2OPPORTUNITIES & THREATS Opportunities & threats exists in external environment. An external appraisal is required to identify profit-making opportunities which can be exploited by the company’s 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 company’s comparative performance potential in the filed of opportunity?
3For 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?StrengthsWeaknessesInternal toThecompanyMATCHINGConversionExistExternalToThe companyOpportunitiesThreats
4GAP AnalysisGap analysis is a comparison between an entity’s 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.
5Analyzing 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 organization’s 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?
6Analyzing an Existing GAP in sales DemandGapPotential DemandExisting DemandDistributionGapProduct GapCompetitiveExisting Sale
7Continuous 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 Fo 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?
8Using 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 canChange the industry structureCreate new business and industriesBe used to create competitive advantages
9Change the industry structure The threat of new entrantsThe bargaining power of suppliersThe bargaining power of customersThe threat of substitute product/services
10Creating New Business Opportunities IT is giving everyone ample opportunities to expand their business to the extent they wantB2B, B2C etc are the examples of IT
11Be used to create competitive advantages Cost of leadership:By facilitating reductions in cost level e.g. reduction in administration staff.Better resources utilizationUsing J.I.T and advance manufacturing systems.Reduction in cost by using s, fax’s multimedia conferences.