Retail biznes environment 2


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Retail biznes environment 2

  1. 1. RETAIL BUSINESS ENVIRONMENT 2 Ms Rosmin Iqbal Hussain Boptom (UKM), CMBA (UNIMAS)
  2. 2. Alternating Strategies
  3. 3. Generating Alternative Strategies From SWOT <ul><li>SWOT analysis is a tool for helping assess the current situation for the firm. </li></ul><ul><li>However, we need to be able to combine the information in the SWOT analysis in a meaningful way to generate alternative strategies that we might pursue </li></ul><ul><li>*Use TOWS matrix </li></ul>
  4. 4. <ul><li>The SWOT that we’ve been dealing with in the other slaid has been a useful tool to helping identify key characteristics of our businesses </li></ul><ul><li>But it doesn’t really help guide us to choosing strategies </li></ul><ul><li>For that there is the TOWS matrix which will integrate some of the things we’ve used to create the SWOT </li></ul>
  5. 5. SWOT Analysis Opportunities 1. 2. 3. Strengths 1. 2. 3. Threats 1. 2. 3. Weaknesses 1. 2. 3. Internal Environment External Environment
  6. 6. <ul><li>That is the SWOT tool we introduced in the previous section. SWOT is a conceptual framework for a systematic analysis that helps organize the external threats and opportunities with the internal weaknesses and strengths of the organization. To use it you simply list the strengths/weaknesses you have in your business and the opportunities and threats you face </li></ul><ul><li>SWOT analysis is the simplest way to conduct environmental scanning. A SWOT analysis should result in the identification of an organization’s core competencies, and of opportunities that the company is unable to take advantage of due to a lack of, or insufficient, current resources </li></ul><ul><li>Let’s take this a step further and develop some useful strategies out of the assessments you’ve done, using the TOWS matrix </li></ul>
  7. 7. TOWS Matrix <ul><li>The TOWS matrix is a tool designed to match external opportunities and threats with our internal strengths and weaknesses </li></ul>
  8. 8. TOWS Matrix <ul><li>Technique used in strategy formulation for combining </li></ul><ul><ul><li>External analysis </li></ul></ul><ul><ul><ul><li>Opportunities </li></ul></ul></ul><ul><ul><ul><li>Threats </li></ul></ul></ul><ul><ul><li>Internal analysis </li></ul></ul><ul><ul><ul><li>Strengths </li></ul></ul></ul><ul><ul><ul><li>Weaknesses </li></ul></ul></ul>
  9. 9. TOWS Matrix Weaknesses: 1. 2. 3. Strengths: 1. 2. 3. WO Strategies Use Opportunities to overcome weaknesses SO Strategies Use strengths to take advantage of opportunities Opportunities: 1. 2. 3. WT Strategies Defensive strategies to minimize weaknesses and avoid threats ST Strategies Take advantage of Strengths to avoid threats Threats: 1. 2. 3. From Internal Analysis (IFAS) From External Analysis (EFAS) Source: Weihrich
  10. 10. <ul><li>The TOWS tool combines the ingredients of SWOT (our assessment of the internal and external environments, which used the EFAS and IFAS tables) in a way that can suggest some strategies. It matches external opportunities and threats facing a particular company with that company’s internal strengths and weaknesses to result in four sets of possible strategic alternatives </li></ul><ul><li>- Therefore we got some strategies: </li></ul><ul><li>* SO Strategies </li></ul><ul><li>* ST Strategies </li></ul><ul><li>* WO Strategies </li></ul><ul><li>* WT Strategies </li></ul>
  12. 12. Industry Analysis
  13. 13. Porter’s 5 Forces
  14. 14. Rivals
  15. 15. Business & Competition <ul><li>Though a business does not want competition from other businesses, inevitably most will face a degree of competition </li></ul><ul><li>The amount and type of competition depends on the market the business operates in </li></ul><ul><ul><li>Many small rival businesses e.g. a shopping mall or city centre arcade *close rivalry </li></ul></ul><ul><ul><li>A few large rival firms e.g. in a small town / rural area </li></ul></ul><ul><ul><li>A rapidly changing market e.g. where the technology is being developed very quickly & competitors adopting new techs </li></ul></ul>
  16. 16. Competitor Analysis
  17. 17. Reacting to Competition <ul><li>A business could react to an increase in competition (e.g. a launch of rival product) in the following ways </li></ul><ul><ul><li>Cut prices (but can reduce profits) </li></ul></ul><ul><ul><li>Improve quality (but increases costs) </li></ul></ul><ul><ul><li>Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money) </li></ul></ul><ul><ul><li>Cut costs , e.g. use cheaper materials, make some workers redundant </li></ul></ul>
  18. 18. Weapons for Competing <ul><li>Vigorous price competition </li></ul><ul><li>More or different performance features </li></ul><ul><li>Better product performance </li></ul><ul><li>Higher quality </li></ul><ul><li>Stronger brand image & appeal </li></ul><ul><li>Wider selection of models & styles </li></ul><ul><li>Bigger / better dealer network </li></ul><ul><li>Low interest rate financing </li></ul><ul><li>Higher levels of advertising </li></ul><ul><li>Stronger product innovation capabilities </li></ul><ul><li>Better customer services </li></ul><ul><li>Stronger capabilities to provide buyers with custom-made products </li></ul>
  19. 19. Substitutes
  20. 20. Force of Substitute Products <ul><li>Substitutes matter when customers are attracted to the products of firms in other industries / products of other firms </li></ul><ul><ul><li>Eyeglasses and contact lens VS laser surgery </li></ul></ul><ul><ul><li>Eyeglasses and contact lens VS Ortho-K </li></ul></ul><ul><ul><li>Eyeglasses VS CL: cases where one practice doesn’t offer variable products </li></ul></ul><ul><ul><li>MPs VS full regime cleaning: which do we carry </li></ul></ul><ul><ul><li>Hidrogen peroxide syst VS enzymatic cleaner: trend </li></ul></ul>
  21. 21. How to Tell Whether Substitute Products Are a Strong Force <ul><li>Whether substitutes are readily available and attractively priced </li></ul><ul><li>Whether buyers of ur market view substitutes as being comparable or better </li></ul><ul><li>How much it costs end users to switch to </li></ul>
  22. 22. Suppliers
  23. 23. Competitive Pressures From Suppliers <ul><li>Whether supplier-seller relationships represent a w eak or strong competitive force depends on </li></ul><ul><ul><li>Whether suppliers can exercise sufficient bargaining leverage to influence terms of supply in their favor </li></ul></ul><ul><ul><li>Nature and extent of supplier-seller collaboration in the industry </li></ul></ul>
  24. 24. When Is the Bargaining Power of Suppliers Stronger? <ul><li>There are only a few suppliers of a specific input </li></ul><ul><ul><li>Ortho-K lenses, Keratoconus lenses </li></ul></ul><ul><li>They provide unique and differentiated products </li></ul><ul><ul><li>Branded CLs, MultiFocalss </li></ul></ul><ul><li>Customer is not important </li></ul><ul><ul><li>Ex: Ortho-K lenses, Keratoconus lenses, Equipments suppliers </li></ul></ul>
  25. 25. Buyers
  26. 26. Bargaining Power of Buyers <ul><li>Whether seller-buyer relationships represent a weak or strong competitive force depends on </li></ul><ul><ul><li>Whether buyers have sufficient bargaining leverage to influence terms of sale in their favor </li></ul></ul><ul><ul><li>Extent and competitive importance of seller-buyer strategic partnerships in the industry </li></ul></ul>
  27. 27. When Is the Bargaining Power of Buyers Stronger: ur profit amount is smaller ? <ul><li>Small number of buyers </li></ul><ul><ul><li>Ex: daily disposal CL </li></ul></ul><ul><li>Buyers purchase standard, commodity products </li></ul><ul><ul><li>Branded SGlass </li></ul></ul><ul><li>Possibility of backward integration </li></ul><ul><ul><li>Departmental stores carrying Sglasses / reading glasses </li></ul></ul>
  28. 28. Implications
  29. 29. Strategic Implications of The Five Competitive Forces <ul><li>Competitive environment is unattractive from the standpoint of earning good profits when </li></ul><ul><ul><li>Rivalry is vigorous </li></ul></ul><ul><ul><li>Entry barriers are low and entry is likely </li></ul></ul><ul><ul><li>Competition from substitutes is strong </li></ul></ul><ul><ul><li>Suppliers and customers have considerable bargaining power </li></ul></ul>
  30. 30. Strategic Implications of The Five Competitive Forces <ul><li>Competitive environment is ideal from a profit- making standpoint when </li></ul><ul><ul><li>Rivalry is moderate </li></ul></ul><ul><ul><li>Entry barriers are high and no firm is likely to enter </li></ul></ul><ul><ul><li>Good substitutes do not exist </li></ul></ul><ul><ul><li>Suppliers and customers are in a weak bargaining position </li></ul></ul><ul><li>Example: Therapeutic lens industry Orto-K, added services unavailable elsewhere (Visual Therapy), & those that can provide these service is limited (limited entry into ur service market) </li></ul>
  31. 31. Competitive Advantage
  32. 32. Resources & Competitive Advantage *Resources refers to products / services
  33. 33. Sustainable Competitive Advantage
  34. 34. The Business Environment Model <ul><li>The value of services/ products u create </li></ul><ul><li>that gives the end profit </li></ul>
  35. 35. END