I-GENERAL ENVIRONMENT

influence industries & firm i- DEMOGRAPHIC population size, age structure of customers, geographical distribution, ethnic mix, income distribution iii- POLITICAL taxation laws vi- GLOBAL political event in the country, global markets, emerging countries, different ii- ECONOMIC inflation rate, interest rate, trade deficits, budget deficits, personal savings rates & gross iv -SOCIOCULTURAL - woman in workforce, attitudes about quality of life, concerns about environment, shift in

i- THREAT OF NEW ENTRANTS

influenced by 2 factors:

iiBARGAINING POWER OF SUPPLIERS

prices & quality means used by suppliers to exert power over firms SUPPLIER IS POWERFUL WHEN: (a)the firms are significant customers, (b)satisfactory substitute products are not available to industry firms, (c)there are few

II-INDUSTRY ENVIRONMENT
influences firm & competitive

(a) RETALIATION FROM CURRENT & EXISTING FIRMS when new entrants are coming into the industry, existing co may give competitive responses to reduce the possibility of new

iii- BARGAINING POWER OF BUYERS buyers

vTECHNOLOGICA L products innovations, new communication techniques, application of OBJECTIVE to identify 2 : OPPORTUNITIES conditions that if exploit it helps the co archives its strategic competitiveness THREATS conditions that may hinder a cos effort to achieve strategic competitiveness

(b) BARRIERS OF ENTRY The existing firms should try to develop capabilities so that new firms are barred to enter the industry. Kinds of 7 i- ECONOMIES OF SCALE Economies of scale can be accomplished because a production increases the cost of producing each additional unit falls. Co manufacturing customized products learn how to respond quickly to customers desires rather than developing economies of scale. ii- PRODUCT DIFFRENTIATION Firms product must be unique. Customers who value this kind of product tend to become loyal. However, new entrants may results to offering lower prices to combat these unique product characteristics. iii- CAPITAL REQUIREMENT to successfully enter into a new market in addition to physical facilities. iv- SWITCHING COSTS one-time costs customers incur when they buy from different supplier. When switching cost is high, new entrant would try to either offer low price for its product or offer much-differentiated product to attract customers. v- ACCESS TO DISTRIBUTION CHANNELS a place to distribute the products. New entrants have to persuade distributors to carry their products. vi- COST DISADVANTAGES existing & established competitors have cost adv that new

III-COMPETITOR ANALYSIS focuses

on each co against whom a firm directly competes
-involves gathering data & info that can be useful in understanding its competitors intention & strategic implications. Firms should also gather data & info regarding govt policies. This will give an early warning of threat & opportunities & analyze them on how they will affect the cos strategy.

ii- SLOW INDUSTRY GROWTH when the growth in industry slow, competition becomes intense as firms try to increase their market shares by attracting competitors customers. iii- HIGH FIXED COSTS/HIGH STORAGE COSTS when firm try to increase prod volume, inventories increase/excess inventories exist. To reduce it, firm offer discounts/cut it selling price. iv- LACK OF DIFFERENTIATED/LOW SWITCHING COSTS buyers are loyal to products that suits their needs, so in an industry where differentiated product exist, rivalry is less resulting to lower competition v- HIGH EXIT BARRIERS Co would continue to operate even though at loss. These include economic, strategic, emotional factors that made them remain as is.

want to buy products sold at lower price. When suppliers goods were sold at higher price, buyers would try to reduce their costs by: (a) asking for higher quality products & services (b) greater CUSTOMERS IS POWERFUL WHEN: (a)they purchase large portion of the total output (b)customers purchases significant portion of the sellers product (c)customers can switch to another product at little cost

iv- THREAT OF SUBSTITUTE PRODUCTS

substitute products are goods & services from outside the industry that perform similar

v- INTENSITY OF RIVALRY AMONG COMPETITORS firms actions

always invite competitive responses. Factors that affect the intensity of

These substitute products posses strong threat to the firm when customers: (a)have no switching cost to bear (b)the substitute product is sold at lower price (c)when the quality of the product is better i- MANY EQUALLY BALANCED COMPETITORS- when firms are same size & power, competition is strong. So, intense rivalries exist

IV- EXTERNAL ENVIRONMENTAL ANALYSIS process

gathering more info about the environment to increase the understanding of the general environment

SCANNING MONITORING FORECASTING ASSESSING

EXTERNA L ENVIRON MENT