Industry Analysis Flashcards
(14 cards)
What is PEST in external analysis?
Environmental Analysis
- Political
- Economic
- Social
- Technological
Examples of political elements in PEST
Tax policies
Trade regulations
Legal factors
Governmental regulations
Examples of economic elements in PEST
Growth
Exchange rates
interest rates
Examples of social elements in PEST
Socio-cultural trends
Examples of technological elements in PEST
Rate of technological change
Innovation
3 types of innovation in technological elements in PEST
Transformational
Substantial
Incremental
What is transformational innovation?
Create new product category
What is substantial innovation?
Make old product offering go obsolete
What is incremental innovation?
Should not change value proposition
Definition of market
Group of consumers that is interested in the product and has the resources to purchase it
Considerations of market analysis
The segment’s attractiveness
The firm’s strengths and capabilities
- relative to segment needs
- relative to competitive situations
Attractive market characteristics
Market size: Large
Growth: High
Synergy with core businesses: High
Contribution to profit: High
Barriers to entry: High
Seasonality: Low
Price sensitivity: Low
Strength of trade: Low
How can a firm serve a submarket
Lower price point
Serve non-users
Serve niche markets
Provide system solutions
Serve unmet needs
Respond to a trend
Leverage a new technology
Profitability of Market assessed by Porter’s Five Factors
Competition among existing firms
Threat of potential entrants
Threat of substitute products
Bargaining power of suppliers
Bargaining power of customers
