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Lecture 4

MGCR 423 Lecture Notes - Lecture 4: Swot Analysis, Switching Barriers, Pest Analysis

Management Core
Course Code
MGCR 423

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Analysis: Enabling the Right Decision
Analysis supports the decision making process, it should no hinder the decision making but
make it stronger
Key objectives of the analysis
o Ensure key facts are being brought forward
o Ensure the right issues and opportunities are being addressed
o Create a level knowledge playing field for strategic planning participants
o Select the correct strategies to achieve the vision
o Create buy in
External Environmental Analysis (insert graph)
General environment:
o Focused on elements in the broader society than can indirectly influence an industry an
the firms within the industry
o Influenced by demographic, economic, political/legal, sociocultural, technological,
global and sustainable physical.
o Firms cannot directly control these environmental elements, but can analyze and predict
Industry environment:
o Focused on factors and conditions influencing a firm’s profitability within an industry
such as threat of new entrants, power of suppliers, power of buyers, the threat of
substitutes and intensity of rivalry among competing firms
Competitor environment:
o Focused on predicting the dynamics of competitor’s actions, responses and intentions
o How companies gather and interpret information about competitors is called competitor
o Combination of the two prior analyses
Market and Customers (4th) not in text
Four Components of the External Environmental Analysis
1. Scanning- identifying early signs of environmental changes and trends
o Often reveals ambiguous, incomplete data that requires careful analysis
o Internet provides a lot of opportunity for scanning
2. Monitoring detecting meaning through ongoing observations of environmental changes and
o Requires a firm to identify important stakeholders and understand its reputation with these
o Scanning and monitoring are very important when a firm competes in an environment with
high technological uncertainty
3. Forecasting- developing projections of anticipated outcomes based on monitored changes and
4. Assessing- determining the timing and importance of environmental changes and trends for
firm’s strategies and their management
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o The previous 3 allow you to understand the general environment. Intent of assessing is
to find the implications of your understanding
SWOT Analysis: Good For a First Pass
Valuable for starting discussions it is not enough to make real strategic decisions
External components:
o Opportunity: a condition in the general environment that, if exploited effectively, helps a
firm achieve strategic competitiveness
o Threat: a condition in the general environment that may hinder a firm’s efforts to
achieve strategic competitiveness
Areas you want to look at when performing a SWOT
General Environment: 7 Dimensions
Seven dimensions in the broader society that influence an industry and the firms within it:
o Demographic
o Economic
o Political/legal (sometimes divided into separate categories)
o Sociocultural
o Technological
o Global
o Physical (also sometimes called environmental)
Important to look at both trends in the general environmental and what is driving those trends
PESTEL, similar but different
The General Environment: Segments and Elements
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