SITUATIONAL ANALYSIS

MODULE 2

SITUATIONAL ANALYSIS

The situational analysis is used to develop an optimal strategy to reach goals and objectives.

Often referred to as SWOT; it is used to derive competitive advantage

SITUATIONAL ANALYSIS

Assess organizational strengths and weaknesses by using Ansoff’s Grid of Competences

ANSOFF’S GRID OF COMPETENCES

A 4 x 4 matrix that classifies skills & resources against functional areas.

Skills and Resources: R&D, General Management, Operations, Marketing

Functional Areas: facilities and equipment, personnel skills, organizational capabilities, management capabilities

COMPETITION

STRENGTHS &WEAKNESSES

STRATEGIC POSTURE

PAST PERFORMANCE

MARKETINGEFFECTIVENESS

MARKETINGENVIRONMENT

MEASUREMENT OF STRENGTHSAND WEAKNESSES (158/159)

STRENGTHS: EXAMPLES (Text, pg 169)

Leadership in innovationAbility to influence legislationEfficient, low cost facilitiesAvailability of capitalCustomer loyaltyDominant market shareQuality sales forceMake and sell quality products

OPPORTUNITIES AND THREATS

Political/ LegalSocial/Cultural/DemographicEconomicTechnological

POLITICAL / LEGALManagerial Questions

What changes in regulations are possible? How will they impact demand for my product?

What political risks exist in countries the firm wishes to expand to?

POLITICAL / LEGALMethods of Analysis

Analysis of regulationsEnvironmental monitoringPublic opinion polls

SOCIAL/CULTURAL/DEMOManagerial Questions

What trends are emerging where the firm is operating?

How would these trends impact the demand for existing products or help create new products?

What trends of population growth & movement are emerging?

How would these impact the firm?

SOCIAL/CULTURAL/DEMOMethods of Analysis

Content analysis of popular press

Lifestyle analysisGeneral purpose consumer

surveysCensus data / projections

ECONOMICManagerial Questions

What are the economic prospects in the markets where the firm currently operates or plans to operate in the future?

How would they affect the business?

ECONOMICMethods of Analysis

Macroeconomic forecasting models

TECHNOLOGICALManagerial Questions

What are some emerging technologies that will affect the current products and their processes?

What are the life-cycle trends of the current technologies?

TECHNOLOGICALMethods of Analysis

Life Cycle AnalysisTechnological forecasting

methods

SITUATIONAL ANALYSIS

Competitor Analysis What are the strengths, weaknesses and limitations of our competitors?

ANALYZING THE COMPETITION

Identify key competitorsAnalyze performance recordAssess current satisfactionIdentify marketing strategyAnalyze resources and

competenciesPredict future behavior

COMPETITOR’S OBJECTIVES

Financial goalsMarket share

COMPETITOR’S OBJECTIVES

The parent’s objectives what are they overall importance of SBU how successful has the parent been in the past

COMPETITOR’S STRATEGY

Past strategiesPresent strategies

COMPETITOR’S SUCCESSES

Provide insight into future actions

COMPETITOR’S WEAKNESSES

Take advantage of weaknesses!

FUTURE BEHAVIOR

What is their current level of satisfaction?

How likely will they change?How effectively can the

competitor respond to environmental changes?

GATHERING COMPETITIVE INFORMATION

Recruits and employees of competing firms

CustomersPublished materials and

public documentsObservation Trash analysis

“THE COMPETITION”

“The essence of strategy formulation is coping with competition.” (Porter)

We must be broad minded when looking at “the competition.”

POTENTIAL COMPETITORS

Current CompetitionSuppliersPotential EntrantsSubstitute ProductsCustomers

FIVE FACTOR MODEL OF MARKET PROFITABILITY

POTENTIALENTRANTS

POWER OFSUPPLIERS

SUBSTITUTEPRODUCTS

POWER OFBUYERS

EXISTINGCOMPETITORS

THREAT OF POTENTIAL ENTRANTS

Barriers to Entry Incumbents’ cost advantages Product differentiation Capital requirements Access to distribution channels Government policies Switching costs

POWER OF SUPPLIERS

Suppliers can be powerful if: industry is dominated by a few suppliers

the industry of the customer is not important to the supplier group

POWER OF BUYERS

Buyers can be powerful if they: are few purchase in large volumes earn low profits can find alternative suppliers

SUBSTITUTE PRODUCTS

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

RIVALRY AMONG EXISTING COMPETITORS

Rivalry will be intense if: competitors are numerous/identical in size

the product or service lacks differentiation

there is high investment intensity

FROM THE INTERNET

University of Arizona Libraries http://

dizzy.library.arizona.edu/ library/teams/slrp/csa/csa-html /csa_home.htm

FROM THE TEXT….

Pages 74 to 93Pages 115 to 119Pages 158 to 175