The Strategic Position

7/28/2019 The Strategic Position

1/31

[email protected]

The Strategic Position


2/31

The Environment


3/31

Macro environment analysis

1. PESTEL framework

2. Key drivers of change

3. Porters Diamond model


4/31

PESTEL Analysis - Political

- Bureaucracy - Tariffs- Corruption - Tax Policy- Political Change - Trade Restrictions- Political Stability - Social/Employment Legislation- Environmental Law- Freedom of the Press- Government Type- Government Stability

- Labour Law- Regulation/Deregulation (NTB)


5/31

Economic

- Business Cycle Stage - Likely Economic Change- Economic Growth - Unemployment Rate- Exchange Rates- Consumers Disposable Income- GDP Growth- Globalisation- GNP Growth- Interest Rates

- Inflation Rate (cost of capital)- Labour Costs- Labour Supply


6/31

Social

- Health Consciousness- Population Growth Rate- Age Distribution- Career Attitudes- Perception of Safety.- Educational Infrastructure- Social Mobility- Employment Patterns

- Attitudes to work- Cultural Taboos


7/31

Technological

- Degree of Automation

- Emerging Technologies

- Impact of Internet, Reduced Communication Costs- Rate of Technological Change

- R&D Activity (SEZs)

- Technology Incentives

- Technology Transfer


8/31

Environmental & Legal

- Weather

- Climate

- Climate Change

Legal- Antitrust Law

- Consumer Law

- Discrimination Law- Employment Law

- Health and Safety Laws


9/31

Key drivers of Change

Ernst & Young finds the six trends are themselves connectedby three key derivers of change:- Demographic shifts. Population growth, increased urbani-zation, a widening divide between countries with youthful

and quickly aging populations and a rapidly growingmiddle class are reshaping not only the business world, butalso society as a whole.- Reshaped global power structure. As the world recovers

from the worst recession in decades, the rise of relationshipsbetween the public and private sectors has shifted thebalance of global power faster than most could haveimagined just a few years ago.


10/31

- Disruptive innovation. Innovations in technologycontinue to have massive effects on business and society.

We're now seeing emerging markets become hotbeds ofinnovation, especially in efforts to reach the growingmiddle class and low-income consumers around the globe.


11/31

Six global trends, interconnected by

three key drivers of change

Source: http://www.ey.com/GL/en/Issues/Business-environment
http://www.ey.com/GL/en/Issues/Business-environmenthttp://www.ey.com/GL/en/Issues/Business-environmenthttp://www.ey.com/GL/en/Issues/Business-environmenthttp://www.ey.com/GL/en/Issues/Business-environment


12/31

Porters Diamond model of National

advantage


13/31

Industries and sectors

Porters five forces framework to analyse

source of competition

The dynamics of competition


14/31

Porters Five forces


15/31

Five Forces analysis of The Coca-Cola Companyin relationship to its Coca-Cola brand.

Threat of New Entrants/Potential Competitors:

Medium Pressure

Entry barriers are relatively low for the beverage

industry: there is no consumer switching cost and zerocapital requirement. There is an increasing amount ofnew brands appearing in the market with similarprices than Coke products

Coca-Cola is seen not only as a beverage but also asa brand. It has held a very significant market share fora long time and loyal customers are not very likely totry a new brand.
http://valuationacademy.com/threat-of-new-entrants/http://valuationacademy.com/threat-of-new-entrants/


16/31

Threat of Substitute Products: Medium to High

pressure There are many kinds of energy drink s/soda/juice

products in the market. Coca-cola doesnt really have anentirely unique flavor. In a blind taste test, people cant tellthe difference between Coca-Cola and Pepsi.

The Bargaining Power of Buyers: Low pressure The individual buyer no pressure on Coca-Cola Large retailers, like Wal-Mart, have bargaining power

because of the large order quantity, but the bargainingpower is lessened because of the end consumer brandloyalty.
http://valuationacademy.com/threat-of-substitute-products-or-services/http://valuationacademy.com/bargaining-power-of-buyers/http://valuationacademy.com/bargaining-power-of-buyers/http://valuationacademy.com/threat-of-substitute-products-or-services/


17/31

The Bargaining Power of Suppliers: Low pressure The main ingredients for soft drink include carbonated

water, phosphoric acid, sweetener, and caffeine. Thesuppliers are not concentrated or differentiated.

Coca-Cola is likely a large, or the largest customer of anyof these suppliers.

Rivalry Among Existing Firms: High Pressure Currently, the main competitor is Pepsi which also has a

wide range of beverage products under its brand. BothCoca-Cola and Pepsi are the predominant carbonatedbeverages and committed heavily to sponsoring outdoorevents and activities.
http://valuationacademy.com/bargaining-power-of-suppliers/http://valuationacademy.com/competitive-rivalry-among-existing-firms/http://valuationacademy.com/competitive-rivalry-among-existing-firms/http://valuationacademy.com/bargaining-power-of-suppliers/


18/31

There are other soda brands in the market thatbecome popular, like Dr. Pepper, because of theirunique flavors. These other brands have failed toreach the success that Pepsi or Coke have enjoyed.

Valuation Academy is proud to present ourmeticulously researched and in-depth analysis ofCoca-Cola using Porters Five Forces and a SWOTanalysis availalble for just $4. This 2,500 word, (fully

editable) 10 page word document will be available fordownload after checking out through the link below.


19/31

The dynamics of competition

Incumbent Entrant


20/31

Competitors and Market

1. Strategic group mapping Matrix


21/31

Positioning of competitors

Product Quality

Custo

mersatisfactio

n

Low

High Low

High

P1

P2

P3

P4

P5

Wo

n


22/31

2. Market segment

Type of factors Consumer markets Industrial / organisational

market

Characteristics of people /organisations

Age, sex, race, Income,ethnicity, Family size, Life-cycle stage, Location, Lifestyle

Industry, Location, Size,Technology, Profitability,Management

Purchase / use situation Size of Purchase, Brandloyalty, Purpose of use,Purchasing behaviours,importance of purchase,

Choice criteria

Application, Importance ofpurchase, Volume, Frequencyof purchase, Purchasingprocedure, Choice criteria,

Distribution Channel

Users needs and preferences

for product characteristicsProduct similarity, Pricepreference, Brand preference,Desired features, Quality

Performance requirements ,Assistance from suppliers,Brand preference, Desiredfeatures, Quality, Servicerequirements


23/31

3. Identifying the strategic customers

The strategic customer is the person(s) at whim the

strategy is preliminary addressed because they have

the most influence over which goods or service are

purchased. example: RFL plastic, Diamond world


24/31

Importance of identifying the right strategic customers:- develop product portfolio based on customer- develop product packing- assist to do promotional events or develop advert to

attract target customers in a particular location or media- to hit the sales target- helps to sustainable growth of sales and Profitabilityfor the organisation


25/31

Understanding the customers valuecritical success factors

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Reputation After sales service Delivery reliability Testing Technical quality

Company A

Company B

Company C

Mostimportant Lessimportant

Perceived value by customers in the electrical goods


26/31

SWOT analysis

Strength Real Estate development: Strong demographic growth and continuous rising of

demand of housing

Steady GDP growth Availability of skill human resources in real estate

development sector in the local market Availability of construction materials in the local market

Broadening economic scope Increasing range of monthly income in the single couple

family


27/31

Weakness Scarcity of land Unavailability of loan financing in the real estate sector Higher inters rate in real estate finance Inadequate infrastructural development

Opportunity Strong growth of young generation along with single

young couple both in urban and rural areas which isdriving the growth of sharp demand of flat or apartment

Introducing new technology


28/31

Introducing affordable and small size of housingconcept to accommodate large population

Scope of implementing long term mortgage finance,

home insurance, mortgage insurance and otherfinancial instruments.

Government has agenda to develop this thrivingindustry to confirm housing for all.

Foreign Direct Investment in real estate sector.


29/31

Threat

Inconsistence of policy and implementation

Natural disaster

Inconsistence of Government policy and administration Economic turmoil


30/31

Offering Question


31/31

Reference books

Johnson, Scholes at el., ExploringCorporate Strategy, FT, Prentice Hall, 8thedition, 2008.

Fred R. David, Strategic Management:Concepts and Cases, Prentice Hall, 12thedition, 2009

Documents

The Strategic Position