Shore up your weaknesses. Capitalize on your opportunities. Recognize your threats. Size and Growth: What are important and potentially important markets? What are their size and growth characteristics? What markets are declining?
What are the driving forces behind sales trends? Profitability: For each major market consider the following: Is this a business in which the average firm will make money? How intense is the competition among existing firms? Evaluate the threats from potential entrants and substitute products. What is the bargaining power of suppliers and customers?
Cost Structure: What are the major cost and value-added components for various types of competitors? Distribution Systems: What are the alternative channels of distribution? How are they changing? Key Success Factors: What are the key success factors, assets and competencies needed to compete successfully?
How will these change in the future? Environmental Analysis: An environmental analysis is the fourth dimension of the External Analysis. The interest is in environmental trends and events that have the potential to affect strategy. This analysis should identify such trends and events and estimate their likelihood and impact. When conducting this type of analysis, it is easy to get bogged down in an extensive, broad survey of trends. It is necessary to restrict the analysis to those areas relevant enough to have significant impact on strategy.
This analysis is divided into five areas: economic, technological, political-legal, sociocultural, and future.
Economic: What economic trends might have an impact on business activity? Interest rates, inflation, unemployment levels, energy availability, disposable income, etc. Technological: To what extent are existing technologies maturing? What technological developments or trends are affecting or could affect our industry? Government: What changes in regulation are possible? What will their impact be on our industry?
What tax or other incentives are being developed that might affect strategy development? Are there political or governmental stability risks? Sociocultural: What are the current or emerging trends in lifestyle, fashions, and other components of culture? What are their implications? Look at the overall size of the industry to get a feel for how many companies offer similar products and services, then research the projected industry growth.
Understand the environmental implications on a particular market. For example climate change might have an effect on your product or on the supply chain for your product in a number of ways.
Being prepared for the future of your market can put you a step ahead of your competitors. Identify barriers to entry that may cause potential competitors to think twice about starting a business similar to your own.
Review the distribution system, such as how you obtain products from the manufacturer or from a reseller, to identify strengths and weaknesses in the process that could affect your business if market conditions change. Social trends , including acceptance of technology, use of leisure time, fashions and changing beliefs. NB: The factors above are not in order of importance, the checklist merely provides an easy to remember acronym. Afterwards you should sift through them to identify the important few factors from the trivial many.
Since the external environment in which the enterprise operates is constantly changing, the External Analysis needs to be repeated frequently and ideally constantly. In this way, the enterprise will be able to identify opportunities and threats more quickly. Lecture 1: What Is Cultural Journalism?
An Introduction to Cultural Journalism. Breadcrumb Home Guides Sales and marketing Market strategy and planning External and internal analysis for your marketing plan. How to write a marketing plan External and internal analysis for your marketing plan. PESTLE external analysis A PESTLE analysis helps you to identify the main external opportunities and threats in your market: Political changes such as trade agreements between countries Economic factors such as interest rates, exchange rates and consumer confidence Social factors such as changing attitudes and lifestyles, and the ageing population Technological factors such as new materials and growing use of the internet Environmental factors such as environmental law and impact on the environment Legal factors such as new and existing legislation SWOT internal analysis You also need to understand your own internal strengths and weaknesses.
For example, a new business may note the following: Strength: enthusiastic employees or a unique product Weakness: no existing customer base and limited finances Opportunity: potential customers with problem the product solves, interested investors Threat: competition from established businesses with a bigger budget You need to look for opportunities that play to your strengths.
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