The document discusses the marketing environment and how it consists of internal and external forces that affect marketing strategy. It defines the microenvironment as close internal forces like suppliers, customers, and competitors that can be controlled by marketers. The macroenvironment consists of larger external forces in the PESTLE categories (political, economic, social, technological, legal, environmental) that are generally uncontrollable. It also discusses Porter's Five Forces model and how it analyzes competition through new entrants, supplier/buyer power, substitute threats, and industry rivalry. Environmental scanning and management help marketers understand and respond to trends in these environments.
The term strategy is derived from the Greek word “Strategos” means a plan or process or a set of decision rules or an arrangement to create a common thread.
It is the path or the way to achieve the goals of the organization or corporate.
It helps the manager proactively to direct or run the organization in a volatile environment.
It consists of WH questions.
Mintzberg has defined the strategy which consists of “5Ps” such as: plan, pattern, position, ploy and perspective.
A Plan “how to achieve the target”.
A Pattern “to take consistent actions over time”.
A Position “to be achieved by offering goods and services in particular market”.
A Ploy “how to beat the competitors by using tactics and tricks with proper allocation and utilization of resources”.
A Perspective “it is the vision of the organization what it want to be”.
Characteristics:
Strategy is concerned with to achieve the broad goals of the organization.
It establishes unique value proposition compared to its competitors.
It provides tailored value to its customers.
It clearly identifies and clarifies what not to do.
It empowers the organization to move towards its vision.
It creates environmental scanning to gain competitive advantage.
External environment is the environment outside of the organization which influences the business. It can broadly be categorised into two parts: Micro Environment & Macro Environment.
Micro Environment studies the small area of business or immediate periphery of the organization. It directly influence and regulate the business.
E.g.: customers, suppliers, creditors, vendors, competitors and local community.
Macro Environment: It studies overall business activity in a broad manner. It influences business on the basis of “PEST”: Political, Economic, Socio-cultural and Technology.
Political Factors consists of employment laws, tax policy, policies regarding trade & tariffs, environmental regulation and political stability.
Economic Factors consists of economic growth, interest rate, exchange rate and inflation rate.
Socio-Cultural Factors consists of health consciousness, population growth rate, age, career attitude, emphasis on safety etc.
Technological Factor consists of R & D activity, automation, technology incentives and change in technology.
Internal Environment is a component of the business environment, which is composed of various elements present inside the organization that can affect and be affected by the decision of the organization and its activities.
The internal environment of the organization consists of employees, management, owner, shareholders, investors and all other resources.
Factors influencing external environment are: value system, vision, structure, culture, human resource, physical resource, technical-know-how etc.
The internal environment environmental analysis generates long list of resources and capabilities which play vital role in strategy formulation.
It determines the strength and weakness of the organization.
This presentation is an effort to discover the role and importance of environmental factors and forces in routine marketing activities internally and externally at micro and macro level.
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3.2 Environmental Analysis
Previous section
Next section
3.2 Environmental Analysis
Marketing managers are tasked with shaping the elements of the marketing mix to fit the preferences and needs of the target market. This process does not, however, take place in a constant or unchanging environment. The dynamic external environment to which decision makers must respond and adapt comprises two distinct types of variables. Macro-environmental forces are those uncontrollable external variables that impact all firms within an industry. These include demographic shifts, prevailing economic conditions, cultural trends, and changes in the regulatory environment. The PESTEL framework, discussed in the following section, addresses these macro-environmental forces. Micro-environmental forces are external stimuli that selectively and discretely influence each firm uniquely and independently. Though not directly under the control of any single organization, some of these elements of the external environment can be managed and influenced to a significant degree. These micro-environmental forces include the behavior of a company’s suppliers, customers, and channel intermediaries such as independent wholesalers and retailers.
Marketing managers exercise direct control over a limited range of internal resources and decision variables through which they can respond to the threats and opportunities posed by the external environment. Primary among these tools are the marketing mix variables and managers’ discretion to identify segments and select target markets. The success of a marketing plan hinges on the ability to adapt the marketing mix to fit the changing character of both the target market and the larger context provided by macro-environmental forces and trends.
Understanding Forces and Trends: PESTEL Analysis
The process of systematically assessing how elements of the external environment will impact a business or market is termed environmental scanning. Factors of particular concern to marketing managers include those issues and trends that influence the attitudes and behavior of current and prospective target markets. Other points of concern focus on conditions relevant to economies, industries, allied companies (e.g., suppliers), and competitors.
Conducting an environmental scan can incorporate a wide range of information sources and research methodologies such as statistical trend analysis and data mining. However, each variation on the process shares the goal of providing managers with relevant information to improve the quality of marketing decisions. These decisions include choices about new opportunities nested in the strategic alternatives of market penetration, market development, and product development.
Although there are a number of ways to scan the external environment, among those models with the most comprehensive set of external factors is t.
. Introduction to Corporate Strategy(CS))debajanipalai
The term strategy is derived from the Greek word “Strategos” means a plan or process or a set of decision rules or an arrangement to create a common thread.
It is the path or the way to achieve the goals of the organization or corporate.
It helps the manager proactively to direct or run the organization in a volatile environment.
It consists of WH questions.
Mintzberg has defined the strategy which consists of “5Ps” such as: plan, pattern, position, ploy and perspective.
A Plan “how to achieve the target”.
A Pattern “to take consistent actions over time”.
A Position “to be achieved by offering goods and services in particular market”.
A Ploy “how to beat the competitors by using tactics and tricks with proper allocation and utilization of resources”.
A Perspective “it is the vision of the organization what it want to be”.
Strategy is concerned with to achieve the broad goals of the organization.
It establishes unique value proposition compared to its competitors.
It provides tailored value to its customers.
It clearly identifies and clarifies what not to do.
It empowers the organization to move towards its vision.
It creates environmental scanning to gain competitive advantage.
External environment is the environment outside of the organization which influences the business. It can broadly be categorised into two parts: Micro Environment & Macro Environment.
Micro Environment studies the small area of business or immediate periphery of the organization. It directly influence and regulate the business.
E.g.: customers, suppliers, creditors, vendors, competitors and local community.
Macro Environment: It studies overall business activity in a broad manner. It influences business on the basis of “PEST”: Political, Economic, Socio-cultural and Technology.
Internal Environment is a component of the business environment, which is composed of various elements present inside the organization that can affect and be affected by the decision of the organization and its activities.
The internal environment of the organization consists of employees, management, owner, shareholders, investors and all other resources.
Factors influencing external environment are: value system, vision, structure, culture, human resource, physical resource, technical-know-how etc.
Strategic Advantage Profile (SAP) is a summary statement which provides an overview of the advantages and disadvantages in key areas which affect future operations of the organization.
It is the systematic evaluation of strategic advantage which is significant for the business and its environment.
It involves analysis of internal strength and weakness along with opportunities and threats by focusing on complete study of functional areas like: marketing, production, finance, accounting, personnel, R&D.
1
CHAPTER
2
THE EXTERNAL ENVIRONMENT:
OPPORTUNITIES, THREATS, INDUSTRY COMPETITION
AND COMPETITOR ANALYSIS
Opening remarks
Company’s strategic actions are affected by
External environment
Internal environment
External environment is the source of:
Opportunities
Threats
The need for monitoring and analyzing external environment
The pace of change
Complexity
Uncertainty
2
The general, industry and competitor
analysis
3
General environment – broader society dimensions ( 7 dimensions)
Demographic, economic, political/legal, sociocultural, technological, physical and global
Out of firm’s control so must monitor and gather information
Industry environment – factors in competitive environment
Threat of new entrants, power of suppliers, power of buyers, threat of product substitutes, intensity of rivalry among competitors
Firm must assess industry’s opportunities for profit potential
Competitor analysis or competitive intelligence – the way firm’s can gather and analyze information on the industry competitors
Identifying their actions, responses and intentions
These three analyses influence and are influenced by the firm’s vision, mission and strategic actions
The general, industry and competitor environments
4
Three External Environments include:
General
Industry
Competitor
Segments of the general environment
5
DEMOGRAPHIC
Population size
Geographic distribution
ECONOMIC
Nature and direction of the economy in which a firm competes or may compete
SOCIO-CULTURAL
Refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to and deal with those changes
Age structure
Ethnic mix
Income distribution
POLITICAL/LEGAL
PHYSICAL
TECHNOLOGICAL
GLOBAL
Arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding the interactions among nations as well as between firms and various local governmental agencies
Concerned with a society's attitudes and cultural values
Includes the institutions and activities involved with creating new knowledge and translating that knowledge into new products, processes, and materials
Includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets
External environmental analysis
6
The objective of this analysis is identification of
Opportunities and
Threats
Opportunity – a condition in the external environment that helps a company achieve strategic competitiveness, if exploited
Threat – a condition in the external environment that may diminish company’s efforts towards achieving strategic competitiveness
The four-step process includes
Scanning
Monitoring
Forecasting
Assessing
1. Scanning
Studying all the segments of the general environment
Early signals of changes an ...
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
The term strategy is derived from the Greek word “Strategos” means a plan or process or a set of decision rules or an arrangement to create a common thread.
It is the path or the way to achieve the goals of the organization or corporate.
It helps the manager proactively to direct or run the organization in a volatile environment.
It consists of WH questions.
Mintzberg has defined the strategy which consists of “5Ps” such as: plan, pattern, position, ploy and perspective.
A Plan “how to achieve the target”.
A Pattern “to take consistent actions over time”.
A Position “to be achieved by offering goods and services in particular market”.
A Ploy “how to beat the competitors by using tactics and tricks with proper allocation and utilization of resources”.
A Perspective “it is the vision of the organization what it want to be”.
Characteristics:
Strategy is concerned with to achieve the broad goals of the organization.
It establishes unique value proposition compared to its competitors.
It provides tailored value to its customers.
It clearly identifies and clarifies what not to do.
It empowers the organization to move towards its vision.
It creates environmental scanning to gain competitive advantage.
External environment is the environment outside of the organization which influences the business. It can broadly be categorised into two parts: Micro Environment & Macro Environment.
Micro Environment studies the small area of business or immediate periphery of the organization. It directly influence and regulate the business.
E.g.: customers, suppliers, creditors, vendors, competitors and local community.
Macro Environment: It studies overall business activity in a broad manner. It influences business on the basis of “PEST”: Political, Economic, Socio-cultural and Technology.
Political Factors consists of employment laws, tax policy, policies regarding trade & tariffs, environmental regulation and political stability.
Economic Factors consists of economic growth, interest rate, exchange rate and inflation rate.
Socio-Cultural Factors consists of health consciousness, population growth rate, age, career attitude, emphasis on safety etc.
Technological Factor consists of R & D activity, automation, technology incentives and change in technology.
Internal Environment is a component of the business environment, which is composed of various elements present inside the organization that can affect and be affected by the decision of the organization and its activities.
The internal environment of the organization consists of employees, management, owner, shareholders, investors and all other resources.
Factors influencing external environment are: value system, vision, structure, culture, human resource, physical resource, technical-know-how etc.
The internal environment environmental analysis generates long list of resources and capabilities which play vital role in strategy formulation.
It determines the strength and weakness of the organization.
This presentation is an effort to discover the role and importance of environmental factors and forces in routine marketing activities internally and externally at micro and macro level.
· My Bookshelf· TOCAnnotation menu· Downloads· Prin.docxLynellBull52
· My Bookshelf
· TOC/Annotation menu
· Downloads
· Print
· Search
· Profile
· Help
3.2 Environmental Analysis
Previous section
Next section
3.2 Environmental Analysis
Marketing managers are tasked with shaping the elements of the marketing mix to fit the preferences and needs of the target market. This process does not, however, take place in a constant or unchanging environment. The dynamic external environment to which decision makers must respond and adapt comprises two distinct types of variables. Macro-environmental forces are those uncontrollable external variables that impact all firms within an industry. These include demographic shifts, prevailing economic conditions, cultural trends, and changes in the regulatory environment. The PESTEL framework, discussed in the following section, addresses these macro-environmental forces. Micro-environmental forces are external stimuli that selectively and discretely influence each firm uniquely and independently. Though not directly under the control of any single organization, some of these elements of the external environment can be managed and influenced to a significant degree. These micro-environmental forces include the behavior of a company’s suppliers, customers, and channel intermediaries such as independent wholesalers and retailers.
Marketing managers exercise direct control over a limited range of internal resources and decision variables through which they can respond to the threats and opportunities posed by the external environment. Primary among these tools are the marketing mix variables and managers’ discretion to identify segments and select target markets. The success of a marketing plan hinges on the ability to adapt the marketing mix to fit the changing character of both the target market and the larger context provided by macro-environmental forces and trends.
Understanding Forces and Trends: PESTEL Analysis
The process of systematically assessing how elements of the external environment will impact a business or market is termed environmental scanning. Factors of particular concern to marketing managers include those issues and trends that influence the attitudes and behavior of current and prospective target markets. Other points of concern focus on conditions relevant to economies, industries, allied companies (e.g., suppliers), and competitors.
Conducting an environmental scan can incorporate a wide range of information sources and research methodologies such as statistical trend analysis and data mining. However, each variation on the process shares the goal of providing managers with relevant information to improve the quality of marketing decisions. These decisions include choices about new opportunities nested in the strategic alternatives of market penetration, market development, and product development.
Although there are a number of ways to scan the external environment, among those models with the most comprehensive set of external factors is t.
. Introduction to Corporate Strategy(CS))debajanipalai
The term strategy is derived from the Greek word “Strategos” means a plan or process or a set of decision rules or an arrangement to create a common thread.
It is the path or the way to achieve the goals of the organization or corporate.
It helps the manager proactively to direct or run the organization in a volatile environment.
It consists of WH questions.
Mintzberg has defined the strategy which consists of “5Ps” such as: plan, pattern, position, ploy and perspective.
A Plan “how to achieve the target”.
A Pattern “to take consistent actions over time”.
A Position “to be achieved by offering goods and services in particular market”.
A Ploy “how to beat the competitors by using tactics and tricks with proper allocation and utilization of resources”.
A Perspective “it is the vision of the organization what it want to be”.
Strategy is concerned with to achieve the broad goals of the organization.
It establishes unique value proposition compared to its competitors.
It provides tailored value to its customers.
It clearly identifies and clarifies what not to do.
It empowers the organization to move towards its vision.
It creates environmental scanning to gain competitive advantage.
External environment is the environment outside of the organization which influences the business. It can broadly be categorised into two parts: Micro Environment & Macro Environment.
Micro Environment studies the small area of business or immediate periphery of the organization. It directly influence and regulate the business.
E.g.: customers, suppliers, creditors, vendors, competitors and local community.
Macro Environment: It studies overall business activity in a broad manner. It influences business on the basis of “PEST”: Political, Economic, Socio-cultural and Technology.
Internal Environment is a component of the business environment, which is composed of various elements present inside the organization that can affect and be affected by the decision of the organization and its activities.
The internal environment of the organization consists of employees, management, owner, shareholders, investors and all other resources.
Factors influencing external environment are: value system, vision, structure, culture, human resource, physical resource, technical-know-how etc.
Strategic Advantage Profile (SAP) is a summary statement which provides an overview of the advantages and disadvantages in key areas which affect future operations of the organization.
It is the systematic evaluation of strategic advantage which is significant for the business and its environment.
It involves analysis of internal strength and weakness along with opportunities and threats by focusing on complete study of functional areas like: marketing, production, finance, accounting, personnel, R&D.
1
CHAPTER
2
THE EXTERNAL ENVIRONMENT:
OPPORTUNITIES, THREATS, INDUSTRY COMPETITION
AND COMPETITOR ANALYSIS
Opening remarks
Company’s strategic actions are affected by
External environment
Internal environment
External environment is the source of:
Opportunities
Threats
The need for monitoring and analyzing external environment
The pace of change
Complexity
Uncertainty
2
The general, industry and competitor
analysis
3
General environment – broader society dimensions ( 7 dimensions)
Demographic, economic, political/legal, sociocultural, technological, physical and global
Out of firm’s control so must monitor and gather information
Industry environment – factors in competitive environment
Threat of new entrants, power of suppliers, power of buyers, threat of product substitutes, intensity of rivalry among competitors
Firm must assess industry’s opportunities for profit potential
Competitor analysis or competitive intelligence – the way firm’s can gather and analyze information on the industry competitors
Identifying their actions, responses and intentions
These three analyses influence and are influenced by the firm’s vision, mission and strategic actions
The general, industry and competitor environments
4
Three External Environments include:
General
Industry
Competitor
Segments of the general environment
5
DEMOGRAPHIC
Population size
Geographic distribution
ECONOMIC
Nature and direction of the economy in which a firm competes or may compete
SOCIO-CULTURAL
Refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to and deal with those changes
Age structure
Ethnic mix
Income distribution
POLITICAL/LEGAL
PHYSICAL
TECHNOLOGICAL
GLOBAL
Arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding the interactions among nations as well as between firms and various local governmental agencies
Concerned with a society's attitudes and cultural values
Includes the institutions and activities involved with creating new knowledge and translating that knowledge into new products, processes, and materials
Includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets
External environmental analysis
6
The objective of this analysis is identification of
Opportunities and
Threats
Opportunity – a condition in the external environment that helps a company achieve strategic competitiveness, if exploited
Threat – a condition in the external environment that may diminish company’s efforts towards achieving strategic competitiveness
The four-step process includes
Scanning
Monitoring
Forecasting
Assessing
1. Scanning
Studying all the segments of the general environment
Early signals of changes an ...
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
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2. Successfully setting up a business
does not guarantee that it will run
smoothly. There are issues that
need to be considered in making
business decisions. These include
forces outside the business which
define both the microenvironment
and macroenvironment.
2
3. A company’s marketing
environment consists of the
forces outside marketing that
affect the management’s
ability to build and maintain
successful relationship with
the target consumer
3
4. Environmental scanning
A process of collecting information about the
external marketing environment to identify and
interpret potential trends.
The goal of this process is to analyze the information
and decide whether these trends represent significant
opportunities or pose major threats to the company.
Environment scanning is a vital component of
effective environmental management.
Example: Consumer reluctance to eat beef after
confirmation of mad cow disease was an opportunity
for producers of organic beef.
4
5. Environmental management
The attainment of organizational objectives by
predicting and influencing the competitive, political-
legal, economic, technological, and social-cultural
environments.
Strategic alliance
A partnership in which two or more companies
combine resources and capital to create competitive
advantages in a new market. It is commonly found in
international marketing. Members of such alliances
share risks and profits
5
6. Market research and Market intelligence
allow marketers to collect information
about the marketing environment and
come up with strategic plans to map out
and meet the expectations of consumers.
7. The Microenvironment
It refers to the forces
closely influencing the
company and directly
affecting the
organization’s relationship.
Sometimes it can be
controlled and influences
by the marketer
7
8. The Microenvironment
✓ The Company
These are all the departments within a
company that marketers must work closely
together with. This can include HR to the
accounting department.
8
9. The Microenvironment
✓ Suppliers
Company’s that deliver the products
necessary to further produce the acquiring
company’s products. Companies determine
their product specifications and search for
potential suppliers that can offer the best
mix of quality, reliability, warranties and
guarantees, credit, and the lowest cost.
9
10. The Microenvironment
✓ Marketing Intermediaries
These are other companies that work as
company as promoters and distributors, to
assist another company who is trying to sell
its products. Included here are resellers,
financial intermediaries, physical distribution
firms and marketing and services agencies.
10
11. The Microenvironment
✓ Competitors
This is where a company provide more value
and greater service than other companies
offering similar products. Marketers conduct
a competitive analysis by identifying
competitors and analyzing the values and
benefits of their products.
11
12. Types of Competition
Brand Competition- occurs when brands in
the same segment and industry compete
against each other.
Substitutable Products Competition- involves
products whose characteristics and benefits
meet the same customer need.
Generic Competition- involves a variety of
products that provide the same benefits and
value to the customer.
12
13. The Microenvironment
✓ Public
Any group that has an actual or potential
interest in or impact on organization’s ability
to achieve its objective which include:
financial, media, government, local, general
and internal publics
13
14. The Microenvironment
✓ Customers
It refers to the general consumer that
purchase a product either for use in their
operations or as a part of another product to
resell. The customers are the most important
factor of a company. It is necessary to create
reliable and positive relationships to build
long-lasting customer relationships.
14
15. Customer Market
It is composed of the consumer market,
business market, reseller market,
government market and international
market. It facilitates the exchange of
products and services between business
firms, consumers, and other organizations,
both local and overseas.
15
16. The Macroenvironment
It is consists of external forces that have a
significant influence on marketing strategy.
The external forces in the
macroenvironment cannot be controlled;
therefore, companies should learn to
adapt the forces.
16
17. The Macroenvironment
PESTLE Analysis
A framework that identifies the external
forces influencing market performance and
determines opportunities and threats that
arise from them.
17
18. The Macroenvironment
PESTLE Analysis
This tool is especially useful when starting
a new business or entering a foreign
market. It is often used in collaboration
with other analytical business tools such as
the SWOT analysis and Porter’s Five Forces
to give a clear understanding of a situation
and related internal and external factors.
18
19. The Macroenvironment
Political Forces
These factors are all about how and to what degree
a government intervenes in the economy or a
certain industry. Basically all the influences that a
government has on your business could be classified
here. This can include government policy, political
stability or instability, corruption, foreign trade
policy, tax policy, labor law, environmental law and
trade restrictions.
19
20. The Macroenvironment
Economic Forces
are determinants of a certain economy’s
performance. Factors include economic growth,
exchange rates, inflation rates, interest rates,
disposable income of consumers and unemployment
rates. These factors may have a direct or indirect long
term impact on a company, since it affects the
purchasing power of consumers and could possibly
change demand/supply models in the economy.
20
21. The Macroenvironment
Social Forces
This dimension of the general environment represents
the demographic characteristics, norms, customs and
values of the population within which the
organization operates. This inlcudes population trends
such as the population growth rate, age distribution,
income distribution, career attitudes, safety
emphasis, health consciousness, lifestyle attitudes
and cultural barriers.
21
22. Social Forces
Trends- refers to particular behavior of a
certain group of individuals which lasts for a
certain period
Fads- are short-lived trend such a particular
fashion or activity
Megatrends- trends that persist over a long
period
22
23. The Macroenvironment
Technological Forces
These factors pertain to innovations in technology
that may affect the operations of the industry and the
market favorably or unfavorably. This refers to
technology incentives, the level of innovation,
automation, research and development (R&D)
activity, technological change and the amount of
technological awareness that a market possesses.
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24. The Macroenvironment
Legal Forces
Although these factors may have some overlap with
the political factors, they include more specific laws
such as discrimination laws, antitrust laws,
employment laws, consumer protection laws,
copyright and patent laws, and health and safety
laws. It is clear that companies need to know what is
and what is not legal in order to trade successfully
and ethically.
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25. The Macroenvironment
Environmental Forces
Environmental factors have come to the forefront
only relatively recently. They have become important
due to the increasing scarcity of raw materials,
pollution targets and carbon footprint targets set by
governments. These factors include ecological and
environmental aspects such as weather, climate,
environmental offsets and climate change which may
especially affect industries such as tourism, farming,
agriculture and insurance.
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26. Porter’s Five Forces Analysis
is a framework that helps analyzing the level of
competition within a certain industry. It is especially
useful when starting a new business or when
entering a new industry sector. According to this
framework, competitiveness does not only come
from competitors. Rather, the state of competition in
an industry depends on five basic forces: threat of
new entrants, bargaining power of suppliers,
bargaining power of buyers, threat of substitute
products or services, and existing industry rivalry.
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28. Porter’s Five Forces Analysis
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New entrants in an industry bring new
capacity and the desire to gain market
share. The seriousness of the threat
depends on the barriers to enter a certain
industry. The higher these barriers to
entry, the smaller the threat for existing
players.
➢ Threat of new entrants
29. Porter’s Five Forces Analysis
29
This force analyzes how much power and control
a company’s supplier has over the potential to
raise its prices or to reduce the quality of
purchased goods or services, which in turn
would lower an industry’s profitability potential.
The fewer there are, the more power they have.
➢ Bargaining power of suppliers
30. Porter’s Five Forces Analysis
30
This force analyzes to what extent the customers
are able to put the company under pressure,
which also affects the customer’s sensitivity to
price changes. The customers have a lot of
power when there aren’t many of them and
when the customers have many alternatives to
buy from.
➢ Bargaining power of buyers
31. Porter’s Five Forces Analysis
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The existence of products outside of the realm of
the common product boundaries increases the
propensity of customers to switch to alternatives.
In order to discover these alternatives one
should look beyond similar products that are
branded differently by competitors. Instead,
every product that serves a similar need for
customers should be taken into account.
➢ Threat of substitute
32. Porter’s Five Forces Analysis
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It examines how intense the current competition
is in the marketplace, which is determined by the
number of existing competitors and what each
competitor is capable of doing. Rivalry is high
when there are a lot of competitors that are
roughly equal in size and power, when the
industry is growing slowly and when consumers
can easily switch to a competitors offering for
little cost.
➢ Competitive Rivalry
