4.BUSINESS ENVIRONMENT
•The awareness of how environment in which company takes place is changing can be considered as the
factors of success of each company.
•At its simplest business environment can be divided into competitive environment and macro-
environment.
•Macro – environment – wider environment, social, political and economic setting in which
organisations operate.
•

•Macro – environment – wider environment, social, political and economic setting in which
organisations operate.
•Competitive environment – including company, its immediate competitors and customers ( Porter 5
forces)
Source: Oxford college of marketing)

Macro-economic environment – methods of analysis
•Politics
•governement type and policy, funding grants
•Economy
•Inflation and interest ates
•Labour and energy costs
•Social
•Population, education, media
•Lifestyle, fashion, culture
•Technology
•Emerging technologies, web
•Information and communication
•Legal
•Regulations and standards
•Employment law
•Environment
•Weather, green and ethical issues
•Pollution, waste, recycling
•
•
PESTLE analysis

Competitive environment
•
•Porter´s five forces
•Strategic group mapping
•(zdroj: Oxford Professional Education Group)

Porter´s 5 forces - Rivalry among existing companies
–this rivalry is likely to be most intense where a number of conditions prevail:
•Where the competitors in the industry are roudghly evenly balanced in terms of size and/ or market
share.
•During periods of low market growth
•Where exit barriers are high.
•Where product differentiation is low
•Where fixed costs are relatively high.
•

Porter´s 5 forces – The threat of market entry
•Organistaion should also consider the potential for new entrants to emerge. Entry barriers can be
low where the following hold:
–Cost of entry are low
–Existing or new distribution channels are open to use
–Little competitive retaliation is anticipated.
–Differentiation is low
–There are gaps in the market.
–

Porter´s 5 forces – The threat of substitutes
•Substitution can increase competitivness of an industry for a number of reasons.
–By making existing technologies redundant
–By incremental product improvement

Porter´s 5 forces  - Bargaining power of suppliers
•Suppliers tend to have more bargaining power where the following hold:
–Suppliers are more concentrated than buyers
–Cost of switching suppliers are high
–Suppliers´offerings are highly differentiated.

Porter´s 5 forces  - Bargaining power of buyers
•Buyers tend to be more powerful in the supply chain where the following is true:
–They are more concentrated than sellers
–There are readily available alternative sources of supply
–Buyers switching costs are low.

Porter´s 5 forces - Competitivness drivers
•Where the following industry characteristics are present, expect greater levels of competition:
•There is little differentiation between offers
•Industry growth rates are low
•High fixed costs need to be recoverd
•High supplier switching costs
•Low entry barriers
•High exit barriers

Map of strategic groups
•Strategic group is composed of firms within a industry following similar strategies aimed at
similar customers or customers groups.

•Variables for the composition of the map of strategic groups:
•Sales
•Size of the company
•Product range
•Pricing
•Distribution
•Targeting and segmentation
•Etc.
•The identification of strategic groups is fundamental to industry analysis
•Understanding the dynamics of existing strategic groups can be productive to understand their
vulnerabity to competitive attack.

Mapa strategických konkurenčních skupin
•
•Product range(number of products)
•Price
•Dumping
•Medium
•High
•1000
•3000
•5000
A
B
C
D
E
F

Customer analysis
•What we need to know about customer ( market research):
•Current information:
–Who are the prome market targets?
–What gives them value?
–How can they be brough closer?
–How can they be better served?
•Future information:
–How will customers and their need and requirement change?
–Which new customers should we pursue?
–How should we pursue them?

Current customers
•The roles of current customers may differ as follows:
•The initiator
•The influencer
•The decider
•The purchaser
•The user




Future customers
•Types of change essential to customer analysis: •1) Changes in existing customers: their wants,
needs and expectations. •2) Changes come from new customers emerging as potentialy more attractive
targets. ( change in living standars etc.)

Competitor analysis
•„If you know your enemy as you know yourself, you need not fear the result of a hundred battles“
(Sun Tzu, 4th century BC)
•Competitive benchmarking – the process of measuring company´s strategies and operations against „
best-i-class“ companies, both inside and outside your own industry.
•4 steps of benchmarking:
–Identifying who to benchmark against
–Identifying what aspects of business to benchmark
–Collecting relevant data to enable processes and operations to be compared
–Comparison with own processes

Relation between external and internal environment.
•Source: Key Drivers for Quick SWOT Analysis, http://2012books.lardbucket.org
Výsledek obrázku pro external analysis

Life cycle of product / industry
•
•Demand
•Time
•Introduction
•Growth
•Maturity
•Decline