BBUS 444:STRATEGIC MANAGEMENT

PRESENTED TO:
SIR SHAKEEL BAIG
PRESENTED BY:
SANA BUKHARI
ABDUL WAHID
M.ADEEL
MUZAMMIL EJAZ

CONTANT
Michael Porter Five Factors

PEST Analysis

CPM Matrix

PORTERS FIVE FORCES
Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Making new product introductions
Increasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
Threat of New Entrants
Barriers to
Entry
Government Policy
Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent
of Scale
Bargaining Power of Suppliers
Suppliers exert power
in the industry by:
* Threatening to raise
prices or to reduce quality
Powerful suppliers
can squeeze industry
profitability if firms
are unable to recover
cost increases
Suppliers are likely to be powerful if:
Supplier industry is dominated by a
few firms
Suppliers products have few substitutes
Buyer is not an important customer to
supplier
Suppliers product is an important
input to buyers product
Suppliers products are differentiated
Suppliers products have high
switching costs
Supplier poses credible threat of
forward integration
Bargaining Power of Buyers
Buyers compete
with the supplying
industry by:
* Bargaining down prices
* Forcing higher quality
* Playing firms off of
each other
Buyer groups are likely to be powerful if:
Buyers are concentrated or purchases
are large relative to sellers sales
Purchase accounts for a significant
fraction of suppliers sales
Products are undifferentiated
Buyers face few switching costs
Buyers industry earns low profits
Buyer presents a credible threat of
backward integration
Product unimportant to quality
Buyer has full information
Threat of Substitute Products
Products
with similar
function
limit the
prices firms
can charge
Keys to evaluate substitute products:
Products with improving
price/performance tradeoffs
relative to present industry
products
Example:
Electronic security systems in
place of security guards
Fax machines in place of
overnight mail delivery
PORTERS 5 FORCES AND PROFIT
Force Profitability will
be higher if:
Profitability will
be lower if:
Bargaining power
of suppliers
Weak suppliers Strong suppliers
Bargaining power
of buyers
Weak buyers Strong buyers
Threat of new
entrants
High entry barriers Low entry barriers
Threat of
substitutes
Few possible
substitutes
Many possible
substitutes
Competitive rivalry Little rivalry Intense rivalry
PEST ANALYSIS
EXTERNAL ENVIRONMENT
PEST Analysis

This form of business analysis examines the external
environment and the global factors that may affect a
business. It can provide a quick and visual representation of
the external pressures facing a business, and their possible constraints on
strategy.

It is usually divided into four external influences
on a business
P Political
E Economic
S Social
T Technological



POLITICAL FACTOR
This is concerned with how political developments, regionally,
nationally and internationally might affect a businesss strategy.

Employee protection-
health/safety, redundancy pay, discrimination, minimum wage
Consumer protection-
truth in advertising, high-pressure sales tactics, sales
agreements
Competition protection-
unfair trade practices, monopoly, mergers & takeovers
ECONOMICAL FACTOR
This involves the analysis of a wide variety of economic factors
and their effects on a business. They include:
Economic growth and rising living standards
Low/high levels of inflation
Low/high levels of unemployment
Balance of payments
(value of imports vs. exports)
SOCIAL FACTOR

What competitive advantage might a business gain by social
changes taking place outside of the business?
Aging population, reduced birth rates, longer life expectancy
Changing role of women in the workplace
Improved Education better skilled workers
Early retirement, more leisure time
Rising divorce rates, more single households
Job security
Immigration creating a wider range of consumer tastes



TECHNOLOGICAL FACTOR

The impact of technological advancement on business
strategy.

Business Software applications (word processing,
spreadsheets, database, accounting systems, inventory
systems)

Computer-aided design

Computer-aided manufacturing

Internet/Intranet


PESTEL
ENVIRONMENTAL FACTOR


competition
economy
demographics
government interference
consumer behavior
political issues
location
LEGAL FACTOR
Equal pay act (1970)
Sex discrimination act (1975)
Sales of goods act (1979)
Health and safety at work act (1974)
PESTELI
INDUSTORY FACTOR

Competitor
Technology
Utilization of resources
Cost
Value
LONG PEST
LOCAL FACTOR
NATIONAL FACTOR
GLOBAL FACTOR
CPM (COMPETITOR
PROFILE MATRIX):

CPM (competitor profile matrix):
In order to better
understand the external environment and the
competition in a particular industry, firms often use
CPM. The matrix identifies the firms key competitors
and compares them using industrys critical success
factors. The analysis also reveals companys relative
strengths and weaknesses against its competitors.
IMPORTANCE:
In most industries, competitors tend to have
distinct strengths and weaknesses. While one particular player
might have the lowest manufacturing costs, another could have
the most recognized brand name. Yet another competitor could
have the tastiest or most durable product, As a result, you can
rank companies in terms of the "total package" they bring to the
table. This allows a manager or business owner to identify the
strongest competitors as well as the areas where she most
needs to improve.
The weights must be between 0 and 1 and the
sum of the weights for all attributes must add up to 1.
Naturally, the more critical an attribute, the higher its
weight must be. In case of supermarkets, the weights
might be 0.3, 0.3, 0.25 and 0.15 for location, product
selection, price and customer service, respectively.
Weightage:
Critical success factors
(CSF) are the key areas, which must be performed at
the highest possible level of excellence if organizations
want succeed in the particular industry. They vary
between different industries or even strategic groups
and include both internal and external factors.
Critical success factors (CSF):
We can define RATING as number of
higher success factor as much any organization get strong
in any factor weather it is internal or external as much it get
rating.
Scoring :
weightage Rating Scoring
Rating and Score:
Example of C.P.M