Professional Documents
Culture Documents
IBUS 5002
Strategy,
Innovation
&
QUESTIONS
Entrepreneurship
Week 4 -
Frameworks to understand the internal &
external factors impacting business
Dr Richard Seymour
1
outline
environment
2.
industry
3.
consumers
your Mission
- Fundamental
purpose
- Values & vision
your Objectives
- Specific
- Measurable
- Achievable
the External
Environment
Industry
Consumers
(SW)OT etc.
your Strategy
(holding this all
together!)
the internal
Resources
Capabilities
People
Leadership
SW(OT) etc.
nature of competition is
changing
and increasing
technological changes
traditional industry
boundaries are blurring:
technological diffusion
computers &
telecommunications
information &
communication
technologies
importance of
knowledge
pace of change is
relentless
global economy is
changing
traditional sources of
competitive advantage no
longer guarantee success
flexibility
innovation
speed
integration
a) environment
standard framework
- PESTLN
focus on the long term (usually) - look as far back as
you do forward
as examples
Economic
Interest rates
Inflation
Cost of key inputs
Disposable income
Unemployment
Technological
Communication
Information
Physical
transport (?)
Political
stability
rent-seeking
activism
Legal
Consumer laws
Competition laws
Natural environment
Resources
Weather
Seasonality
industry
Demographic structure
Population growth
Age distribution
Ethnic mix
Gender mix
Social structure
Consumer preferences
Cultural shifts
Value changes
b) industry
standard frameworks include
Threat of
substitutes
INDUSTRY
COMPETITORS
POTENTIAL
ENTRANTS
Rivalry
among
existing firms
SUBSTITUTES
Threat of new
entrants
Bargaining
power of buyers
BUYERS
criticisms of 5-forces?
Structure-Conduct-Performance
Framework (not so useful)
External
shocks
Industry
S Changes in
structure
Firms strategy
in
Changes in
C Changes
P
conduct
performance
Technology
breakthroughs
Demand
economics
Finance
Capacity changes
Profitability
Changes in
government policy
Supply
economics
Vertical
integration
EVA
Changes in tastes
or lifestyles
Industry value
chain
Operational
efficiency
Technological
progress
Employment
Structure-Conduct-Performance
Framework (yawn)
External
shocks
Industry
S Changes in
structure
Firms strategy
in
Changes in
C Changes
P
conduct
performance
Technology
breakthroughs
Demand
economics
Finance
Capacity changes
Profitability
Changes in
government policy
Supply
economics
Vertical
integration
EVA
Changes in tastes
or lifestyles
Industry value
chain
Operational
efficiency
Technological
progress
Employment
substitutors
you
suppliers
Source: Brandenburger & Nalebuff (1995)
complementors
Source:
Porter, 1985,
Competitive
advantage
your Mission
- Fundamental
purpose
- Values & vision
your Objectives
- Specific
- Measurable
- Achievable
the External
Environment
Industry
Consumers
(SW)OT etc.
your Strategy
(holding this all
together!)
the Internal
Resources
Capabilities
People
Leadership
SW(OT) etc.
Source:
Porter, 1985,
Competitive
advantage
rare
costly to
imitate
nonsubstitutable
competencies
portfolios of competencies
The diversified corporation is a large tree:
- The leaves, flowers, fruit are end products
- Smaller branches are business units
- Trunk & major limbs are core products
- Root system that provides nourishment and
stability is the core competence