I N T E R N A L   a n d EXTERNAL ANALYSIS

THE  BUSINESS  AND  ITS   MARKETING  ENVIRONMENT

S E S S I O N   F O U R

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Mostafa Purmehdi

SWOT

STRATEGIC ANALYSIS

O B J E C T I V E S

SWOT

I N T E R N A L    A N A L Y S I S    O F

STRENGTHS    AND    WEAKNESSES

S T R A T E G I C   A N A L Y S I S   O F

OPPORTUNITIES    AND    THREATS

Boat

No, yes

SWOT ANALYSIS MODEL

Internal Analysis

O B J E C T I V E S

Internal Analysis

V   A   L   U  E

C   H   A   I   N

A N A L Y S I S

B   E   N   C  H

M    A     R     K

K      I      N    G

The steps an organization follows to develop, produce and deliver its products, goods or services

Each step represents an opportunity to gain a Competitive advantage

An ongoing process of research, comparative analysis, adaptation and implementation of best practices to improve the performance of various business processes and functions

VALUE

PRIMARY ACTIVITIES

SUPPORT ACTIVITIES

CHAIN

ANALY

-SIS

• Supply chain logistics: reception of raw materials and inventory management
   
• Manufacturing: processing of raw materials into finished products or services
   
• Marketing logistics: order intake, preparation and shipping, and inventory management
   

• Marketing communication and sales: the most skilled companies in marketing and sales usually have considerable competitive advantages
   

• Peripheral services: installation, repairs and technical support

internal analysis > value chain analysis > PRIMARY ACTIVITIES

Core competency: Supply chain logistics

Core competency:

Peripheral services

internal analysis > value chain analysis > PRIMARY ACTIVITIES

• Company infrastructure: services required for the organization to function, such as administration, financial management, strategic planning, and quality control
   

• Human resource management: capability to attract and retain talent
   

• Research and development (R&D): company’s ability to innovate quickly implement product development
   

• Purchasing: decrease procurement costs, from raw materials to other products and services

internal analysis > value chain analysis > SUPPORT ACTIVITIES

Core competency: Research and development

What products came out of R&D?

BENCHMARKING

Samsung

B  E  N  C  H  M  A  R  K  I  N  G

Apple

B  E  N  C  H  M  A  R  K  I  N  G

developed "benchmarking"

in the 1980s

B  E  N  C  H  M  A  R  K  I  N  G

IS MARKETING A
 CORE COMPETENCY

?

Core Competencies to Make Marketing a Strength

• Product development capability

• Customer satisfaction capability

   – Basic factors

   – “Wow” factors

   – Performance factors

• Brand

• Distribution networks

• Strategic partnerships

• Information

External Analysis

O B J E C T I V E S

Micro Analysis

Macro Analysis

MICRO vs. MACRO

* for a complete list of items please refer to your textbook.

External analysis
Examination of different dimensions of the business environment and their management consequences
Micro-environment vs Macro-environment

MICRO

d  i  r  e  c  t

MACRO

i  n  d  i  r  e  c  t

E F F E C T   O N   B U S I N E S S

M i CRO
ENVIRO
N MENT

PORTER'S FIVE FORCES

M I C R O   E N V I R O N M E N T

MR. PORTER

B A T N A

BEST ALTERNATIVE TO A NEGOTIATED AGREEMENT

[ READ: WORST THAT CAN HAPPEN IF NEGOTIATIONS FAIL ]

B a r g a i n i n g   P o w e r   o f   C u s t o m e r s

PATENTS

B a r r i e r s   f o r   N e w   E n t r a n t s

POWERFUL BRAND

DISTRIBUTION

LOYALTY

ECONOMY OF SCALE

VARIETY

PRICE ADVANTAGE

T h r e a t   o f   S u b s t i t u t e   P r o d u c t s

NO TRANSFER COSTS

NO DIFFERENTIATION

Substitute Products

Complementary Products

MACRO
ENVIRO
N MENT

M A C R O   E N V I R O N M E N T

ECONOMYGOVERNMENTDEMOGRAPHYSOCIOCULTURALASPECTS

ECONOMY

• Economic performance (indicator: GDP)
• Consumers’ purchasing power (indicator: GDP/capita)
• Economic distribution (indicator: Gini index)
• Important factors:
  • Technological development
  • Education
  • Regulation
  • Globalization

GDP

Quebec vs. Canada

G D P   P E R   C A P I T A

$81000

Alberta

$63000

Saskatchewan

$62000

NFL & LBD

$39000

Quebec

Gini index

0

1

perfect distribution of wealth or income

one person holds 100% of the wealth

I N C O M E   I N E Q U A L I T Y

M A C R O   E N V I R O N M E N T

ECONOMYGOVERNMENTDEMOGRAPHYSOCIOCULTURALASPECTS

GOVERNMENT

• Type of government > Stability
   
• Power of legislation > Attractiveness

M A C R O   E N V I R O N M E N T

ECONOMYGOVERNMENTDEMOGRAPHYSOCIOCULTURALASPECTS

DEMOGRAPHY

• Population size and distribution
• Age distribution
• Level of education and income
• Ethnic origin
• Religious faith

A G E   D I S T R I B U T I O N   I N   C A N A D A

M A C R O   E N V I R O N M E N T

ECONOMYGOVERNMENTDEMOGRAPHYSOCIOCULTURALASPECTS

SOCIOCULTURAL

• Culture
• Generational cohorts
  • Baby boomers
  • Generation X
  • Millennial generation

SILENT GENERATION, BABY BOOMERS, GENERATION X, MILLENNIALS

BABY BOOMERS VS. MILLENNIALS

Baby boomers

(born 1946 – 1964) 

Live to work, Picky on products and services that precisely meet their need.

Generation X

(born 1965– 1980)

First to have both parents in the workforce, Work to live, Own ways of doing things, Clearly defined goals and values

Millennial generation

(born 1981– 2000)

Generation D (Digital), C (Connected), Access to information, Curious and confident, focusing on breath but neglect the depth.

HOW TO CONNECT WITH GENERATIONS

T H E   B U S I N E S S

ECOSYSTEM

a network of interdependent elements

[  C   O   O   P   E   T   I   T   O   R   S  ]

Information System

O B J E C T I V E S

M A R K E T I N G   I N F O R M A T I O N  S Y S T E M

Internal Data

• Accounting system
   
• CRM or Customer Relationship Management
  • Data related to contacts
  • Details of sales activities
  • Problems raised and the progress of the sales process

External Data

Secondary

Primary

Gathered by other organizations:

• Market studies
• Reports by industrial associations and companies

Qualitative research

Exploratory research

Ethnography

Netnography

Quantitative research

Confirmatory research

Survey or other methods

study of people and cultures

study of free behaviour of individuals on the Internet

ETHNOGRAPHY

NETHNOGRAPHY

SWOT Examples

O B J E C T I V E S

P O W E R E D   B Y

Sedibeng Breweries

a medium-scale brewery in Botswana. Sedibeng’s primary market advantages are their company culture, consistent “quality” branding, traditional brew recipes, and commitment to rural distribution.

Sedibeng Breweries

Potential Strategies for Growth

Two important things to focus on in the “Weaknesses” column:

• building an informational website, and
• developing an efficient employee training program.

Ignoring these weaknesses for too long could have disastrous consequences.

A potential opportunity is a government-subsidized export operation, ideally to target markets in neighboring countries

Haley’s Vintage Hats

an online-only business that sells affordable replicas of vintage designer hats. Owner Haley Truit operates Haley’s Vintage Hats through an Etsy storefront and hopes that it will become successful enough that she can quit her other job and run her dream company full-time.

Haley’s Vintage Hats

Potential Strategies for Growth

• Take full advantage of the opportunities as an Etsy seller.
• Partnering with other vintage fashion vendors on Etsy could help  her lack of a marketing background (a major company weakness).
• with Haley’s expertise as a milliner, developing an apprenticeship program could help the company cheaply expand its production capacity and support the increase in sales that would come with its expanded marketing efforts.

UPer Crust Pies

a specialty meat and fruit pie cafe in Michigan’s Upper Peninsula that sells hot, ready-to-go pies, frozen take-home options, fresh salads, and beverages.

The company is planning to open its first location in downtown Yubetchatown, and is very focused on developing a business model that will make it easy to expand quickly and that opens up the possibility of franchising.

UPer Crust Pies

Potential Strategies for Growth

• investigate its options for obtaining capital. Funding a new business can take time, and the sooner UPer Crust Pies gets started on this process, the better.
• Because they are targeting working families, a key piece of that marketing plan will be the store’s grand opening, and the promotional strategies necessary to get UPer Crust Pies’ target market in the door.