Analysis Tools SWOT PESTC Porters 5 Forces BCG

Analysis Tools SWOT, PEST+C, Porter’s 5 Forces, BCG Matrix

SWOT Analysis l l Strengths and Weaknesses (internal) Opportunities and Threats (external)

Strengths l l l Company’s sustainable competitive advantage Excellent employees Strong market share Reputation New products and technologies Good financing

Weaknesses l l l Old equipment and technology Minimal R&D Poor planning Reputation Poor management

Opportunities l l l New markets Economy Poor competition Growth strategy Possible new technology

Threats l l l New competitors Lack of resources Government regulations Substitute products Changing market preferences

PEST+C Analysis of the Environment

Politics l l l Three levels of government—municipal, provincial and federal Taxes Crown corporations Laws International governments

Economic l l l l Stage in business cycle Interest rate Canadian $ Inflation rate Unemployment rate Supplier power Buyer power Stage in product life cycle

Social l Demographic changes Lifestyle changes Social values

Technology l l Available technology Creation of new technology Use of information technology Using technology to create new products or processes

Competition l l What is the competition doing? State and evaluate each major competitor

Porter’s 5 Forces

Porter’s 5 Forces l Threat of New Entrants – l Industry Rivalry – l Is there an alternative to the product/service offered by you and your competitors? Buyer Power – l Is there a lot of competition? Threat of Substitutes – l How easy is it to get into your market? Do your customers absolutely need your product/service? Do they have other options? Do they have any negotiating power? Supplier Power – How important is your business to your supplier(s)? Do you have any negotiating power?

The Boston Consulting Group Matrix l l Used to analyze a company’s portfolio of different products/services Goal is to have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash

The BCG Matrix l l 2 dimensions: market share and market growth Basic idea: the bigger the market share a product has or the faster the product's market grows, the better it is for the company

Cash Cow l l A business unit that has a large market share in a mature, slow growing industry Cash cows require little investment and generate cash that can be used to invest in other business units

Star l l l A business unit that has a large market share in a fast growing industry Stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead If successful, a star will become a cash cow when its industry matures

Question Mark l l l AKA “Problem Child” A business unit that has a small market share in a high growth market These business units require resources to grow market share, but whether they will succeed and become stars is unknown

Dog l l l A business unit that has a small market share in a mature industry A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share