This document provides an overview of several frameworks for analyzing a business's external environment and competitive landscape. It describes Porter's Five Forces framework, which examines the competitive balance of power in an industry. It also outlines PEST analysis, the industry lifecycle model, and analyses of key success factors and environmental forces. Additional models covered include Pearce & Robinson's three environments and Robins' prime forces. The document gives examples of how to apply these frameworks to industries like automotive and gaming.

1. STRATEGIC AWARENESS

2. WHAT IS SA?
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You are manufacturing and selling a car
Put these factors in order: product, style,
emotion, delight
What car is it?
In this country 60% of cars are domestically
purchased
What company is it?
Do you think it’s successful and why?

3. WHAT IS SA?
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Sue is 18, her holiday wardrobe is sorted
It’s all been done in one hit
She looks chic and up to the minute when she
baby sits for a friend e.g. furry gilet, military
style jacket, gypsy skirt
She says “why buy a Mark Jacobs jacket if
you can get a lookalike for less”
What’s the name of the company?
Is it successful and why?

4. WHAT IS SA?
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It’s made from sugar, tastes like sugar, is 600
time sweeter than sugar, but it’s not sugar
It can be baked, it has a long shelf life and is
easily mixed with other ingredients
What’s its name?
Who makes it?
Why is it so successful?

5. WHAT IS SA?
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Example 1 – Renault
Example 2 – Primark
Example 3 - Sucralose or Splenda – Tate and
Lyle

6. WHAT IS SA?
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Other examples:
Adidas – merged with Reebok (Aug 05)
Rimmel, Chanel, H & M, H Stern, Burberry,
Roberto Cavalli…….. What’s the link?
McDonalds – new clown, Serena and Venus
Williams, Destiny’s Child, Justin Timberlake –
why?

7. WHAT IS SA? – more
examples
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Disney
Sony
Tesco
BP
Ryanair

8. BUSINESS ENVIRONMENT
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DEEPER EXAMINATION OF THE FORCES
CAUSING CHANGE INSIDE FIRMS
FORCES THAT ACT AS CATALYSTS FOR
CHANGE
TRADITIONAL – “PEST”, “NEDSLEPT”,
industry life cycle

9. BUSINESS ENVIRONMENT
NAT
ECON
DEMO
TECH
ORG
SOCIAL
POLIT
ENVIRO
LEGAL

10. NEDSLEPT
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NATURAL – climate/weather factors
ECONOMIC – state of the economy,
competition, demand and supply etc
DEMOGRAPHIC – population change - age,
sex, immigration, geographical distribution,
number of marriages, birth and death rate
SOCIAL – attitudes, tastes, fashions, habits

11. NEDSLEPT
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LEGAL – UK government law, EU law and
international law
ENVIRONMENTAL – impact of tourism on the
environment, pressure groups, media
POLITICAL – attitude to tourism, pro/anti,
actions of government – domestic and
international – particularly the increasing
relevance of the EU
TECHNOLOGICAL – research and
development, delivering tourism

12. INDUSTRY LIFE CYCLE
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Illustrates the stages that an industry moves
through
Enables a business to identify where it is in
the cycle and what its future strategy should
be
Similar to the product life cycle, but not the
same!

13. INDUSTRY LIFE CYCLE
Sales
maturity
growth
0
intro
decline
Time

14. INDUSTRY LIFE CYCLE
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Intro - lead users
Early growth -early adopters
Late growth -early majority
Maturity/Decline - late majority
Decline - laggards

15. INDUSTRY LIFE CYCLE
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Intro – industry is “up for grabs” often based
on innovation - is it really an industry at all who wants the product? how can it be sold?
what is the right price?
Growth - firms worry about volume, quality
and price e.g. can we sell 2 million laptops
this year – there is a focus on improvements
Maturity/Decline - squeezing the profit out –
margins often get thin - economies of scale
typically important

16. OTHER MODELS
PEARCE & ROBINSON – looks at 3
environments
1. REMOTE ENVIRONMENT - global and
domestic - comprises five factors that are not
influenced by a single firm i.e. economic,
social, political, technological, and
ecological. These factors must be
considered by the firm when working with the
market.
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17. OTHER MODELS
2. INDUSTRY ENVIRONMENT – competitive
forces - made up of the entry barriers,
supplier power, buyer power, substitute
availability, and competitive rivalry
These contending forces are of the greatest
importance to the firm in strategy
formulation.

18. OTHER MODELS
3. OPERATING ENVIRONMENT - also called
competitive or task environment - it deals
closely with competitors, creditors,
customers, labour, suppliers
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In assessing the competitive position of the
firm, the following criteria are:
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Market share, Breadth of product line
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Effectiveness of sales distribution
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Price competitiveness

19. OTHER MODELS
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Advertising promotion effectiveness
Location and age of facility
Capacity and productivity
Experience, Raw material costs, Financial
position
Relative product quality, R&D advantages
calibre of personnel, customers, suppliers,
other stakeholders

20. OTHER MODELS
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DILL – TASK ENVIRONMENT – This focuses on
forces affecting the industry and its structure e.g.
competitors, customers, suppliers, and substitutes
ROBINS – Looks at the PRIME FORCES
influencing a business e.g. NATURE OF
WORKFORCE
TECHNOLOGY
ECONOMIC SHOCKS
SOCIAL TRENDS
WORLD POLITICS
COMPETITION

21. BUSINESS ENVIRONMENT
KEY FACTORS FOR SUCCESS ANALYSIS
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FOCUS ON THE KEY FACTORS FOR
SUCCESS IN AN INDUSTRY
THEN FOCUS ON THE KEY
ENVIRONMENTAL FORCES

22. KEY FACTORS FOR
SUCCESS ANANLYSIS
EXAMPLE - Car industry
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KEY FACTORS
1.
low unit wage costs
2.
technological innovation
3.
innovative design

23. KEY FACTORS FOR
SUCCESS ANALYSIS
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1.
2.
3.
4.
5.
KEY ENVIRONMENTAL FORCES
general wage levels
regulations and employment law
strength of trade unions
government policy on industrial
relations
support for research and development

24. PORTER’S FIVE FORCES
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1.
2.
LOOKS AT THE FACTORS
SPECIFIC TO THE COMPETITIVE
BALANCE OF POWER IN AN
INDUSTY
CAN BE USED BY A FIRM TO:
identify opportunities in its
environment
protect itself against competition and
other threats

25. PORTER’S FIVE FORCES
POTENTIAL
ENTRANTS
SUPPLIERS
INDUSTRY
COMPETITORS
RIVALRY
SUBSTITUTES
BUYERS

26. FIVE FORCES
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THREAT OF POTENTIAL ENTRANTS
DEPENDS ON BARRIERS TO ENTRY
e.g. technical knowledge
THREAT OF SUBSTITUTES e.g.
SEGA v SONY v NINTENDO
SUPPLIER POWER e.g. power of
Microsoft over PC makers

27. FIVE FORCES
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BUYER POWER e.g. the power of
Tescos or Asda in buying from farmers
and other suppliers
ALL OF THE ABOVE INFLUENCE THE
EXTENT OF RIVALRY BETWEEN
FIRMS
OTHER FACTORS: the number of firms
in the market, their relative market
share, how independent they are

28. FOUR LINKS ANALYSIS
LOOKS AT THE FACTORS SPECIFIC
TO CO-OPERATION IN AN INDUSTRY
 FIRMS HAVE FORMAL & INFORMAL
LINKS WITH OTHERS
 COLLUSION – illegal
 OPPORTUNITIES & THREATS ARISE
AS A RESULT OF THE LINKS

29. FOUR LINKS ANALYSIS
INFORMAL COOP LINKS
& NETWORKS
GOV LINKS
& NETWORKS
THE FIRM
COMPLEMENTORS
FORMAL
COOP LINKS

30. FOUR LINKS ANALYSIS
GOV LINKS & NETWORKS
e.g. government may be a customer, local
Business Link
 INFORMAL COOP LINKS &
NETWORKS
 i.e. no legal connection, local Chamber
of Trade and Commerce, Trade
Association
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31. FOUR LINKS ANALYSIS
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FORMAL COOP LINKS – a legal contract
e.g. a joint venture, joint shareholding,
contract to supply
COMPLEMENTORS
Firms whose products add value to the base
firm e.g. Hewlett Packard and Microsoft
HP products are complemented by Microsoft
software