Revida Putri Lestriana (041914353015)

Yanuar Fajar Nugroho (041914353013)

Magister Manajemen Fakultas Ekonomi dan Bisnis Richard Alexander (041914353028)
Arif Prabowo (0419143530036)
Universitas Airlangga
2020
 The External Environment:
Opportunities, Threats, Industry Competition, and
Competitor Analysis
2.1 The general, industry and competitor
environment

The general environment is composed of dimensions in

the broader society that influence an industry and the
firms within it

The industry environment is the set of factors that

directly influences a firm and its competitive actions and
respons: the threat of new entrants, the power of
suppliers, the power of buyers, the threat of product
subtitutes, and the intensity of rivalry among competing
firms

Competitors analysis is how companies gather and

interpret information about their competitors
General Environment
Dimensions in the broader society that influence an
industry and the firms within it:
• Demographic
• Economic
• Political/legal
• Sociocultural
• Technological
• Global

THE GENERAL ENVIRONMENT
FOCUS ON
■ Environmental trends and
their implications
Analysis of
■ The Industry environment COMPETITORS
■ Focus on FOCUS ON
• PREDICTING COMPETITORS`
• THE FACTORS AND CONDITIONS
ACTIONS, RESPONSES AND
INFLUENCING AND INDUSTRY`S
INTENTIONS
PROFITABILITY POTENTIAL

Influences the firms` vision, mission, choices of strategies, and the competitive actions and
responses it will take to implement those strategies
2.2 external environmental analysis
External
Environments
Turbulent, ■ An external environmental analysis
complex, (scanning, monitoring, forecasting, assessing)
global See table 2.2

Firms
General
Environments

1. An Opportunity
2. A Threath
Opportunities and Threats

 Opportunity
A condition in the general environment that, if exploited,
helps a company achieve strategic competitiveness.

 Threat
A condition in the general environment that may hinder a
company’s efforts to achieve strategic competitiveness.
2.3 segments of the general environment

●
Population size - Age structure - Geographic distribution
The Demomcratic Segment ●
Ethnic mix - Income distribution

The Economic Segment

●
The nature and direction of the economy in
which a firm competes or may compete

The arena in which organizations and interest groups compete for attention, resources,
●

The Political/Legal Segment and a voice in overseeing the body of laws and regulations guiding interactions among
nations as well as between firms and various local governmental agencies
The Socioculture Segment
●
Concerned with a society`s attitude and cultural
values

●
Includes the institutions and activities involved in creating new knowledge
The Technological Segment and translating that knowledge inti new outputs, products, processes, and
materials

Includes relevant new global markets, exixting markets that are changing,
●

The Global Segment important international political events, and critical cultural and institutional
characteristics of global markets

Refers to potential and actual changes in the physical environment and business
●
Industry Environment Analysis

 Industry Defined
A group of firms producing products that are close substitutes
• Firms that influence one another
• Includes a rich mix of competitive strategies that companies use in
pursuing strategic competitiveness and above-average returns
Threat of New Entrants: Barriers to Entry

 Economies of scale
 Product differentiation
 Capital requirements
 Switching costs
 Access to distribution channels
 Cost disadvantages independent of scale
 Government policy
 Expected retaliation
Bargaining Power of Suppliers

• Supplier power increases when:

• Suppliers are large and few in number.
• Suitable substitute products are not available.
• Individual buyers are not large customers of suppliers and there are many
of them.
• Suppliers’ goods are critical to the buyers’ marketplace success.
• Suppliers’ products create high switching costs.
• Suppliers pose a threat to integrate forward into buyers’ industry.
Bargaining Power of Buyers
 Buyer power increases when:
• Buyers are large and few in number.
• Buyers purchase a large portion of an industry’s total
output.
• Buyers’ purchases are a significant portion of a
supplier’s annual revenues.
• Buyers’ switching costs are low.
• Buyers can pose threat to integrate backward into the
sellers’ industry.
• Buyer has full information
Threat of Substitute Products

 The threat of substitute products increases when:

• Buyers face few switching costs.
• The substitute product’s price is lower.
• Substitute product’s quality and performance are equal to or greater
than the existing product.
 Differentiated industry products that are valued by
customers reduce this threat
Intensity of Rivalry Among Competitors
 Industry rivalry increases when:
 There are numerous or equally balanced competitors.
 Industry growth slows or declines.
 There are high fixed costs or high storage costs.
 There is a lack of differentiation opportunities or low switching costs.
 When the strategic stakes are high.
 When high exit barriers prevent competitors from leaving the industry
2-5 interpreting industry analysis
Effective industry analyses are products of careful
study and interpretation of data and information
from multiple sources

Analysis of the five forces within a given industry

allows the firm to determine the industry`s
attractiveness in terms of the potential to earn
average or above-average return
 2-6 strategic groups

A set of firms emphasizing similar strategic dimensions and using a

similar strategy (Mas-Ruiz. 2013)
Strategic groups have several implications :

1. The competitive rivalry among them can be intense

2. The strengths of the five forces differ across strategic group

3. The closer the strategic groups are in terms of their strategies, the
greater is the likelihood of rivalry between the groups
 2-7 competitor analysis
A competitor analysis focuses on each company against which a firm competes directly.
In a competitor analysis, the firm seeks to understand the following:

What drives the competitor, as shown by its future objectives

What the competitor is doing and can do, as revealed by its

current strategy

What the competitor believes about the industry, as shown by

its assumptions

What the competitor`s capabilities are, as shown by its strengths

and weakness
Porter, Competitive Strategy. p 49
Complementors
 Complementors
 The network of companies that sell complementary products or
services or are compatible with the focal firm’s own product or
service.
• If a complementor’s product or service adds value to the sale of
the focal firm’s product or service, it is likely to create value for
the focal firm.
• However, if a complementor’s product or service is in a market
into which the focal firm intends to expand, the complementor
can represent a formidable competitor.
Ethical Considerations
 Practices considered both legal and ethical:
• Obtaining publicly available information
• Attending trade fairs and shows to obtain competitors’
brochures, view their exhibits, and listen to discussions about
their products
 Practices considered both unethical and illegal:
• Blackmail
• Trespassing
• Eavesdropping
• Stealing drawings, samples, or documents