Chapter 6 - Internal Analysis
© 2005 John Wiley & Sons
Aims to provide a detailed understanding of the
organization in terms of four aspects:
1. Financial performance (sales, market share &
profit)
2. Other performance dimensions
customer satisfaction/loyalty
product quality
brand association
relative cost
new product activity
manager/employee capability and performance
3. Strengths & weaknesses
4. Opportunities & threats
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For Discussion:
In performance analysis, what measures would
you consider important?
© 2005 John Wiley & Sons
Please take McDonald and Chevrolet as examples.
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Chapter 4 – Market/submarket Analysis
© 2005 John Wiley & Sons
Aims to determine the attractiveness, structure
& dynamics of a market (submarket) to
current & potential participants
1. Dimensions
Emerging submarkets
Size & Growth
Profitability
Cost structure
Distribution systems
Trends & Developments
Key success factors
2. Risks in high-growth markets (competitors,
market changes & firm limitations)
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For Discussion:
Case: Fast food industry & McDonald’s
© 2005 John Wiley & Sons
1. What are the emerging submarkets in the fast
food industry?
2. What comes to your mind when you mention
the name “McDonald’s”?
3. What are the alternative responses available
to McDonald’s, assuming that it wants to stay
relevant to customers interested in healthier
eating?
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Chapter 5 – Environmental Analysis & Strategic
Uncertainty
© 2005 John Wiley & Sons
Aims to identify & evaluate trends & events in
the environment surrounding the market
Dimensions
Technology Trends
Government / Economic Trends
Consumer Trends (cultural trends, green movement
& demographic trends)
Impact Analysis – assess the impact & immediacy of
the trend & events
Scenario Analysis – explore different assumptions
about the future
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For Discussion:
Case: Fax Machine
© 2005 John Wiley & Sons
1. What did the fax machine replace, if anything?
2. What will replace (or has replace) the fax
machine?
3. When will the fax machine disappear?
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For Discussion:
Case: Airline Industry
© 2005 John Wiley & Sons
Focusing on the airline industry, develop a list
of strategic uncertainties and possible
strategic actions.
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For Discussion:
What measures would you consider important?
It should depend on the strategy & the firm.
© 2005 John Wiley & Sons
For a particular company, the overall measures might
be similar but the detailed ones will be different.
Quality is key for both companies but the way you
determine quality will be very different.
McDonald is about consistency, cleanliness, fast
service, and personal while Chevrolet is about
reliability, styling etc.
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For Discussion: Fast food industry & McDonald’s:
The trends are towards low fat, low carbohydrate, and
fresh vegetables.
Typically responses will be around fast food, quick
service, non-healthy food, etc.
© 2005 John Wiley & Sons
McDonald’s could:
a. Change the offering – French fries with less “bad” fat, Taco Bell has
fresco style – they omit or replace additives (like mayonnaise) that
contain substantial amounts of fat.
b. Create a branded offering like Wendy’s Sensational Salads. They will
need a real home run to make a difference and that is hard to do
especially given the credibility problem.
c. Do a co-brand in order to get credibility – like McDonald’s salad with
Newman’s own salad dressing
d. Start a new concept with a new name – McDonald’s own Baja Fresh
e. Do nothing – there are enough people who are loyal to the high fat,
fried foods who will support their business.
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For Discussion: Fax Machine:
Fax machine replaced snail mail, priority mail and in
some cases UPS.
© 2005 John Wiley & Sons
The fax is being replaced by email and the Internet.
It will be replaced when a faster, cheaper, and safer
method to transmit documents in developed. The
internet is almost there. Also there are some laggard
adopters of fax machines who may never switch to
email or the Internet.
The fax machine is still a useful tool for transmitting
hard copy or hand written documents that are not in
electronic format and if the customer does not own a
scanner.
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For Discussion: Airline Industry:
Some strategic uncertainties may include:
© 2005 John Wiley & Sons
1. If the price of gasoline goes up significantly or
significantly down when will the impact be on the
demand for travel?
2. Will some alternative replace airline travel as we
know it today (teleconferencing, telesales meetings,
etc.)?
3. If some unexpected tragic event should happen to
dissuade customers from choosing air travel as a
means of transportation, what will replace it?
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