Module 8B Flashcards
Name four different external analyses
- SEPTEmber analysis
- Product lifecycle analysis
- Five forces model
- Stakeholder analysis
What does the SEPTEmber analysis mean?
It is a macro-analysis of the following topics:
1. Social-cultural: demography, income distribution etc.
2. Economic: income levels, inflation, investments etc
3. Political: political stability, ideology, taxation etc
4. Technological: R&D, energy accessability and affordability etc.
5. Ecological: risk of natural disaster, natural resources etc.
What is the industry lifecycle?
Analysis of where in the lifecycle a product is. It has four stages: introduction/initiation, growth, maturity, decline
What are the key insights of the Industry lifecycle analysis?
- easier to find new markets and clients in growing industries
- Lower costs in mature industries
what is the experience curve?
Costs per unit go down as company/industry gains more experience producing the product.
What are the five components of Porter’s five forces model?
- Competitive rivalry
- Bargaining power suppliers
- Bargaining power buyers
- Threat of new entrants
- Threat of substitution
What is the threat of entrants?
The threat that new players enter the market. This prevents the companies in the market from overcharging. The strength of their threat depends on the entry barriers
What are common entry barriers for new entrants?
- Benefits of scale
- Patents
- Industry maturity (experience curve effects)
- Customer switching costs
- Capital requirements
- Access to distribution channels: powerful competitors might own crucial parts of channel
When is buyer bargaining power high?
- Concentration: few customers
- Switching costs are low for customers
Bargaining power is especially annoying when customers are price-sensitive:
1. Generic product where quality is not important
2. Buyers with low margins
When is suppliers bargaining power high?
- Concentration: few suppliers
- High switching costs
When is the threat of substitutes high?
- Substitutes are available
- Better price/performance ratio by competitors
- Switching costs for customers are low
What is competitive rivalry?
Rivalry with competitors, but not every competitor is a rival. Rivalry will drive down profits.
When is competitive rivalry high?
- Many competitors (or competitors of equal size)
- Slow industry growth
- High exit barriers
- Low differentiation possibilities
What is a strategic stakeholder analysis?
Analysis of everyone that might be affected by the organization or can affect it. When mapping out the most important stakeholders, there are two points you should consider:
1. Large stake
2. Power
What resources should be analyzed through internal analysis?
- Human resources
- Physical resources
- Financial resources
- Organizational resources
