Environmental analysis

The Boston Consulting Group’s

Growth-Share Matrix
Market Growth Rate

20%- Stars Question marks

?2
18%- 4
16%-
14%-
3 ? 1
12%- 5
10%-
8%- Cash cow Dogs
6%- 8
4%-
2%- 6 7
0
10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x
Relative Market Share
The Marketing Environment and
Competitor Analysis
•SWOT analysis
•PEST analysis
•Five forces analysis
 SWOT analysis

• Strengths (internal)
• Weaknesses (internal)
• Opportunities (external)
• Threats (external)
 Strengths
• Your specialist marketing expertise.
• A new, innovative product or service.
• Location of your business.
• Quality processes and procedures.
• Any other aspect of your business that
adds value to your product or service
• A weakness could be:
• Lack of marketing expertise.
• Undifferentiated products or services (i.e.
in relation to your competitors).
• Location of your business.
• Poor quality goods or services.
• Damaged reputation
An opportunity could be:
• A developing market such as the Internet.
• Mergers, joint ventures or strategic
alliances.
• Moving into new market segments that
offer improved profits.
• A new international market.
• A market vacated by an ineffective
competitor.
A threat could be:
• A new competitor in your home market.
• Price wars with competitors.
• A competitor has a new, innovative
product or service.
• Competitors have superior access to
channels of distribution.
• Taxation is introduced on your product or
service.
Simple rules for successful SWOT analysis.
• Be realistic about the strengths and weaknesses of your
organization when conducting SWOT analysis.
• SWOT analysis should distinguish between where your
organization is today, and where it could be in the future.
• SWOT should always be specific. Avoid grey areas.
• Always apply SWOT in relation to your competition i.e.
better than or worse than your competition.
• Keep your SWOT short and simple. Avoid complexity
and over analysis
• SWOT is subjective.
 Wal-Mart SWOT Analysis.

• Strengths - Wal-Mart is a powerful retail brand. It has a

reputation for value for money, convenience and a wide
range of products all in one store.
• Weaknesses - Wal-Mart is the World's largest grocery
retailer and control of its empire, despite its IT
advantages, could leave it weak in some areas due to
the huge span of control.
• Opportunities - To take over, merge with, or form
strategic alliances with other global retailers, focusing on
specific markets such as Europe or the Greater China
Region.
• Threats - Being number one means that you are the
target of competition, locally and globally.
 Starbucks SWOT Analysis
Strengths - Starbucks Corporation is a very
profitable organisation, earning in excess of
$600 million in 2004
Weaknesses - Starbucks has a reputation for new
product development and creativity.
Opportunities - New products and services that
can be retailed in their cafes, such as Fair Trade
products.
Threats - Starbucks are exposed to rises in the
cost of coffee and dairy products.
 SWOT Analysis
STRENGTHS WEAKNESS
India’s geographical location Not adequate infrastructure
Diversity in culture No proper marketing
Historical monuments

TOURISM

THREATS
OPPORTUNITY
Economic conditions and
Allowing entry of multinational
company political turmoil

Proactive role from the govt Aggressive strategies adopted

by other countries
Growth of domestic tourism
 STRENGTHS WEAKNESS
Limited Target Audience.
Large Number of outlets.
Follow the competitor strategy.
In house sourcing of coffee beans.
Quality of food- Stale breads.
Tie Ups with good companies
Loud and Hard Music.

Improper sitting arrangement.

OPPORTUNITIES THREATS
Entry of Foreign players like
Large Untapped Market
Georgia & Starbucks.
Tie-ups with other companies for
Large unorganized market.
promotion
 Nike SWOT Analysis.
Strengths - Nike is a very competitive organisation.
Phil Knight (Founder and CEO) is often quoted
as saying that 'Business is war without bullets.
'Weaknesses - The organisation does have a
diversified range of sports products.
Opportunities - Product development offers Nike
many opportunities.
Threats - Nike is exposed to the international
nature of trade.
 PEST analysis

• Political factors
• Economic factors
• Socio-cultural factors
• Technological factors
 Political/legal
• Monopolies legislation
• Environmental protection laws
• Taxation policy
• Employment laws
• Government policy
 Economic Factors

• Interest rates
• Currency exchange rates
• Inflation
• Employment
• Disposable income
 Sociocultural factors
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
 Technological
• New discoveries and innovations
• Speed of technology transfer
• Rates of obsolescence
• Internet
• Information technology
 Five forces analysis
Potential
entrants

Threat of
entrants

Suppliers COMPETITIVE Buyers

RIVALRY
Bargaining Bargaining
power power

Threat of
substitutes

Substitutes
Source: Adapted from M. E. Porter,
Competitive Strategy, Free Press,
1980, p. 4.
 Threat of new entrants
• Economies of scale
• Government policy
• Strong Brands
• Consumers
• Capital requirements
• Switching costs eg FedEx, Gillette, Sony, Nintendo
• Distribution
Slotting allowance
Retaliation against new comers
Barriers change over time
 Bargaining power of Buyers
• When the product bought is undifferentiated
• When the product bought is large
percentage of the buyer’s cost eg steel in
automobiles
• When the buyer threatens to backward
integrate
• When the buyer has full information
 Bargaining power of suppliers
• Suppliers are highly concentrated
• There is no substitute available for the
product
• Supply is limited
Pressure from substitutes
 Five Forces Analysis: Key
Questions and Implications
• What are the key forces at work in the competitive
environment?
• Are there underlying forces driving competitive
forces?
• Will competitive forces change?
• What are the strengths and weaknesses of
competitors in relation to the competitive forces?
• Can competitive strategy influence competitive forces
(eg by building barriers to entry or reducing
competitive rivalry)?