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SITUATIONAL ANALYSIS

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.

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SITUATIONAL ANALYSIS

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  1. SITUATIONAL ANALYSIS MODULE 2

  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

  3. SITUATIONAL ANALYSIS • Assess organizational strengths and weaknesses by using Ansoff’s Grid of Competences

  4. 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

  5. MEASUREMENT OF STRENGTHS AND WEAKNESSES (158/159) STRATEGIC POSTURE COMPETITION PAST PERFORMANCE STRENGTHS & WEAKNESSES MARKETING EFFECTIVENESS MARKETING ENVIRONMENT

  6. STRENGTHS: EXAMPLES (Text, pg 169) • Leadership in innovation • Ability to influence legislation • Efficient, low cost facilities • Availability of capital • Customer loyalty • Dominant market share • Quality sales force • Make and sell quality products

  7. OPPORTUNITIES AND THREATS • Political/ Legal • Social/Cultural/Demographic • Economic • Technological

  8. 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?

  9. POLITICAL / LEGALMethods of Analysis • Analysis of regulations • Environmental monitoring • Public opinion polls

  10. 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?

  11. SOCIAL/CULTURAL/DEMOMethods of Analysis • Content analysis of popular press • Lifestyle analysis • General purpose consumer surveys • Census data / projections

  12. 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?

  13. ECONOMICMethods of Analysis • Macroeconomic forecasting models

  14. 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?

  15. TECHNOLOGICALMethods of Analysis • Life Cycle Analysis • Technological forecasting methods

  16. SITUATIONAL ANALYSIS • Competitor Analysis • What are the strengths, weaknesses and limitations of our competitors?

  17. ANALYZING THE COMPETITION • Identify key competitors • Analyze performance record • Assess current satisfaction • Identify marketing strategy • Analyze resources and competencies • Predict future behavior

  18. COMPETITOR’S OBJECTIVES • Financial goals • Market share

  19. COMPETITOR’S OBJECTIVES • The parent’s objectives • what are they • overall importance of SBU • how successful has the parent been in the past

  20. COMPETITOR’S STRATEGY • Past strategies • Present strategies

  21. COMPETITOR’S SUCCESSES • Provide insight into future actions

  22. COMPETITOR’S WEAKNESSES • Take advantage of weaknesses!

  23. FUTURE BEHAVIOR • What is their current level of satisfaction? • How likely will they change? • How effectively can the competitor respond to environmental changes?

  24. GATHERING COMPETITIVE INFORMATION • Recruits and employees of competing firms • Customers • Published materials and public documents • Observation • Trash analysis

  25. “THE COMPETITION” • “The essence of strategy formulation is coping with competition.” (Porter) • We must be broad minded when looking at “the competition.”

  26. POTENTIAL COMPETITORS • Current Competition • Suppliers • Potential Entrants • Substitute Products • Customers

  27. FIVE FACTOR MODEL OF MARKET PROFITABILITY POTENTIAL ENTRANTS POWER OF SUPPLIERS EXISTING COMPETITORS POWER OF BUYERS SUBSTITUTE PRODUCTS

  28. THREAT OF POTENTIAL ENTRANTS • Barriers to Entry • Incumbents’ cost advantages • Product differentiation • Capital requirements • Access to distribution channels • Government policies • Switching costs

  29. 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

  30. POWER OF BUYERS • Buyers can be powerful if they: • are few • purchase in large volumes • earn low profits • can find alternative suppliers

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

  32. 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

  33. FROM THE INTERNET • University of Arizona Libraries • http://dizzy.library.arizona.edu/ library/teams/slrp/csa/csa-html /csa_home.htm

  34. FROM THE TEXT…. • Pages 74 to 93 • Pages 115 to 119 • Pages 158 to 175

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