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Strategic Analysis. Environmental Analysis. Mikkeli 2005 Compiled by Rulzion Rattray. The Environment & Decisions. Complex. Organic Extreme. Static. Dynamic. Mechanistic Extreme. Simple. Turton, R. (1991),. The Macro Environment. POLITICAL ECONOMIC SOCIETAL ENVIRONMENTAL

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strategic analysis environmental analysis

Strategic Analysis.Environmental Analysis

Mikkeli 2005

Compiled by Rulzion Rattray

slide2

The Environment & Decisions

Complex

Organic Extreme

Static

Dynamic

Mechanistic Extreme

Simple

Turton, R. (1991),

the macro environment
The Macro Environment

POLITICAL

ECONOMIC

SOCIETAL

ENVIRONMENTAL

TECHNOLOGICAL

VALUES/LIFE-STYLE

INEVITABLES

TRENDS

UNCERTAINTIES

Details and focus of analysis will depend on the industry that is being investigated & should be linked to forces that drive competition in that industry

structural analysis of industries michael porter
Structural Analysis of Industries Michael Porter

Political

Potential

Entrants

Environmental

Threat of entry

Economic

Industry

competitors

Bargaining

Bargaining

Suppliers

Buyers

Power

Power

Rivalry

Threat of substitutes

Societal

Technological

Substitutes

structural analysis of industries michael porter5
Structural Analysis of Industries Michael Porter
  • State of competition & the profit potential of an industry depends on 5 forces
  • Knowledge of the 5 forces allows a firm to:
    • Establish the context for its strengths & weaknesses
    • Determine industry opportunities & threats
  • The Goal:
    • To find a defendable position in the industry, where the firm can defend itself against these forces, or influence them in its own favour
generic competitive strategies michael porter 1985
Generic Competitive StrategiesMichael Porter 1985
  • “Positioning” determines whether a firm’s profitability is above or below the industry average.
  • Position is logically based on industry structure, this should allow the firm to deal with industry forces better than rivals
    • should be based either on lower costs or on differentiation

21/10/97

Compiled by Rulzion Rattray

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generic competitive strategies michael porter 19857
Generic Competitive StrategiesMichael Porter 1985
  • Three Generic Strategies:
    • Cost Leadership
    • Differentiation
    • Focus
  • Firms must choose -
    • pursuing more than one will result in the firm being “stuck in the middle”

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slide8

Generic Competitive StrategiesMichael Porter 1985

Competitive Advantage

Cost

Leadership

Differentiation

Broad

?

Competitive

Scope

Cost

Focus

Differentiation

Focus

Narrow

Adapted from M.E. Porter Competitive Advantage, Free Press, 1985.

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generic competitive strategies michael porter 19859
Generic Competitive StrategiesMichael Porter 1985
  • There is only place for one cost leader in any industry
  • There is more than one basis for differentiation or focus
  • If two or more firms seek to occupy the same position & on the same basis an unprofitable battle can result

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the strategy clock bowman faulkner
The Strategy ClockBowman & Faulkner

High

Differentiation

Focus

Differentiation

Perceived

Added

Value

Low

Price

Strategies destined

for ultimate

failure

Low

Price/added

value

Low

Price

Low

High

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achieving sustainable competitive advantage
AchievingSustainable Competitive Advantage
  • Be clear who target customers are
  • Understand customer’s perceived value
  • Understand basis of competitors strategy
  • Understand basis of own competitive position; resources, stakeholders
  • Ensure customers needs are met in a distinctly different way

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references
References
  • Johnson, G. & Scholes, K. (1998) Exploring Corporate Strategy, Prentice Hall
  • Porter ME (1979), “How Competitive Forces Shape Strategy”, Harvard Business Review March/April 1979.
  • Porter ME (1985), Creating & Sustaining Superior Performance, Free Press.
  • Stacey, R, (1996), Strategic Management & Organisational Dynamics, Pitman, London.
  • Turton, R. (1991), Behaviour in a Business Context, London, Chapman Hall.
  • Ginter P & Duncan (1990), Macroenvironmental Analysis, Long Range Planning, December.
  • Whittington R., (1993), What is Strategy & does it matter?, Routledge.