PEST Analysis, Porter’s 5 Forces and Sustainability Strategies Margarita Antonova Volunteer Telerik Academy academy.telerik.com Business System Analyst Telerik Corporation

2  PESTLE Analysis  Porter’s 5 Forces  Growth Strategies  Contingency Strategies

Sustainability Questions Are we making a profit? How do we continue to sell at a profit?

Analysis of the external environment and more specifically the Political, Economic, Social, Technological, Legal and Environmental factors.

5  What is the political situation of the country and how can it affect the industry?  What are the prevalent economic factors?  How much importance does culture has in the market and what are its determinants?  What technological innovations are likely to pop up and affect the market structure?  Are there any current legislations that regulate the industry or can there be any change in the legislations for the industry?  Intellectual property rights for software  What are the environmental concerns for the industry?

Porter’s 5 Forces Model Framework for industry analysis and business strategy development that helps determine the competitive intensity and attractiveness of a market.

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Threat of new entries/competition – can new businesses be easily started in you industry/sector  What’s the threat of new businesses starting in this sector?  How easy is it to start up in this business?  What are the rules and regulations?  What finance would be needed to start-up?  Are there barriers to entry which give you greater power?

9 2. increases the likelihood of customers switching to alternatives 2. Threat of substitute products or services - increases the likelihood of customers switching to alternatives  How easy is it to find an alternative to this product or service?  Can it be outsourced? Or automated?  There new markets targeting similar needs?

10 3. number in the market, importance to the organization, and cost of switching 3. Bargaining power of customers (buyers) – the ability of buyers to drive prices down caused by their number in the market, importance to the organization, and cost of switching  How powerful are the buyers?  How many are there?  Can the buyers get costs down?  Do they have the power to dictate terms?

11 4. number, relative size and strength, uniqueness of their product or service, and cost of switching 4. Bargaining power of suppliers – the ability of suppliers to drive prices up caused by their number, relative size and strength, uniqueness of their product or service, and cost of switching  Examine how many suppliers are in the market?  Are there a few who control prices?  Or many so prices are lower?  Do your suppliers hold the power?  How easy is it to switch, what’s the cost?

12 5. the main driver is the number and capability of competitors in the market; many competitors, offering undifferentiated products and services reduce market’s attractiveness 5. Intensity of competitive rivalry – the main driver is the number and capability of competitors in the market; many competitors, offering undifferentiated products and services reduce market’s attractiveness  What’s the level of competition in this sector?  Is it a commodity market?

Sustainability Strategies Planning for longevity.

14   Growth strategies:   Organic growth   Research and development – the cradle of innovation and staying in the business   Cost-Benefit Analysis   Outside sources:   Mergers – combining companies   Acquisitions – acquiring companies   Strategic alliances – independent organizations that pursue the same goals together

15   Contingency Strategies   Definition – a risk management strategy that aims to minimize the impact of a foreseeable events and to plan for how the business will resume normal operations after such events   Types:   Preparing for predictable and quantifiable crises   Preparing for unexpected and unwelcome events

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17   Define Environment   Describe Industry   PESTLE   Porter’s 5 Forces Analysis

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