Why Do a Situation Analysis
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A situation analysis identifies strategic options and opportunities
A situation analysis involves
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External factors: Macroenvironment (industry and competitive conditions)
 Internal factors: Microenvironment (organization’s internal situation and
competitive position)
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External factors
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Industry’s dominant economic traits
Competitive forces
Competitive moves of rivals
Key success factors
Attractiveness of the industry
SWOT
Internal Factors
Strengths
Weaknesses
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F Opportunities
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Threats
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Five Forces Model
Substitute
Products
Suppliers
Rivalry among sellers
Buyers
Potential Entrants
Analysis of Competitive Forces
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The analysis is designed to identify the main sources of competitive forces
and the strength of the pressure
Sources of competitive pressures are defined by
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Rivalry among competitors
Substitute products
Potential entry
Bargaining power of suppliers
Bargaining power of buyers
Rate the strength of each competitive force
Explain how each competitive force works and its role in the overall
competitive picture
Environmental Scanning
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A way to monitor and interpret social, political, economic, ecological and
technological events in an effort to spot trends and conditions that could
eventually impact the industry and the organization.
The purpose of environmental scanning is to raise the consciousness of
managers about potential developments that could have an important
impact on industry conditions and pose new opportunities and threats
Assessing Competitive Positions: Strategic Groups
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A Strategic Group consists of those rival firms with similar competitive
approaches and positions in an industry
A Strategic Group displays different competitive positions that rival firms
occupy
Organizations in the same strategic group have one or more competitive
characteristics in common
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Sell in the same price/quality range
Cover same geographic areas
Be vertically integrated to same degree
Emphasize same types of distribution channels
Offer buyers similar services
Use identical technological approaches
Competitor Analysis
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An organization’s strategy is affected by
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Current strategies of competitors
 Actions competitors are likely to take
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Profile of key competitors involves studying
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Current position in the industry of each competitor
 Strategic objectives and recent business plans of each competitor
 Basic competitive approach of each competitor
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Successful strategies take into account
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Understanding competitor strategies
 Evaluating their vulnerability to driving forces and competitive pressures
 Sizing strengths and weaknesses of each competitor
 Anticipating each competitor’s next move
Key Industry Success Factors
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Key success factors spell the difference between
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Profit and loss
 Competitive success or failure
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A key success factor can be
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A specific skill or talent
 Competitive capability
 Something an organization must do to satisfy customers
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Being distinctively better than competitors on one or more key success
factors produces a competitive advantage
Key success factors consist of 3-5 major determinants of financial and
competitive success in an industry