ANALYSING THE BUSINESS ENVIRONMENT Failing to plan is planning to fail! The only constant in the modern world is change!

The Macro Business Environment Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment

The Demographic Environment Trends in the demographic environment: –______________________________

The Economic Environment My firm’s economic environment: –______________________________

The Natural Environment My firm’s natural environment: –______________________________

The Technological Environment My firm’s technological environment: –______________________________

The Political-Legal Environment My firm’s political-legal environment: –______________________________

The Social-Cultural Environment My firm’s social-cultural environment: –______________________________

MARKETING STRATEGY TOOLS SWOT Analysis Five Forces Analysis

SWOT Analysis Strengths Weaknesses Opportunities Threats

Strengths & Weaknesses of a SWOT Analysis Firm decides what its strengths are in relation to other firms/competitors Useful to develop information needed to allow better competitive decisions SWOT encourages good thinking about strengths, weaknesses, opportunities and threats. However, it lacks prescriptive power. Thus, the need for Five Forces Analysis

Five Forces Analysis The Five Forces Model includes: –Barriers to entry –Power of suppliers –Power of buyers –Rivalry among competitors –Availability of substitutes

Industry Analysis with the Five Forces Model New Entrants –What are the barriers to entry? –Can we raise them? Can they by lowered? –Characteristics of Potential new entrants –Likely competitive strategies of these entrants –When will they enter our market

Suppliers How Large and concentrated are they? Can firms switch suppliers easily? How important is their product to us? How much cost does their product represent? What is their relative bargaining power over us?

Buyers How concentrated are our customers? Potential for creating a new market or growing this one? How high are switching costs? How price sensitive is each customer segment Customer’s relative bargaining power?

Substitutes What are the substitutes for our product? How viable are they as replacements? How quickly will they penetrate our market? Which players in the industry will see substitutes as a chance for diversification?

Competitors Who are our major competitors today? What are their relative industry positions? What is the competitive advantage of each? How is product differentiation achieved?