Analysis Tools SWOT, PEST+C, Porter’s 5 Forces, BCG Matrix

SWOT Analysis Strengths and Weaknesses (internal) Opportunities and Threats (external)

Strengths Company’s sustainable competitive advantage Excellent employees Strong market share Reputation New products and technologies Good financing

Weaknesses Old equipment and technology Minimal R&D Poor planning Reputation Poor management

Opportunities New markets Economy Poor competition Growth strategy Possible new technology

Threats New competitors Lack of resources Government regulations Substitute products Changing market preferences

PEST+C Analysis of the Environment

Politics Three levels of government—municipal, provincial and federal Taxes Crown corporations Laws International governments

Economic Stage in business cycle Interest rate Canadian $ Inflation rate Unemployment rate Supplier power Buyer power Stage in product life cycle

Social Demographic changes Lifestyle changes Social values

Technology Available technology Creation of new technology Use of information technology Using technology to create new products or processes

Competition What is the competition doing? State and evaluate each major competitor

Porter’s 5 Forces

Threat of New Entrants – How easy is it to get into your market? Industry Rivalry – Is there a lot of competition? Threat of Substitutes – Is there an alternative to the product/service offered by you and your competitors? Buyer Power – Do your customers absolutely need your product/service? Do they have other options? Do they have any negotiating power? Supplier Power – How important is your business to your supplier(s)? Do you have any negotiating power?

The Boston Consulting Group Matrix Used to analyze a company’s portfolio of different products/services Goal is to have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash

The BCG Matrix 2 dimensions: market share and market growth Basic idea: the bigger the market share a product has or the faster the product's market grows, the better it is for the company

Cash Cow A business unit that has a large market share in a mature, slow growing industry Cash cows require little investment and generate cash that can be used to invest in other business units

Star A business unit that has a large market share in a fast growing industry Stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead If successful, a star will become a cash cow when its industry matures

Question Mark AKA “Problem Child” A business unit that has a small market share in a high growth market These business units require resources to grow market share, but whether they will succeed and become stars is unknown

Dog A business unit that has a small market share in a mature industry A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share