Why Do a Situation Analysis

1. Why Do a Situation Analysis • A situation analysis identifies strategic options and opportunities • A situation analysis involves • External factors: Macroenvironment (industry and competitive conditions) • Internal factors: Microenvironment (organization’s internal situation and competitive position) • External factors • Industry’s dominant economic traits • Competitive forces • Competitive moves of rivals • Key success factors • Attractiveness of the industry

2. SWOT Internal Factors Strengths Weaknesses E x F Opportunities t a e c r t Threats a o l r s

3. Five Forces Model Substitute Products Rivalry among sellers Potential Entrants Suppliers Buyers

4. Analysis of Competitive Forces • The analysis is designed to identify the main sources of competitive forces and the strength of the pressure • Sources of competitive pressures are defined by • Rivalry among competitors • Substitute products • Potential entry • Bargaining power of suppliers • Bargaining power of buyers • Rate the strength of each competitive force • Explain how each competitive force works and its role in the overall competitive picture

5. Environmental Scanning • A way to monitor and interpret social, political, economic, ecological and technological events in an effort to spot trends and conditions that could eventually impact the industry and the organization. • The purpose of environmental scanning is to raise the consciousness of managers about potential developments that could have an important impact on industry conditions and pose new opportunities and threats

6. Assessing Competitive Positions: Strategic Groups • A Strategic Group consists of those rival firms with similar competitive approaches and positions in an industry • A Strategic Group displays different competitive positions that rival firms occupy • Organizations in the same strategic group have one or more competitive characteristics in common • Sell in the same price/quality range • Cover same geographic areas • Be vertically integrated to same degree • Emphasize same types of distribution channels • Offer buyers similar services • Use identical technological approaches

7. Competitor Analysis • An organization’s strategy is affected by • Current strategies of competitors • Actions competitors are likely to take • Profile of key competitors involves studying • Current position in the industry of each competitor • Strategic objectives and recent business plans of each competitor • Basic competitive approach of each competitor • Successful strategies take into account • Understanding competitor strategies • Evaluating their vulnerability to driving forces and competitive pressures • Sizing strengths and weaknesses of each competitor • Anticipating each competitor’s next move

8. Key Industry Success Factors • Key success factors spell the difference between • Profit and loss • Competitive success or failure • A key success factor can be • A specific skill or talent • Competitive capability • Something an organization must do to satisfy customers • Being distinctively better than competitors on one or more key success factors produces a competitive advantage • Key success factors consist of 3-5 major determinants of financial and competitive success in an industry