chapter three : EVALUATING A COMPANY’S EXTERNAL ENVIRONMENT :)

next entry is about chapter three "EVALUATING A COMPANY’S EXTERNAL ENVIRONMENT". 

first, we've learnt about PESTEL. what is PESTEL? PESTEL analysis focuses on the six principal components of strategic significance in the macro-environment. this is POLITICS, ECONOMICS, SOCIALS, TECHNOLOGY, ENVIRONMENTAL AND LEGAL. The macro-environment encompasses the broad environmental context in which a company’s industry is situated that includes strategically relevant components over which the firm has no direct control. 

second, we've learnt about Five Competitive Forces. 

Competition from rival sellers
Competition from potential new entrants
Competition from producers of substitute products
Supplier bargaining power
Customer bargaining power

third, we've learnt about FACTORS ARE DRIVING INDUSTRY CHANGE, AND WHAT IMPACTS WILL THEY HAVE. Driving forces are the major underlying causes of change in industry and competitive conditions.The most important part of driving forces analysis is to determine whether the collective impact of the driving forces will be to increase or decrease market demand, make competition more or less intense, and lead to higher or lower industry profitability.

  

Driving forces analysis has three steps:

Identifying what the driving forces are.

Assessing whether the driving forces are, on the whole, acting to make the industry more or less attractive.

Determining what strategy changes are needed to prepare for the impact of the driving forces.

fourth, we've learnt about HOW ARE INDUSTRY RIVALS POSITIONED IN THE MARKET ? A strategic group is a cluster of industry rivals that have similar competitive approaches and market positions. Strategic group mapping is a technique for displaying the different market or competitive positions that rival firms occupy in the industry. Strategic group maps reveal which companies are close competitors and which are distant competitors.

        

A Strategic Group Map Example

that's all for this entry. see you in the next entry. ASSALAMUALAIKUM :)