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Session-3
Market Orientation
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Identify & Evaluate factors beyond the
control of a single firmIncreased foreign competitionPopulation shiftsInformation technology
External StrategicManagement Audit
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CompetitorsSuppliers
DistributorsCreditors
Customers
EmployeesCommunities
ManagersStockholdersLabor Unions
Special InterestGroups
ProductsServices
Key
ExternalForces
Opportunities&
Threats
Key External Forces & theOrganization Beyond control of
organization!
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Performing ExternalAudit
ExternalFactors
Measurable
Long-term orientation
Applicable tocompeting firms
Hierarchical
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Economies of Scale
Industry Properties
Barriers to market entry
Product differentiation
Level of competitiveness
I/O Perspective Firm Performance
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Social, Cultural,Demographic &
Environmental ForcesIndia. Facts
Young population
Less Caucasian
Widening gap between rich &poor
2025 = 18.5% population >65years
2075 = no ethnic or racialmajority
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Key Social, Cultural, Demographic& Environmental Variables
Number of marriages & divorces
Number of special interest groups
Number of births & deaths
Immigration & emigration rates
Childbearing rates
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Political, Government &Legal Forces
Worldwide trend toward similarconsumption patterns
Global buyers and sellers
E-commerce
Technology for instant currencytransfers
Globalization of Industry
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Competitive Forces
Strengths
Weaknesses
Capabilities
Opportunities
Threats
Objectives
Strategies
Identifying Rival Firms
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Competitive Forces
1. Market share matters2. Understand what business you
are in
3. Broke or not, fix it
4. Innovate or evaporate
7 Characteristics of mostCompetitive Firms:
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Competitive Forces
5. Acquisition is essential togrowth
6. People make a difference
7. No substitute for quality
7 Characteristics of mostCompetitive Firms:
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The Five-Forces Model of Competition (Porter)
Potential developmentof substitute products
Rivalry amongcompeting firmsBargaining powerof suppliers
Potential entry of newcompetitors
Bargaining powerof consumers
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The Global Challenge
Faced by Firms --
Gain & maintain exports to
other nations
Defend domestic marketsagainst imported goods
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Industry Analysis: The ExternalFactor Evaluation (EFE) Matrix
CompetitivePoliticalCultural
TechnologicalEnvironmentalSocial
GovernmentalDemographicEconomic
Summarize & Evaluate
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External FactorsIts hard to write them!Exercise: Write the external factors for your
own organization
http://mymaritimeblog.wordpress.com/2007/09/13/intuit-web-site/http://mymaritimeblog.wordpress.com/2007/09/13/intuit-web-site/8/2/2019 3. Market Orientation
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Total weighted score of 4.0Organization response is outstanding to threats and
weaknesses
Industry Analysis EFE
Total weighted score of 1.0Firms strategies not capitalizing on
opportunities or avoiding threats
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Industry Analysis: CompetitiveProfile Matrix (CPM)
Identifies firms major
competitors and their strengths& weaknesses in relation to asample firms strategic
positions
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Gateway Apple Dell
CSFs Wt Rating WtdScore Rating WtdScore Rating WtdScore
Market share 0.15 3 0.45 2 0.30 4 0.60
Inventory sys 0.08 2 0.16 2 0.16 4 0.32
Fin. position 0.10 2 0.20 3 0.30 3 0.30Prod. Quality 0.08 3 0.24 4 0.32 3 0.24
Cons. Loyalty 0.02 3 0.06 3 0.06 4 0.08
Sales Distr 0.10 3 0.30 2 0.20 3 0.30
Global Exp. 0.15 3 0.45 2 0.30 4 0.60
Org. Structure 0.05 3 0.15 3 0.15 3 0.15
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Gateway Apple Dell
CSFs (contd) Wt Rating WtdScore Rating WtdScore Rating WtdScore
Prod. Capacity 0.04 3 0.12 3 0.12 3 0.12
E-commerce 0.10 3 0.30 3 0.30 3 0.30
Customer Serv 0.10 3 0.30 2 0.20 4 0.40Pricecompetitive
0.02 4 0.08 1 0.02 3 0.06
Mgt. experience 0.01 2 0.02 4 0.04 2 0.02
Total 1.00 2.83 2.47 3.49
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.201.20Clinton Administration
.202.10Bad media exposure from FDA
.102.05Smokeless market SE region U.S.
.153.05Production limits on tobacco
.202.10Legislation against the tobacco industry
Th rea t s .303.10More social pressure to quit smoking
2.101.00TOTAL
.604.15Pinkerton leader in discount market
.051.05Astronomical Internet growth
.153.05Increased demand
.151.15Global markets untapped
Weighted
scoreRatingWeight
Universal System TechnologiesKey External Factors
Oppo r t un i t i e s
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(Competitive Profile Matrix)ProcterAvon LOreal & Gamble
2.803.253.151.00Total
0.1530.2040.0510.05Market Share0.4020.4020.8040.20Global Expansion
0.2020.4040.4040.10Customer Loyalty
0.4530.4530.6040.15Financial Position
0.3030.3030.4040.10Management
0.4040.3030.3030.10Price Competition
0.3030.4040.4040.10Product Quality
0.6030.8040.2010.20Advertising
ScoreRatingScoreRatingScoreRatingWeightrit ical SuccessFactor
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Competitive Profile Matrix RoyalCaribbean
RCL CCL POC
Critical Success
Factors
W eight Rating W eighted
Score
Rating Weighted
Score
Rating W eighted
Score
Market Share
Customer Loyalty
Distribution NetworkFinancial Position
Global Expansion
Advertising
Product Quality
Expansion ofdeparture ports
0.20
0.15
0.150.10
0.05
0.05
0.15
0.15
3
3
41
4
3
4
4
0.60
0.45
0.600.10
0.20
0.15
0.60
0.60
4
4
34
3
4
3
3
0.80
0.60
0.450.40
0.15
0.20
0.45
0.45
2
2
23
2
2
2
2
0.40
0.30
0.300.30
0.10
0.10
0.30
0.30
Total 1.00 3.30 3.50 2.10
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EFE Matrix
Key External Factors Weight Rating Weighted Score
Opportunities
Nearly 88% of North Americans have never been ona cruise.
0.15 4 0.60
Cruise vacations are seen as a choice of oldertravelers; leaving minorities and young adult marketsvirtually untapped
0.08 3 0.24
Distribution networks at home and abroad may be anuntapped source for generating increased business
0.07 3 0.21
Internet use is increasing; commonly the tool used tosecure reservations for many travelers
0.08 3 0.24
Several markets overseas, such as, France, Italy, havea market of would be cruisers
0.10 2 0.20
Threats
Increase in regulation by US regardingenvironmental issues and economic downturns
0.08 2 0.16
Alaskan legislators are considering a $50 tax percruise ship passenger
0.05 2 0.10
Location and severity of terrorist attacks; namely
September 11th events
0.10 3 0.30
War and political uprisings 0.10 3 0.30
Drastic changes in the world oil market and currencyexchange
0.02 1 0.02
Existing and potential litigation 0.02 1 0.02
Increased capacity of competitors and pricing wars 0.05 2 0.10
Transfer of information through collective bargainingagreements
0.03 1 0.03
Competitors: Carnival and P & O 0.07 2 0.14
Total 1.00 2.56