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Business Management II. OPPORTUNITIES & THREATS Opportunities & threats exists in external environment. An external appraisal is required to identify.

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Presentation on theme: "Business Management II. OPPORTUNITIES & THREATS Opportunities & threats exists in external environment. An external appraisal is required to identify."— Presentation transcript:

1 Business Management II

2 OPPORTUNITIES & THREATS Opportunities & threats exists in external environment. An external appraisal is required to identify profit-making opportunities which can be exploited by the companys strength and also anticipate environmental threats for instance declining economy, competitors action, government legislation etc. For opportunities, it is necessary to decide: –What opportunities exist in the business environment? –What is the capability profile of the competitors? Are they better placed to exploit these opportunities? –What is the companys comparative performance potential in the filed of opportunity?

3 For threats, it is necessary to decide the following What threat might arise, to the company or its business environment? How will market player be affected? Strengths Weaknesses Conversion MATCHINGMATCHING OpportunitiesThreats Internal to The company Exist External To The company

4 GAP Analysis Gap analysis is a comparison between an entitys ultimate objective (most commonly expressed in terms of demand, but may be reported in term of profit) and the expected performance of projects both planned and underway. The planning is not the gap between the current position organization and the desired future position. Point to note: –The planning gap is not the gap between the current position of the organization and the desired future position.

5 Analyzing the Planning GAP Gap analysis quantifies the size of the gap between the objective for the planning period and the forecast based on the current situation and current prospects. Gap analysis is based on two questions. –What are the organizations target for achievement over the planning period? –What would the organization be expected to achieve if it did nothing – ie did not develop any new strategies, but simply carried on in the current way with the same product and selling to the same market?

6 Analyzing an Existing GAP in sales Potential Demand Existing Demand Existing Sale Distribution Gap Product Gap Competitive Gap Demand Gap

7 Continuous Gap Analysis A gap analysis can be used as a means of strategic control. This mean that the gap is regularly updated. –Were the assumptions in F o forecast justified? –A similar questions can be asked of the other strategies which are supposed to fill the gap. Have they been implemented as planned? Have they generated the expected level of sales or profit?

8 Using IS/IT As A Strategic Tool Porter & Miller states that IT has the potential to change the nature of the competition within an industry in three ways. IT can –Change the industry structure –Create new business and industries –Be used to create competitive advantages

9 Change the industry structure The threat of new entrants The bargaining power of suppliers The bargaining power of customers The threat of substitute product/services

10 Creating New Business Opportunities IT is giving everyone ample opportunities to expand their business to the extent they want B2B, B2C etc are the examples of IT

11 Be used to create competitive advantages Cost of leadership: –By facilitating reductions in cost level e.g. reduction in administration staff. –Better resources utilization –Using J.I.T and advance manufacturing systems. Reduction in cost by using s, faxs multimedia conferences.


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