EXTERNAL ENVIRONMENT ANALYSIS (Competitive analysis)

Competitive Forces Seven Characteristic describe the most competitive companies : Market share matters Understand and remember precisely what business you are in ? Whether it’s broke or not, fix it. Make it better not just product but the whole company if necessary Innovate or evaporate, particularly in technology-driven businesses Acquisition is essential to growth\ People make a difference There is no substitute for quality and no greater threat than failing to be cost competitive on a global basis.

Key Question about Competitors What are the major competitor’s strength ? What are the major competitor’s weaknesses What are the competitor’s objective & strategies ? How will the major competitors most likely respond to current economic, social, cultural, demographic, environmental, political, governmental, etc How vulnerable are the major competitor to our company’s strategies ? How vulnerable are our alternative strategies to success ful counterattack by our major competitors ? How are our product or service positioned relative to major competitors ? To what extend are new firms entering and old firms leaving this industry ? What key factor have resulted in our present competitive position in this industry ? What is the nature of suppliers and distributors relationship ?

Competitive Intelligence Programs Competitive Intelligence (CI), as formally defined by the Society of Competitive Intelligence Professional (SCIP), is a systematic and ethical process for gathering and analyzing information about the competition’s activities and general businesses trend to further a business’s own goals Three strong misperception about CI Running an Intelligence program requires lot of people, computer and other resources. Collecting intelligence about competitors violate antitrust laws, business intelligence equals espionage Intelligence gathering is an unethical practices

Competitive Analysis : Porter’s Five Forces Model Industry growth Fixed (or storage) cost / value added Intermittent over capacity Product differences Brand Identity Switching Cost Concentration and balance Informational complexity Diversity of competitors Corporate Stakes Exit Barriers Entry Barriers Economic of scales Proprietary product Brand Identity Switching cost Capital requirement Access to distribution Absolute cost advantage Governmental policy Expected Retaliation Rivalry Determinant New Entrants Threat of New Entrants Industry Competitors Bargaining Power Of Suppliers Bargaining Power Of Buyers Suppliers Buyers Intensity of Rivalry Determinant of Suppliers Power Bargaining Leverage Bayer concent’ vs firm concent’ Buyer Volume Buyer switching cost vs firm switching cost Buyer information Ability to backward integrate Substitute product Price Sensitivity Price / Total purchase Product difference Brand Identity Impact on quality perf’ Buyer’s profit Decision maker incentives Determinant of Buyers Power Differentiation of inputs Switching Cost Presence of substitute inputs Supplier concentration Importance of volume to supplier Cost relative to total purchase Impact of inputs on cost or differentiation Threat of forward integration relative to threat of backward integration by firms in the industry. Threat of Substitutes Subtitutes Relative price performance of substitute, switching cost, Buyer propensity to substitute

External Factors Evaluation (EFE) EFE matrix allowed strategist to summarized and evaluate the external factors. 5 steps to make EFE List key external factors as identified Assign each factor a weight that range from 0 (not important) and 1.0 (very important) Assigned rating between 1-4 to indicate how effectively the firms current strategies to response Multiply each factor’s weight by its rating to determine a weighted score Sum the weighted score to determine the total weighted score of the organization

EFE

External Threat and Opportunity Profile

Competitive Profile Matrix (CPM) The CPM identifies a firm’s major competitor and its particular strength and weaknesses. CPM include both external and internal factors the rating refer : 4 = major strength, 3 = minor strength, 2 = minor weaknesses, 1 = major weaknesses The critical success factors are broader

Critical Success Factors An Example CPM Critical Success Factors Weight Company 1 Company 2 Company 3 Rating Score 1. Advertising 0,20 1 4 0,80 3 0,60 2. Product Quality 0,10 0,40 0,30 2 3. Price Competitiveness 4. Management 5. Financial Position 0,15 0,45 6. Customer Loyalty 7. Market Share 1,00 3,30 2,55 2,65 Pelajari CPM yang lain di hal. 114

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