Introduction to External
Analysis
• External analysis involves examining the factors outside a company that could
impact its performance. This includes technological advancements,
environmental considerations, and market trends. By conducting a thorough
external analysis, organizations can gain valuable insights to make informed
strategic decisions.
Key Components of External Analysis
1 Market Trends 2 Regulatory Environment
Identifying trends influencing the industry and Evaluating laws, regulations, and governmental
consumer behavior. policies affecting the industry.
3 Technological Advancements 4 Economic Factors
Assessing the impact of technology on Analyzing economic indicators, inflation rates,
production, distribution, and consumer and market stability.
preferences.
PESTEL Analysis
Political Factors Economic Factors
Consider government stability and policies Analyze economic trends, currency exchange
affecting the industry. rates, and consumer spending.
Social Factors Technological Factors
Examine cultural trends, demographics, and social Evaluate the impact of technology in the industry
attitudes. and on consumer behavior.
Environmental Factors Legal Factors
Assess environmental concerns and their influence Review regulations, laws, and compliance
on business operations. affecting the industry.
SWOT analysis
Strengths Weaknesses
Internal positive attributes Internal negative attributes
Opportunities Threats
External factors for growth External factors for risk
A SWOT analysis provides a comprehensive assessment of an organization's internal strengths and weaknesses, as
well as the external opportunities and threats it faces. This framework facilitates strategic decision-making and
helps in identifying areas for improvement and potential risks.
Porter's Five Forces analysis
Threat of new entrants
1 New competitors and barriers to entry
Supplier power
2
Control over input prices and quality
Buyer power
3
Ability to influence prices and demand
Threat of substitutes
4
Availability of alternative products or services
Industry rivalry
5
Competition intensity within the industry
Introduction to Industry
Analysis
An industry analysis involves a comprehensive review of key aspects such as
market trends, competitive landscape, and regulatory factors.
Importance of Industry Analysis
Strategic Decision Making Risk Mitigation
Industry analysis guides strategic decisions by It helps in identifying and mitigating potential
providing insights into market dynamics. risks through comprehensive assessment.
Market Positioning Revenue Forecasting
Understanding industry trends assists in effective Analyzing the industry aids in accurate revenue
positioning and competitive strategy. forecasting and resource allocation.
Key Components of Industry
Analysis
• Market Research: Conducting thorough research on market trends,
consumer behaviors, and industry dynamics.
• Competitor Analysis: Assessing the strengths, weaknesses,
opportunities, and threats posed by key industry competitors.
• Regulatory Assessment: Evaluating the impact of government
regulations, policies, and compliance requirements on the industry.
• Trend Analysis: Identifying and analyzing current and emerging trends
that could influence the industry's growth and direction.
Market size and growth
5B 7%
Market Size Market Growth
An estimated market size of $5 billion. Annual growth rate of 7% projected for the next 5
years.
Understanding the market size and growth is crucial for strategic planning and investment decisions. With a
significant estimated market size of $5 billion and a projected annual growth rate of 7% for the next 5 years, there
are opportunities for expansion and innovation within the industry.
Competitive Landscape
Main Competitors Product Differentiation Market Strategies
Identify the key players in the Examine the marketing and
industry and their market share. Highlight how competitors pricing strategies of competitors.
differentiate their offerings.
Understand their strengths,
weaknesses, and market Analyze their unique selling Explore their distribution
positioning. propositions and value channels and target customer
propositions. segments.
Industry trends and drivers
Upward Trend Innovation Globalization Technological
Advancement
Identifying industry Ongoing innovation Understanding global
trends is crucial for drives industry market dynamics is Rapid technological
anticipating future evolution and creates essential in today's progress shapes industry
growth. new opportunities. interconnected world. landscapes and disrupts
traditional norms.
Regulatory Environment
1 Legislation and Compliance
Understanding and adhering to industry-specific laws and regulations.
2 Government Oversight
Monitoring by regulatory bodies to ensure fair practices and consumer protection.
3 Impact on Business Operations
Navigating legal requirements and maintaining ethical standards.
SWOT Analysis
Strengths Weaknesses
Identify the internal attributes of the industry Examine the internal characteristics that place
that give it an advantage over others. the industry at a disadvantage.
Opportunities Threats
Explore external factors that the industry can Analyze the external elements that could
capitalize on for growth and success. potentially jeopardize the industry's
performance.
Key Success Factors
Quality Products
1 High standards and innovation
Effective Marketing
2
Targeted and impactful campaigns
Customer Satisfaction
3
Exceptional service and support
Introduction to
Competition Dynamics
Competition dynamics encompass the ever-changing interactions and strategies
within competitive environments. From market rivalry to sporting contests,
understanding the nuances of competition is essential in various disciplines.
Definition of Competition
Competition, in the business realm, refers to the rivalry between companies striving for the same customer or
market. It encompasses various strategies and tactics aimed at gaining a competitive edge in the marketplace.
Types of competition
• Direct competition: Occurs between businesses offering similar products or services in the same market.
• Indirect competition: Involves businesses that may not offer the same products but compete for the same
consumer budgets.
• Price competition: Focused on offering the lowest prices to gain a competitive edge.
Market competition
1 Understanding Competitors
Research and analyze competitors' products, pricing, and marketing strategies.
2 Identifying Target Market
Determine the specific customer segments that competitors are targeting.
3 Creating Points of Differentiation
Develop unique selling propositions to stand out in the competitive market.
Competitive Advantage
Quality Innovation Cost Leadership
A competitive advantage can be Being at the forefront of Cost-efficient operations can
gained by offering products or innovation can create a lead to a competitive advantage
services of superior quality competitive advantage by by offering products or services
compared to competitors. offering unique or advanced at lower prices.
solutions.
Quality can lead to customer It can position a business as the
loyalty and a positive brand Innovation can drive market go-to choice for budget-
image. differentiation and attract new conscious consumers.
customers.
Strategies for Competing
Product Differentiation Cost Leadership
Create unique features or benefits to set your Implement strategies to produce goods or
product apart from competitors. services at the lowest cost in the industry.
Focus Strategy Mergers & Acquisitions
Concentrate on a specific market segment and Expand market share and resources through
tailor products or services to their needs. strategic mergers and acquisitions.
Factors influencing competition dynamics
Innovation Globalization Consumer Regulatory
Behavior Environment
New ideas and Increased
technologies drive interconnectedness and Changing preferences Laws and policies
competitive advantage international markets and buying trends influence competition
and market shape competitive impact competitive dynamics within
differentiation. landscapes. strategies. industries.
Impact of competition on businesses
Market Expansion Innovation
Competition drives businesses to explore new Competitive pressure spurs innovation and the
markets and expand their reach. development of new products and services.
Customer Focus Efficiency Improvements
Businesses strive to offer superior value and Competition incentivizes businesses to streamline
customer experience to retain their market share. operations and improve efficiency.
Case studies of successful competition
Market Competition: Apple The "Cola Wars" Between Sneaker Battle: Nike vs
vs Samsung Coca-Cola and Pepsi Adidas
Two tech giants constantly A legendary competition between Rivalry in the athletic footwear
innovate and vie for market beverage giants shaping marketing industry driving product
supremacy with their iconic and consumer preferences for innovation and brand loyalty
smartphones. decades. worldwide.
Conclusion and Key
Takeaways
Competition dynamics shape business strategies.
Understanding competition aids in developing effective market approaches.
Adapt, innovate, and focus on unique value propositions.
Importance of Market Segmentation
Targeted Marketing Efficient Resource Allocation
Market segmentation allows businesses By understanding the unique needs of
to target specific customer groups with different segments, resources can be
tailored marketing strategies. allocated more efficiently.
Customer Satisfaction
Meeting the precise needs of different segments enhances customer satisfaction and loyalty.
Types of market segmentation
• Demographic segmentation: Dividing the market based on variables like age, gender, income, and
education.
• Psychographic segmentation: Segmenting based on lifestyle, values, beliefs, and personality traits.
• Behavioral segmentation: Grouping based on purchasing behavior, usage rate, loyalty, and benefits
sought.
Demographic Segmentation
Age Gender Income
Segmenting based on various Understanding the differences Income segmentation helps in
age groups allows targeted in purchase behavior between tailoring products and services
marketing strategies. genders is crucial. to different economic groups.
Psychographic Segmentation
Lifestyle Analysis Personality Traits Value-Based
Segmentation
Understanding consumer Identifying personality traits
values, interests, and activities aids in tailoring marketing Segmenting based on beliefs
is crucial for targeting specific strategies to resonate with and values allows for tailored
lifestyle groups. different consumer messaging that aligns with
personalities. consumer principles.
Purchase Behavior Brand Loyalty Customer Engagement
Understanding how customers Measuring customers' devotion Assessing the level of
buy and make decisions. to particular brands. interaction and involvement
with the brand.
Geographic Segmentation
Global Reach Urban vs. Rural Community Connections
Understanding different Recognizing the unique needs Identifying localized trends and
international markets to tailor and preferences of urban and consumer behaviors within
marketing strategies. rural areas. specific communities.
Market Segmentation: Identifying and
Targeting Specific Customer Groups
1 Researching Customer Needs
Understand the unique needs and preferences of different customer segments through
thorough market research.
2 Segment Profiling
Create detailed profiles for each segment, including demographics, behaviors, and
psychographics to effectively target them.
3 Tailoring Marketing Strategies
Develop customized marketing strategies for each identified segment to resonate with their
specific needs and preferences.
Customer analysis
Understanding your customers is crucial for
business success. It involves analyzing their
behaviors, preferences, and needs.
Understanding Customer Needs and
Preferences
Identifying Key Needs Preference for Anticipating Future
Personalization Needs
Understanding the primary
requirements of the target Customers appreciate Anticipating and fulfilling
audience is essential for personalized experiences and future customer needs can lead
delivering products or services are more likely to engage with to long-term loyalty and
that resonate with them. brands that cater to their sustainable business growth.
individual preferences.
Analyzing Customer Behavior and
Trends
1 Data Collection
Gather information on customer interaction with products and services.
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2 Pattern Recognition
Identify recurring behaviors and trends among customer segments.
3 Forecasting
Predict future customer preferences based on current trends and behaviors.
Importance of Technological and
Environmental Scanning
Staying Ahead Risk Management Innovation
Technological and It aids in identifying Scanning allows for the
environmental scanning potential risks and identification of
helps businesses stay opportunities arising from innovative solutions that
ahead of industry shifts technological can lead to competitive
and emerging trends. advancements and advantages and market
environmental changes. differentiation.
Definition of Technological
Scanning
Technological scanning involves the systematic gathering, analyzing, and
monitoring of information about technological developments. It aims to identify
emerging technologies, assess their potential impact, and anticipate future trends
in the industry. This process helps organizations to adapt and innovate in
response to technological changes.
Technological Analysis: Impact and
Innovation
The swift advancement of technology has deeply
impacted the industry, revolutionizing operations
and opening doors for innovation.
• Automation and AI are streamlining
processes and boosting efficiency
• Data analytics is offering invaluable
insights for strategic decision-making
• IoT and connectivity are transforming
customer engagement and experience
Methods and tools for technological
scanning
SWOT analysis PEST analysis Market research Trend analysis
A strategic tool for Examines political, Surveys, interviews, Identifying patterns
identifying strengths, economic, social, and and data analysis to and changes in
weaknesses, technological factors understand market technology and
opportunities, and affecting businesses. trends and consumer consumer preferences
threats. behavior. over time.
Examples of Technological Trends and
Their Impact on Industries
Artificial intelligence and automation are
revolutionizing manufacturing and logistics,
streamlining processes and increasing efficiency.
The rise of 3D printing is transforming the
production of parts and components, leading to
cost savings and customized products.
Blockchain technology is reshaping the financial
industry, offering secure and transparent
transaction systems.
Definition of Environmental
Scanning
Environmental scanning is the process of gathering, analyzing, and interpreting
information about external forces and factors that can impact an organization.
This includes monitoring political, economic, social, technological, and legal
developments to identify potential opportunities and threats.
Environmental Analysis
Political Impact Economic Factors Social and Legal
Aspects
The influence of political Assessing the impact of Considering societal trends
decisions on industry economic conditions on and legal frameworks
regulations and policies. market stability and growth. affecting the industry.
Methods and tools for environmental
scanning
Observation Mapping Tools Radar Systems
Using observation to spot Utilizing mapping tools to Implementing radar systems to
emerging environmental visualize geographical and monitor environmental
patterns and changes. spatial data. disruptions and shifts.
Examples of Environmental Factors and
Their Impact on Industries
Environmental factors such as climate change,
natural disasters, and resource scarcity have a
profound impact on industries.
For example, companies in the agriculture and
food production sectors are affected by shifting
weather patterns and water availability.
Similarly, the transportation and energy industries
are impacted by policies related to carbon
emissions and renewable energy sources.
Benefits of integrating technological and
environmental scanning
Strategic Decision- Risk Mitigation Competitive Advantage
Making
Identifying technological and Integrating scanning processes
Integrating technological and environmental shifts early provides opportunities to stay
environmental scanning helps in mitigating risks and ahead of competitors by
allows for informed and preparing for potential market leveraging emerging
strategic decision-making disruptions or regulatory technologies and adapting to
based on a holistic view of changes. environmental changes.
industry trends and external
factors.
Conclusion and Key
Takeaways
After conducting external analysis through technological and environmental
scanning, it is evident that staying informed about industry trends and external
factors is vital for strategic decision-making. By integrating technological and
environmental scanning, businesses can anticipate changes and make proactive
adjustments to ensure long-term success.
