SITUATIONAL ANALYSIS MODULE 2

SITUATIONAL ANALYSIS zThe situational analysis is used to develop an optimal strategy to reach goals and objectives. zOften referred to as SWOT; it is used to derive competitive advantage

SITUATIONAL ANALYSIS zAssess organizational strengths and weaknesses by using Ansoff’s Grid of Competences

ANSOFF’S GRID OF COMPETENCES zA 4 x 4 matrix that classifies skills & resources against functional areas. zSkills and Resources: R&D, General Management, Operations, Marketing zFunctional Areas: facilities and equipment, personnel skills, organizational capabilities, management capabilities

COMPETITION STRENGTHS & WEAKNESSES STRATEGIC POSTURE PAST PERFORMANCE MARKETING EFFECTIVENESS MARKETING ENVIRONMENT MEASUREMENT OF STRENGTHS AND WEAKNESSES (158/159)

STRENGTHS: EXAMPLES (Text, pg 169) zLeadership in innovation zAbility to influence legislation zEfficient, low cost facilities zAvailability of capital zCustomer loyalty zDominant market share zQuality sales force zMake and sell quality products

OPPORTUNITIES AND THREATS zPolitical/ Legal zSocial/Cultural/Demographic zEconomic zTechnological

POLITICAL / LEGAL Managerial Questions zWhat changes in regulations are possible? How will they impact demand for my product? zWhat political risks exist in countries the firm wishes to expand to?

POLITICAL / LEGAL Methods of Analysis zAnalysis of regulations zEnvironmental monitoring zPublic opinion polls

SOCIAL/CULTURAL/DEMO Managerial Questions zWhat trends are emerging where the firm is operating? zHow would these trends impact the demand for existing products or help create new products? zWhat trends of population growth & movement are emerging? zHow would these impact the firm?

SOCIAL/CULTURAL/DEMO Methods of Analysis zContent analysis of popular press zLifestyle analysis zGeneral purpose consumer surveys zCensus data / projections

ECONOMIC Managerial Questions zWhat are the economic prospects in the markets where the firm currently operates or plans to operate in the future? zHow would they affect the business?

ECONOMIC Methods of Analysis zMacroeconomic forecasting models

TECHNOLOGICAL Managerial Questions zWhat are some emerging technologies that will affect the current products and their processes? zWhat are the life-cycle trends of the current technologies?

TECHNOLOGICAL Methods of Analysis zLife Cycle Analysis zTechnological forecasting methods

SITUATIONAL ANALYSIS zCompetitor Analysis yWhat are the strengths, weaknesses and limitations of our competitors?

ANALYZING THE COMPETITION zIdentify key competitors zAnalyze performance record zAssess current satisfaction zIdentify marketing strategy zAnalyze resources and competencies zPredict future behavior

COMPETITOR’S OBJECTIVES zFinancial goals zMarket share

COMPETITOR’S OBJECTIVES zThe parent’s objectives ywhat are they yoverall importance of SBU yhow successful has the parent been in the past

COMPETITOR’S STRATEGY zPast strategies zPresent strategies

COMPETITOR’S SUCCESSES zProvide insight into future actions

COMPETITOR’S WEAKNESSES zTake advantage of weaknesses!

FUTURE BEHAVIOR zWhat is their current level of satisfaction? zHow likely will they change? zHow effectively can the competitor respond to environmental changes?

GATHERING COMPETITIVE INFORMATION zRecruits and employees of competing firms zCustomers zPublished materials and public documents zObservation zTrash analysis

“THE COMPETITION” z“The essence of strategy formulation is coping with competition.” (Porter) zWe must be broad minded when looking at “the competition.”

POTENTIAL COMPETITORS zCurrent Competition zSuppliers zPotential Entrants zSubstitute Products zCustomers

FIVE FACTOR MODEL OF MARKET PROFITABILITY POTENTIAL ENTRANTS POWER OF SUPPLIERS SUBSTITUTE PRODUCTS POWER OF BUYERS EXISTING COMPETITORS

THREAT OF POTENTIAL ENTRANTS zBarriers to Entry yIncumbents’ cost advantages yProduct differentiation yCapital requirements yAccess to distribution channels yGovernment policies ySwitching costs

POWER OF SUPPLIERS zSuppliers can be powerful if: yindustry is dominated by a few suppliers ythe industry of the customer is not important to the supplier group

POWER OF BUYERS zBuyers can be powerful if they: yare few ypurchase in large volumes yearn low profits ycan find alternative suppliers

SUBSTITUTE PRODUCTS zSubstitute products limit the potential earnings of an industry by placing a ceiling on prices it can charge.

RIVALRY AMONG EXISTING COMPETITORS zRivalry will be intense if: ycompetitors are numerous/identical in size ythe product or service lacks differentiation ythere is high investment intensity

FROM THE INTERNET zUniversity of Arizona Libraries yhttp://dizzy.library.arizona.edu/ library/teams/slrp/csa/csa-html /csa_home.htm

FROM THE TEXT…. zPages 74 to 93 zPages 115 to 119 zPages 158 to 175