and trade shows Read or scan industry related publications Visit competitor’s facilitates and talk to customers, employees, and in general observe what's going on

Competitive Intelligence Slide 2 of 2 Sources of Competitive Intelligence Talk to customers, about what motivated them to buy your product opposed to your competitor Purchase competitor’s products and study them. Study competitors’ Web sites Study Web sites that provide information about companies

Competitive Analysis Grid Is a tool for organizing the information a firm collects about its competitors It helps a firm see how it stacks up against its competitors, and identifies its primary sources of competitive advantage A company must be able to prove that it has at least one clear source of competitive advantage over its major competitors

Example of a Competitive Analysis Grid Activision

Competitive Leadership Grid Niche Leadership Competitor 5 Competitor 6 Competitor 1 YOUR FIRM Ability to Gain Market Share Competitor 2 Competitor 3 Competitor 4 Competitor 7 Crisis Potential Market Leader Opportunity Alignment