COMP 3357 Competition Business Environment Richard Henson University

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COMP 3357 Competition & Business Environment Richard Henson University of Worcester April 2017

COMP 3357 Competition & Business Environment Richard Henson University of Worcester April 2017

Objectives List most popular tools used to analyse the macro environment and micro (i.

Objectives List most popular tools used to analyse the macro environment and micro (i. e. internal & immediately external environment) n Explain PEST and PESTLE and the information they provide n Explain SWOT analysis and its value to the business n 2

External Matters n Anything outside the organisation’s “system boundary” Øcould be business partners Øcould

External Matters n Anything outside the organisation’s “system boundary” Øcould be business partners Øcould be government n The partnership with another entity will be in the context of sharing data for mutual benefit

Economic Environment n The financial system in which the business is having to function

Economic Environment n The financial system in which the business is having to function ØLocal/regional factors (micro-) ØNational factors (macro-) n These factors can combine to encourage or discourage business growth

Macro-economic Environment n Dependent on government-controlled factors like: ØGovernment business growth funds Øbank interest

Macro-economic Environment n Dependent on government-controlled factors like: ØGovernment business growth funds Øbank interest rates Øincome tax levels ØVAT levels Øcorporation tax levels

Micro-economic Environment n Factors that effect the local/regional economy: ØCouncil tax rates ØLocal Enterprise

Micro-economic Environment n Factors that effect the local/regional economy: ØCouncil tax rates ØLocal Enterprise Partnership business growth funds ØLocal council projects

Business and Society People buy products n People will buy (or not buy) for

Business and Society People buy products n People will buy (or not buy) for a complicated series of reasons. . n Examples (in pairs…) n 7

Reasons to Buy… ØPeer pressure? ØPrice? ØExpert recommendations? ØLabour-saving? ØImage of product? ØEthics of

Reasons to Buy… ØPeer pressure? ØPrice? ØExpert recommendations? ØLabour-saving? ØImage of product? ØEthics of conditions creating the product

Business Environment Analysis… n Macro environmental factors (PEST): ØPolitical ØEconomic ØSocial ØTechnological n All

Business Environment Analysis… n Macro environmental factors (PEST): ØPolitical ØEconomic ØSocial ØTechnological n All effect the ability of a business to perform well… 9

Extending “PEST”. . . n Two other factors… Ølegal Øethical n PESTLE 10

Extending “PEST”. . . n Two other factors… Ølegal Øethical n PESTLE 10

A third macro-environmental breakdown of factors n SLEPT ØPEST plus Legal Øleaves out ethical

A third macro-environmental breakdown of factors n SLEPT ØPEST plus Legal Øleaves out ethical (!) n What do you think about this!? 11

Interactions between factors n To complicate matters further… Øthese factors all affect each other

Interactions between factors n To complicate matters further… Øthese factors all affect each other n e. g. Technology Øaffects economics & social habits Øeffect on politicians because of public opinion 12

Political Response to public opinion? n Usually respond by Øchanging existing laws/regulations or Øbringing

Political Response to public opinion? n Usually respond by Øchanging existing laws/regulations or Øbringing in new ones… n Legal response to information technology advances etc… ØUK government approach… “hands off” Øleave it to market forces) 13

Laws, Regulations, and Information Technology n Passing effective laws takes a lot of consultation

Laws, Regulations, and Information Technology n Passing effective laws takes a lot of consultation etc… ØTechnology moving forward quickly (especially IT) Øfalling behind? GDPR an effort to catch up? 14

Information Technology and Social/Socio-cultural matters n Strategic issues involving the use of the online

Information Technology and Social/Socio-cultural matters n Strategic issues involving the use of the online business environment… ØLegal/ethical » security of suppliers, partners, customers’ data ØSocial » acceptability of new technologies e. g. direct sales online, and email 15

Social/age-based exclusion (no computer; not computerliterate; choice) Legal – data protection, computer misuse… conventional

Social/age-based exclusion (no computer; not computerliterate; choice) Legal – data protection, computer misuse… conventional laws, across national boundaries… n Ethical – use of cookies, etc. to target marketing n How these affect business direction. . . n 16

SWOT Analysis (internally focussed factors…) n Strengths n Weaknesses n Opportunities n Threats 17

SWOT Analysis (internally focussed factors…) n Strengths n Weaknesses n Opportunities n Threats 17

Why SWOT? n Despite “business planning”… Øcorporate initiatives don’t always go as planned! Ømore

Why SWOT? n Despite “business planning”… Øcorporate initiatives don’t always go as planned! Ømore effective analysis required n SWOT developed by an academic… became popular in the 1970 s ØTypically presented as a 2 x 2 matrix… 18

SWOT Matrix 19

SWOT Matrix 19

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Competition n Basic principle of business Øcustomer can choose from a range of products

Competition n Basic principle of business Øcustomer can choose from a range of products in a number of businesses n Competitive Forces (what drives competition? ) Østudied by academics (e. g. Porter) » wrote an International best seller about what he saw as 5 competitive forces

Porters 5 Forces Existing competitive rivalry between suppliers n Threat of new market entrants

Porters 5 Forces Existing competitive rivalry between suppliers n Threat of new market entrants n Bargaining power of buyers n Power of suppliers n Threat of substitute products (including technology change) n 22

Co-opetition n Competitor businesses working together towards a common goal Ømore scope for this

Co-opetition n Competitor businesses working together towards a common goal Ømore scope for this with e-business Øshare data Ømake supply chain more efficient? Øcommon specialised e-marketplaces n Porter’s 6 th Force…? 23

E-business Systems to transform business e- Business 2. 0 n payment systems n e-procurement

E-business Systems to transform business e- Business 2. 0 n payment systems n e-procurement n e- SCM n e-marketing n e-Retail, e-CRM n

Thanks for listening… Think about factors affecting business competition in the online environment… n

Thanks for listening… Think about factors affecting business competition in the online environment… n We’ll cover them in more depth after Easter n