Internal Analysis vs. External Analysis
- External Environment: Companies identify what they could do Internal Environment:. Companies determine what they can do.
Internal analisis
The company needs to be seen as a set of heterogeneous core resources, capabilities, and skills that can be used to create a unique market position.
Components of internal analysis that generate competitiveness
Key to success
Means
Inputs in the production process of a company, such as equipment, the skills of each employee, patents, etc.
Tangible resources Intangible resources
- Financial resources. Physical resources. Human Resources. Organization Resources Brand. Resources for innovation. Reputation with clients.
Capacities
They represent the ability of a company to take advantage of resources that have been intentionally integrated to achieve a desired condition.
They are given by the skills and knowledge of their employees and their functional experience.
Example of the capabilities of companies
Distribution Effective use of logistics techniques. Wal-Mart
Marketing Effective promotion of brand products. Gillette
Manufacturing Design and production skills that generate reliable products. The Gap
Core Skills
They come out of resources and capabilities.
Value chain
Value chain
Primary activities.- Key processes of the company.
Support activities.- processes that help the development of primary activities.
Primary activities
Internal Logistics.- The activities associated with receipt, storage and dissemination of product inputs, such as material handling, storage, inventory control, vehicle scheduling and return to suppliers.
Operations.- Activities associated with the transformation of inputs into the final form of the product, such as machining, packaging, assembly, equipment maintenance, testing, printing or installation operations.
Primary activities
External Logistics.- Activities associated with the collection, storage and physical distribution of the product to buyers, such as finished material warehouses, material handling, delivery vehicle operation, order processing and scheduling.
Marketing and Sales.- Activities associated with providing a means by which buyers can purchase the product and induce them to do so, such as advertising, promotion, sales force, quotas, channel selections, channel relationships, and price.
Primary activities
Service.- Activities associated with the provision of services to realize or maintain the value of the product (installation, repair, training, spare parts and adjustments to the product).
Secondary Activities
Supply.- Refers to the function of buying used supplies in the value chain.
Technological development.- It is given by the knowledge, procedures or technology within the process equipment. It is called technology development activity instead of R&D because it has a very narrow connotation for most managers, and technology development supports many of the different technologies found in value activities.
Secondary Activities
Human Resources Administration.- Activities that involve the search, hiring, training, development and compensation of all types of personnel.
Company Infrastructure.- Activities that include general administration, planning, finance, accounting, government legal affairs and quality management.
Distinctive advantage
are the skills, aptitudes, technologies capable of providing differentiated benefit to customers seeking to reduce Company costs.
Distinctive advantage
Competitive advantage
“A company has a Competitive Advantage when it manages to position itself better than the competition in the secure capture of customers and, in addition, it manages to defend itself against competitive forces. "
M.Porter
External analysis
Low 2 concepts
Macroenvironmental factors.
5 Porter's competitive forces.
Macroenvironmental factors
Social and cultural factors.- population that acts according to a culture. Eg Terrorism, machismo, racism, citizen insecurity, lack of employment.
Political and legal factors.-Have the catalog of all legislation that affects them and periodically review the emergence of new laws.
Macroenvironmental factors
Economic situation.- directly affects the prosperity and general well-being of the country. Eg the growth rate of the economy, interest rates, exchange rate, inflation. Foreign investment.
Technological factor.-Measure risk generated by technological change where the company participates.
5 competitive forces
Threat of new competitors
Scale economics
Product differentiation.
Capital requirements.
Changing costs.
Access to distribution channels.
Rivalry between existing companies
The rivalry between existing competitors gives rise to manipulating their position (using tactics such as price competition, advertising battles, introduction of new products and increases in customer service).
Rivalry between existing companies
It depends
- Large number of competitors or equally balanced.
- Slow growth in the industrial sector.
Substitute products
Those who deserve more attention are those who:
- They are subject to trends that improve their performance and price against the product of the industrial sector.
- Those produced by industrial sectors that obtain high yields.
Bargaining power of buyers
Buyers “compete” in the industrial sector by forcing down prices, negotiating for higher quality, or higher quantities of services and making competitors compete with each other.
Bargaining power of suppliers
Suppliers can exercise bargaining power over those who participate in
an industrial sector threatening to raise prices or reduce the quality of products. It is powerful if:
That it is dominated by few companies and more concentrated than the industrial sector it serves.
Bargaining power of suppliers
That they are not obliged to compete with other substitute products for sale in their industrial sector.
That the company is not an important client of the supplier group.
Suppliers to sell a product that is an important input to the buyer's business.
That the provider group represents a real threat of forward integration.
Generic Strategies
Cost leader
It refers to the ability of a company to reduce the costs associated with a product. The company should seek to lower production costs. Achieving a competitive advantage through costs implies that the accumulated productive chain is less (in costs) than the competition.
Eg Metro, Hyundai.
Differentiation strategy
Studying and understanding these needs, knowing what buyers consider valuable, should establish attributes to your offer in a different way. Eg: E. Wong, Ebel, BMW.
Strategy focused on differentiation
It consists of identifying a niche of buyers in the market, with specific needs and requirements, products are offered to a segment of buyers whose demand is based on specific attributes. Eg Montesur, Neoplaticas.
Cost focused strategy
Some authors call it the competitive hell, they are companies that find themselves without strategies.
Example: any small cellar or tap.
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