Theoretical foundations of the analysis of the external environment
No organization can function in isolation, regardless of the external environment. An organization as an open system can survive only in connection with the external environment.
The external environment is factors outside the organization and contributing to the functioning, survival and growth of the organization when used skillfully.
The development of a strategy logically begins with an external analysis, an analysis of factors that are outside the sphere of constant control of the company's management and which may have an impact on its strategy.
External analysis is part of the so-called SWOT analysis.
SWOT analysis Is an abbreviation of English concepts (strengths - strength, weaknesses - weakness, opportunities - opportunities and threats - threats). It is an analysis of the strengths and weaknesses of the firm, an assessment of its capabilities and potential threats.
The main purpose of the analysis of the external environment is to identify and effectively use in the development of a strategy the opportunities and threats that exist at present and that may arise for the enterprise in the future.
Opportunities are positive trends and phenomena in the external environment that can be used to improve the efficiency of the organization.
For example, tax cuts, an increase in the income of the population and enterprises, a decrease in the interest rate, a weakening of the position of competitors, the development of integration, a decrease in customs barriers, etc.
Threats are negative trends and phenomena of the external environment that can weaken its competitive position or, in the absence of an appropriate response, lead to the complete destruction of the business.
Threats include, for example, a decrease in the purchasing power of the population, increased competition in the market, unfavorable demographic changes, stricter government regulation, etc.
The end result of external analysis is the formation of alternative strategic decisions, their assessment and the final choice of a strategy focused on using opportunities and protecting against threats from the external environment.
The external environment (business environment) consists of two parts.
Macro environment;
Microenvironment.
Macroenvironment Is a remote environment that indirectly affects the organization.
It includes, for example, the state of the economy, scientific and technological progress, socio-cultural and political changes, natural phenomena, group interests and events in other countries that affect the organization.
Microenvironment- This is the branch or close environment of the organization, which has a direct (direct) impact or are directly influenced by the main activities of the organization.
This includes all contact audiences such as suppliers, customers, competitors, intermediaries, shareholders, lenders, trade unions and government agencies.
Scientists distinguish four main types of external environment:
1. A changing environment characterized by rapid change. These can be technical innovations, economic changes (changes in the inflation rate), changes in legislation, innovations in the policies of competitors, etc. Such an unstable environment, which creates great difficulties for management, is inherent in the Russian market.
2. A hostile environment created by fierce competition, the struggle for consumers and markets. Such an environment is inherent, for example, in the automotive industry in the United States, Western Europe and Japan.
3. Diverse environments are common in global business. A typical example of a global business is McDonald's, with operations in many countries (and therefore serving many multilingual clients), with diverse cultures and consumer tastes. This diverse environment influences the firm's activities, its policy of influencing consumers.
4. Technically challenging environment. In such an environment, electronics, computer technology, telecommunications are developing, which require complex information and highly qualified service personnel. The strategic management of enterprises in a technically complex environment must be focused on innovation, as products in this case quickly become obsolete.
In practice, various methods of responding to changes in environmental factors are used. The most common among them are the following approaches:
- "fire fighting", or reactive control style. This post-change management approach is still prevalent in many Russian enterprises;
Expansion of areas of activity, or diversification of capital production as a means of possible reduction of commercial risk when changing environmental factors;
Improving the organizational structure of management to increase its flexibility. In this case, the enterprise can create profit centers, strategic business units and other flexible structures focused on achieving final results;
Strategic management.
Macro environment analysis (PEST analysis)
Macroenvironment includes general factors that do not directly relate to the short-term activities of the enterprise, but can influence its long-term decisions.
Strategic factors of the macroenvironment are considered to be such directions of its development, which, firstly, have a high probability of implementation and, secondly, a high probability of impact on the functioning of the enterprise.
Changes in the macroenvironment affect the strategic position of the enterprise in the market, affecting the elements of the microenvironment. Therefore, the purpose of the analysis of the macroenvironment is to track (monitor) and analyze trends / events outside the control of the enterprise, which may affect the potential effectiveness of its strategy.
Since the number of possible factors of the macroenvironment is large enough, when analyzing the macroenvironment, it is recommended to consider four nodal areas, the analysis of which is called PEST analysis (according to the first letters of the English words political-legal (political-legal), economic (economic), sociocultural), technological (technological factors)).
Purpose of PEST Analysis - tracking (monitoring) changes in the macroenvironment in four key areas (Table 1) and identifying trends, events that are not under the control of the enterprise, but that affect the results of strategic decisions.
Although, of course, other specific factors of the macroenvironment can influence the activity of the enterprise. Thus, the natural environment affects the activities of agricultural enterprises, construction industry enterprises.
Table 1- PEST analysis
| Political and legal factors: - government stability; - tax policy and legislation in this area; - antimonopoly legislation; - laws for the protection of the natural environment; - regulation of employment of the population; - foreign economic legislation; - the position of the state in relation to foreign capital; - trade unions and other pressure groups (political, economic, etc.) | Economic factors: - trends in the gross national product; - stage of the business cycle; - interest rate and exchange rate of the national currency; - the amount of money in circulation; - inflation rate; - unemployment rate; - control over prices and wages; - energy prices; - investment policy |
| Sociocultural factors: - demographic structure of the population; - lifestyle, customs and habits; - mentality; - social mobility of the population; - consumer activity | Technological factors: - R&D costs; - from various sources; - protection of intellectual property; - state policy in the field of scientific and technological progress; - new products (update rate, sources of ideas) |
The following stages of the PEST analysis are distinguished:
1. A list of external strategic factors that have a high probability of implementation and impact on the functioning of the enterprise is being developed.
2. The significance (probability of occurrence) of each event for a given enterprise is estimated by assigning a certain weight to it from one (most important) to zero (insignificant). The sum of the weights must be equal to one, which is ensured by standardization.
3. An assessment of the degree of influence of each factor-event on the strategy of the enterprise is given on a 5-point scale:
- "five" - strong impact, serious danger;
- "unit" - no impact, threat.
4. Weighted estimates are determined by multiplying the weight of the factor by the strength of its impact, and the total and weighted estimate for the given enterprise is calculated.
The total score indicates the degree of readiness of the enterprise to respond to current and projected environmental factors.
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Introduction
The construction corporation specializes in housing construction and includes five businesses (branches) operating autonomously in various regional markets. Corporate governance structure - divisional. A model for the formation of strategies in a corporation - traditional multi-level (corporate level, business level, functional and operational).
Currently, the urgent problem of any organization is the development of a development strategy, since it is the developed strategy that allows the company to survive in the competition in the long term.
A strategy is understood as a general program of action that identifies the priorities of problems and resources to achieve the main goal.
There is no single strategy for all companies, as each company is unique in its own way. The process of developing a strategy depends on the position of the company in the market, the dynamics of its development, its potential, the behavior of competitors, the characteristics of the goods produced, the state of the economy. The strategy breaks down into many competitive actions and approaches to business, on which the successful management of the firm depends. In a general sense, a strategic management plan for a firm is aimed at strengthening its position, satisfying customers and achieving its goals. Managers develop strategies to determine which direction the firm will take and make informed decisions when choosing a course of action. The choice of a specific strategy by managers means that out of all the possible paths of development and methods of action that open up to the company, one direction has been decided in which it will develop.
This course project deals only with corporate strategies and business strategies. The development of a strategy begins with an analysis of the state of the external and internal environment, carried out in each of the departments. The results and annual reports are sent to the corporate headquarters, where after studying all the information, the corporate strategy is developed and adopted. It includes the general strategic line of the corporation, strategic decisions in relation to each existing and newly created business unit (department), decisions on the redistribution of investment resources between departments.
As part of the strategic corporate plan, the department's management develops a business strategy that is aimed at achieving a certain competitive position in the market. Business strategy includes product-market strategy, competitive strategy, integration / disintegration strategy and other areas.
The purpose of this course project is to consolidate theoretical material and acquire skills in developing an organization's development strategy.
The objective of this course project is:
Study of existing methods of strategic analysis and choice;
Comprehension of the process of strategic management, its components in interconnection;
Study of the typology of strategies, the practice of their application.
In addition, this project includes the development of a strategy for a specific resource of the organization - personnel. Since the personnel is the main resource of the company, it determines, first of all, the success of the entire organization. This strategy should be inextricably linked with the strategy of the organization, its goals and objectives.
The survival of organizations, not to mention their prosperity, depends primarily on whether they have their own strategy, as well as on whether they can consistently implement this strategy in practice through specific activities.
1. Strategic analysis of the external macroenvironment (SLEPT analysis)
Analysis of the external environment is a necessary process by which, when developing a strategic plan, it is possible to control external factors in order to determine the possibility of growth of the company or threats to it.
Analysis of the macroenvironment includes:
1) identification of social, economic, legal, political and technological factors that characterize it;
2) assessment of the state of each factor;
3) determination of trends of change (for factors that strongly affect the activities of the organization, detailed analysis and forecasting is advisable);
4) assessment of the nature of the impact on the organization.
The population of Russia in January-August 2003 decreased by 555.8 thousand people, or 0.4%, and amounted to 144.4 million people by September 1. The decline in numbers is due to the natural loss of Russians.
In Russia, the birth rate has dropped dramatically. In January-October 2003, the number of births was 1251.5 thousand, and the number of deaths was 1976.8 thousand. In the same period of 2002, 1175 thousand people were born, 1936, 4 thousand people died. Compared to 2002, in Russia in 2003 both the birth rate and the death rate increased. At the same time, the birth rate grew at a higher rate (7.1% growth versus 1.9%).
The economically active population of Russia by the end of November 2003 amounted to 71.4 million people, or about 50% of the total population of the country. 65.2 million people, or 91.4% of the economically active population, were employed in the economy and 6.2 million people (8.6%) were unemployed.
In Novosibirsk, the number of officially registered unemployed by the end of 2003 was 7,140 people. The registered unemployment rate was 0.85% of the working-age population of working age.
In the third quarter of 2003, 21.9% of Russians, or 31.2 million people, had incomes below the subsistence level, while in the second quarter - 23.3% (33.2 million), and in the first quarter - 26.1 % (37.2 million).
The subsistence minimum of the population of Russia in the third quarter of 2003 amounted to 2121 rubles. per person per month (in the second quarter - 2137 rubles), including for the able-bodied population - 2318 rubles, for pensioners - 1612 rubles, for children - 2089 rubles.
Real disposable money incomes of the Russian population in 2003 increased by 14.5% compared to 2002. The average monthly nominal wage in 2003 was 5512 rubles.
A survey of the population showed that every sixth person considers himself to be absolutely poor. According to sociologists' calculations, every third Russian (36%) classified himself as relatively poor. 33% of people ranked themselves as middle-class. Every eighth Russian (12%) can be considered relatively wealthy. And, finally, 1% were relatively wealthy people who can afford to buy quite expensive things - an apartment, a summer house, and more.
The adoption of the Land Code does not generally play a big role in relation to urban housing construction. The revocation of licenses for real estate activities has two different sides. On the one hand, the cancellation of the license will cause an increase in real estate firms, which will lead to fierce competition in this area of business, as well as to a decrease in real estate margins and, as a consequence, to a certain decrease in prices for construction products, which stimulates demand for it. On the other hand, the abundance of real estate companies can lead to distrust of the population in this way of buying real estate, as a result, if a company sells its properties through such agencies, there is a decrease in demand, if not, then it incurs additional costs for the sale of products.
GDP and industrial production over the past four years, labor productivity - by more than 30%, investment in fixed assets - by 45%. In terms of the rate of economic development, Russia is ahead of the group of developed countries of the world by 2.3 times, and by the rate of investment growth - 6 times.
In 2003, inflation did not exceed 12%, and in the coming period it will not exceed 10%. There has been an increase in the population's savings, primarily in rubles, which testifies to the restoration of confidence in the national currency. Inflation in Russia in January 2004 was 1.8% compared to 2.4% in January 2003, while inflation in February 2003 stood at 1.6%.
The Ministry of Finance has submitted for approval to the Government of the Russian Federation a new chapter of the Tax Code on the tax on property of citizens. According to the bill, the maximum tax rate will be reduced from 2% to 0.1%, but the amount of payment will be calculated based on the market value of the apartment.
In 2003, the budget was executed with a surplus equal to 1.5% of GDP. Over the period from December 19 to December 26, 2003, Russia's gold and foreign exchange reserves increased by $ 3.3 billion, and in percentage terms by 4.4% - from $ 74.5 billion to $ 77.8 billion.
Mortgage lending is a new area in Russia. The law “On Construction Savings Banks” was put into effect, which regulates and regulates the process of preliminary accumulation of funds for the construction and purchase of housing.
According to the Association of Russian Banks, in 2001, mortgage loans were issued in Russia for $ 56 million. In 2002, it was already $ 260 million, and in 2003 there was a projected doubling - the total volume of loans issued amounted to about $ 500 million. ...
According to the technological process index, Russia ranks 51st among the countries of the world. The technological factor is in many ways the most influencing on the activities of a construction organization, on its technologies.
Priority directions for the development of science, technology and technology:
Information and telecommunication technologies and electronics;
Space and Aviation Technology;
New materials and chemical technologies;
New transport technologies;
Manufacturing technologies;
Living systems technologies;
Ecology and rational nature management, etc.
Innovative activity in Russia is low. Improved products and processes in industry account for 9.6%. At the same time, according to independent experts, Russia has one of the world's best scientific and technological potential. However, Russian scientific developments either go abroad for a song or remain unclaimed.
This factor plays an important role in the analysis of the external environment of the organization. The use of innovations in construction accelerates the process of erecting buildings, reduces costs and increases labor productivity. As a result, the quality of the final product is improved.
Climatic factors
The climate of Novosibirsk and its suburbs is continental. Due to the long duration of the cold period, the activity of construction companies increases sharply in the warm season.
The region is sufficiently provided with natural resources. There are deposits of cement raw materials, therefore, the production of building materials is developed, in other things this is typical not only for this region, but also for the nearby regions, which means that there should be no interruptions in raw materials.
The impact assessment and significance of each factor are presented in Table 1.1.
table 1.1
|
Name of factors |
Weigh. grade |
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|
Social Increase in monetary incomes of the population |
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Rising unemployment rate |
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Declining fertility |
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Labor productivity growth |
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Low Availability of a unified legislative framework |
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Effectiveness of the legal framework in construction |
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Law and licensing |
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Small business support |
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Cancellation of licenses for real estate activities |
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Economic economic growth |
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Reducing the rate of inflation |
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Investment growth |
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Budget surplus |
||||
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Currency rate growth $ |
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|
Growth in mortgage loans |
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Economic stability |
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Accession to the World Trade Organization |
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Approximation of legislative acts to international standards |
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Technological Low innovation activity |
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|
Introduction of new equipment and technologies |
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|
Multidirectional development of science, technology and technology |
2. Strategic analysis at the business (department) level of the corporation
2.1 Sectoral strategic analysis of the external environment
strategic management business
2.1.1 Characteristics and key indicators of the business area
Industry strategic analysis is an analysis of the external microenvironment, the immediate environment of the firm. First of all, it is an analysis of the competitive environment. However, it is impossible without understanding which business area the firm belongs to and what features of this business area are inherent.
Our business is related to the production of economic housing in the "working" areas and outskirts. Construction is being carried out according to standard designs. The building material is a panel or monolith. Number of rooms from 1 to 4. The area of apartments is from 27 to 100 m2. The presence of a balcony in the amount of 0-1 pcs., 1 bathroom, central heating and water supply, natural ventilation.
Let's move on to the direct analysis of the competitive environment of the business, based on the data in Table 1. Initial data for the analysis of the external environment from the assignment to the course project.
The growth rate of GNP according to the data of 2004 and 2005 appears to be unchanged at the level of 1.05. The inflation index is also unchanged over these years and is at 1.05. As mentioned above, the products of the target market are economy class apartments.
For 2004, the indicator had a value equal to 3453125 thousand rubles, we multiply this value by the inflation index of 2004, equal to 1.05, and we obtain a value equal to 3625781.25 thousand rubles: 3453125 * 1.05 = 3625781.2 thousand rubles ...
For 2004, the indicator had a value equal to 3288690 thousand rubles, we multiply this value by the inflation index of 2005 and the inflation index of 2006, equal to 1.05, and we obtain a value equal to 3625780.7 thousand rubles:
3288690 * 1.05 * 1.05 = 3625780.7 thousand rubles.
The size of the market in the forecast year 2006 is calculated by multiplying the forecast of demand for 2006 (apartments) by the average price of an apartment in 2005 (thousand rubles): 3757 * 630 = 2366910 thousand rubles. Thus, it can be seen that the size of the market is constantly growing.
For 2004: 3625781.25 / 3625780.7 = 1
2005: 3453125 / 3625781.25 = 0.95
For 2006: 3625780.7 / 3453125 = 1.04.
Let us also calculate the coefficient of the dynamics of the growth rate.
For 2004: 1.08 / 1 = 0.92
2005: 1.04 / 1.05 = 0.99
Let's summarize the obtained data in table 2.1.
Table 2.1
|
Market size (in prices according to the assignment) |
Market size in 2004 prices, thousand rubles |
Market growth rate |
Coef. dynamics of growth rates |
Life cycle stage |
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|
Deployment stage |
||||||
|
Maturity stage |
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|
Maturity stage |
We see that the growth rate is decreasing in comparison with 2004, in 2005 it was 1.05, so we assume that 2005 is at the stage of maturity, where the growth rate is 1.05. In the previous 2004, the growth rate was 0.95 and it took place at the deployment stage, where the growth rate of the market size is greater than 1.05. The stage of maturity is also projected in 2006.
Maturity stages refer to stable stages of the life cycle. At the stage of maturity, the growth rate of the market is approximately equal to the growth rate of GNP. At this stage, investment needs are minimal and financial flows are positive; profitable businesses at these stages are “cash generators”.
There are two different scenarios of competition at the maturity stage. The most typical scenario is a non-crowding-out struggle (the actions of competitors are aimed at maintaining existing positions, or withdrawing into newly created segments, a slight strengthening of positions due to market growth). The second scenario is a crowding-out struggle, which can be of a price or non-price nature. In the first case, one of the market participants begins to reduce prices in the hope of crowding out competitors. The latter lower prices after him, or give up their positions, leaving the market in general or in specific segments. In the price war, the competitor wins with either the lowest costs or the greatest financial reserves that allow it to sustain losses for a long time.
Non-price displacing competition is typical for markets with low price elasticity of demand; it presupposes fierce competition by improving the real quality properties of the goods, or virtual properties (image and prestige, properties based on the belief and conviction of the consumer).
Construction products are products for which the consumption period is significantly longer than the production period.
Let's define such an indicator as the ratio of demand potential and demand forecast. The forecast of demand for 2006 (apartments) was 3757. The indicator of the forecast demand is usually less than the demand potential, since the demand potential characterizes the maximum number of apartments that consumers would like to purchase over a certain period of time, even if reality does not yet allow it. While the demand forecast indicator gives a much more realistic estimate of demand, it characterizes the number of apartments that can be purchased in the next year.
The value of the indicator is 12, which characterizes the market as promising, i.e. the market will enter the stage of decomposition by the end of 2017. Growth possible at the stage of maturity.
Next, let's analyze how important the market is for a corporation. Let's define the market share of business # 1 in the aggregate size of all corporation markets. To do this, we divide the market size (thousand rubles) of business No. 1 (2004) by the total size of the corporation's markets:
It can be concluded that the strategic importance of the market in which the business in question is located in the aggregate size of all the corporation's markets is very low.
Let's calculate the number of apartments under construction for each competitor on the market. To do this, we divide the value of the forecast demand for 2006 (apartments) by the number of competitors in the market in 2005. The number of competitors on the market in 2005 is 8, while in 2003 their number was 3, and in 2004 - 4.
So, 3757/7 = 536.6 approximately 537 apartments for each competitor.
Thus, if houses with 3 - 4 entrances with 28 - 42 apartments in each are being built, each of the market participants must build about 4 houses per year.
The industry average profitability is defined as the ratio of the total profit of all enterprises in the industry to the total costs of all enterprises in the industry, that is, Pri / Зi. It is advisable to compare it with the regional average.
In 2003, the value of the average profitability in the industry was 28%, in 2004 there is an increase in its value to 32% and in 2005 it remained at the same level, and the average regional level of profitability from 2002 to 2004 is 44%, which indicates high competition in industry. Moreover, there was an increase in the number of competitors from 3 in 2003, 4 in 2004, and in 2005 there were 8 of them, which indicates the concentration of the market, aggravation of competition.
Consider also such an indicator as the spread of profitability of competitors, which in 2005 is 8%. When assessing it, it is necessary to take into account the competitive situation in the market.
Due to the fact that the number of market segments has increased: in 2003 - 1, in 2004 - 5, which changed and by 2005 amounted to 5 - the market is very differentiated with a large number of segments.
Competitors with significant profit margins can be quite proactive. But the actions of competitors who are in less profitable segments and seek to move to other market segments can also be active.
But in this case, the spread of profitability is 8%, with an average level of 30%, this allows us to say that there is a sharp struggle in the market and the market itself is not stable.
It is also necessary to consider such an indicator as the average share of subcontracting in the total volume of work,%.
The economic feasibility of subcontracting is due to:
The need to use complex or expensive equipment
Increasing requirements for quality, which requires exceptional competencies
· The impossibility of using our own units with a high workload in time (insufficient volumes of work, short duration of specialized operations in time).
The average share of subcontracting is at 44%, which is the norm, since for most firms the share of subcontracting is at 20-25%. The limiting value reaches 50 - 60%. The higher the class of housing, the more subcontracting is used. The average share of subsidiary production in production costs reflects the level of vertical reverse integration.
At the saturation stage, a high level of integration is a problem because significant tied investments increase exit barriers, risk levels and, as a result, competition.
Let's define the strategic advantages and limitations of vertical integration. The single essential reason for investing in vertical integration is to strengthen the company's competitive position. Unless vertical integration creates sufficient cost savings to pay off additional investment or leads to a competitive advantage, it does not pay off, both in terms of profit and in terms of strategy.
Backward integration creates cost savings only when a volume of production is required to achieve economies of scale equal to those of other suppliers, and when the manufacturing efficiency of the suppliers can be achieved or exceeded. Backward integration is especially beneficial when suppliers have similar profit margins, when the product supplied is a major cost item, and when personnel with the necessary technological skills are available.
Backward vertical integration can create a competitive advantage based on differentiation, when a company, using those of its capabilities that could not previously be used, offers products or services of higher quality on the market, expands the volume of services provided to consumers, or in some other way improves the performance characteristics of its final product.
Backward integration can also reduce the uncertainty associated with reliance on key component suppliers and reduce the company's vulnerability to large suppliers who are willing to raise prices at every opportunity. Building inventories, negotiating fixed-price contracts, hiring multiple suppliers, establishing long-term partnerships, or using backup suppliers are not always attractive ways to reduce supply uncertainty or facilitate relationships with large suppliers.
However, vertical backward integration also has significant drawbacks. First, it leads to an increase in the company's investment in the industry, increases entrepreneurial risk (suddenly the entire industry enters a stagnation period) and often takes financial resources from other more valuable areas for investment. A vertically integrated company must invest in protecting its current technology and manufacturing investments, even if they become obsolete. Because of the high cost of abandoning such investments until they are fully amortized, integrated companies tend to be slower to adopt new technologies than partially integrated or fully non-integrated companies.
Second, backward integration makes the company dependent on its own structures and sources of supply (which may later become more expensive than external supply), which may make it less flexible in meeting customer needs for more diversified products.
Third, vertical integration can create problems of balancing production at each stage of the production cycle. The most optimal scales at each link in the cost chain can vary significantly from each other.
Fourth, backward integration often requires specialists with vastly different qualifications and different entrepreneurial opportunities.
In our case, the average share of ancillary production in the prime cost is growing, and by 2005 it becomes equal to 0. The lack of production of auxiliary production is explained by the fact that the volume of work is relatively small, and also by the fact that the construction technology is a panel, the creation of our own plant for the production of panels requires a very large investment. At the same time, the Herfindahl-Hirschman index of the main material market is at 6536, which indicates the market's inclination towards monopoly.
Let us evaluate another important indicator - the average utilization of production capacities (WF),%, is defined as the ratio of the market size to the total production capacity of all competitors.
The rate of this ratio is 85 - 90%. In our case, the value of the indicator is at the level of 90%.
Let us also consider such indicators characterizing the state of the market as price elasticity of demand and changes in average prices, rubles per 1 sq. m. The change in average prices is cleared of the influence of inflation, that is, real price changes are displayed. In our case on the market in 2005 there is a slight change in average prices for 1 sq. M. m. With all the above characteristics, we note that the price elasticity of demand in the market is high. Price elasticity of demand is expressed by the degree of sensitivity, or sensitivity, of consumers to changes in the price of products. In our case, high elasticity is characterized by the fact that consumers are sensitive to changes in product prices, that is, a significant change in price leads to a large change in the number of purchases, which is explained to a greater extent by the reaction of consumers to the price level of the offered housing.
Next, we will consider such indicators as the number of competitors in the market and the Herfindahl-Hirschman index. The minimum value of the index is related to the number of competitors and is observed if they all divide the market equally. In this case, it is determined in the following way:
ИХmin = 10000 / n,
where n is the number of competitors in the market.
IH is defined as the sum of the squares of the shares of competitors in the market, and if the shares of competitors are equal, then the share Di = 100% / n. The maximum value of IH = 10,000 and is observed in the case of a monopoly. In the case of perfect competition, THEIR will tend to zero. If THEM is more than 6300 - the market can be considered close to monopoly (concentration in some hands> 75%). If THEM is more than 4200 - some tendencies towards concentration are observed in the market (concentration in some hands is in the region of 50-60% of the market). The most typical situation is with IH< 4200 (не достигая низких величин), что характеризуется олигополистической конкуренцией на рынке.
In our case, in 2003, IC = 3300, in 2004 - 2700, in 2005 - 2050, which is typical for market concentration.
Let's calculate THEM:
in 2003: 10000/3 = 3333; in 2004: 10000/4 = 2500; in 2005: 10000/8 = 1250.
Let's summarize the obtained indicators in table 2.2
Table 2.2
|
Number of competitors |
Number of segments |
Ratio |
Growth characteristic (conclusion) |
||||
|
Oligopoly, high shares of leaders, significant influence of leaders on smaller competitors, competition in segments. |
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|
Oligopoly, growth in the number of competitors, decrease in concentration, significant influence of leaders on smaller competitors, competition in segments. |
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|
Oligopoly, concentration increases due to the fact that the market is divided by two large firms (76.1%), competition in segments. |
In 2003, 2004, 2005, there is a clear excess of IH over the level of IHmin, which indicates the presence of several main competitors on the market, which occupy a large part of the market, while the shares of the rest remain insignificant. This is also confirmed by the data on the share of the business of 1 corporation at 30.1%, and the share of its largest competitor at 46%.
In 2003, 2004, 2005 the ratio of the number of competitors and segments is observed> 1, which characterizes the increased level of segmentation. There are 1 - 2 segments per competitor. Either a broad differentiation strategy or a niche strategy can be applied (most likely for less significant market competitors).
Next, let's move on to assessing the next characteristic of the market, this is the main technology / wall material used in the market. The main construction technology of our business is panel construction. For almost half a century, prefabricated houses have been a strategy for housing construction in our country, so it is not surprising that prefabricated houses today form the basis of the housing stock. Over time, the old series were replaced by new developments of MNIITEP. The innovations mainly concerned apartment layouts, technical characteristics of external panels, but the essence of the technology itself remained the same. It was not possible to avoid the flaws traditional for the "typists" either. First of all, this concerns the unsealed gaps between the panels, through which moisture and cold penetrate the room. Low sound insulation (you can hear speech in the next apartment) also cannot please new settlers. The same situation with the ceiling height - 2.64-2.75 m. Nevertheless, apartments in panel houses are well bought. The only reason is the relatively low price. Apartments in them have a smaller area than in monolithic ones. Accordingly, with a difference in the cost per square meter of only 10-20%, an apartment in a "panel" is 30-40% cheaper. An additional argument is inexpensive repairs. For typical housing there is no concept of "free planning", and all interior partitions have already been installed, the walls and ceiling have a flat surface. New settlers save on wall construction and leveling.
There are no technological changes in the industry. Leading competitors adhere to a strategy of broad differentiation, a distinctive feature of which is the release of a wide range of products for different consumers, products differ from competitors' products, prices are usually slightly higher.
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The factors of the microenvironment sometimes include not only the organization ( company ), but also consumers ( customers ), competitors ( competitors ) and partners ( collaborators ). According to the English-language names of these components, the microenvironment of the company is designated as 4C.
In fig. 1.2 shows the factors of the macroenvironment of the organization of direct impact.
Rice. 1.2.
Consumers - an integral part of the business of any organization and the most important component of the organization's immediate environment. Any business exists insofar as it has consumers. The organization's strategy should be focused on the fullest satisfaction of the needs and requirements of the consumer. Knowing the specific desires of its customers, their aspirations and hopes allows the organization to develop clear development goals and programs for their implementation.
In order to attract and retain consumers in the future, it is necessary to familiarize consumers with the purpose of the organization, i.e. with its strategic goals.
Of course, an organization can influence both suppliers and intermediaries, offering them its own prices, tariffs, offering price discounts, giving preference to some of them, etc. Suppliers - these are organizations and individuals who supply the resources necessary for the production of goods or for the provision of services. Market trends affecting suppliers can have a significant impact on an organization's implementation of its strategic plan.
Intermediaries refers to the structures that help an organization advertise, market, sell, and deliver a product to a customer. They are all usually related to each other. Whatever the organization does, whatever product or service it specializes in, the most important intermediaries are transport, financial and advertising.
Any organization faces a wide range of competitors. Market theory states that in order to succeed in business, an organization must not only meet the changing needs of its customers, but also adapt to the strategies of its competitors. The organization must gain a strategic advantage by introducing the priority of its products into the minds of competitors.
In addition, an organization by its actions to better meet the needs and requirements of its customers can influence competitors. Competitors will certainly think if this organization suddenly lowers the prices of its goods, and will take some steps. This is one of the possible forms of influence on competitors. By using the media to cover, for example, its charitable work, an organization can form a positive public opinion about itself.
In addition, the various contact audiences of the organization can be referred to as influencing factors. Contact audience - any group that has a real or potential interest in the organization or influences its ability to achieve its objectives. The contact audience can either contribute to the organization's efforts to serve the market or to oppose the organization's efforts to serve the markets.
Any organization operates with seven types of contact audiences:
- 1) financial circles (banks, investment companies, stock exchange brokerage organizations, shareholders);
- 2) mass media (newspapers, magazines, radio stations and television centers);
- 3) contact audiences of state institutions;
- 4) public organizations (groups of environmentalists, representatives of national minorities, etc.);
- 5) local community (local population);
- 6) society as a whole;
- 7) internal contact audiences (own workers and employees, volunteers, managers, board members).
All these are examples of the possible influence of the organization on the factors of the immediate environment. In reality, there are an infinite number of them.
An increasing number of organizations have to reckon with public rights, values and priorities, take into account and monitor legislation and regulations, as well as many other factors that cannot be influenced.
It is the macro environment that determines many situations in business, its characteristic features affect the activities of all economic entities, regardless of the form of ownership and the specifics of the products offered on the market.
An indirect impact on the activities of the organization is exerted by political and legal, economic, demographic, socio-cultural, scientific and technical, natural, factors (Fig. 1.3).
Political and legal factors - these are political institutions in the country and their development; the state of the legislation governing economic and business activities; the consequences of the influence of foreign economic policy on competition and demand in the domestic market; the influence of the public on the nature of decisions taken by state bodies. There is a well-known aphorism: "You may not be involved in politics, you may not even be interested in it at all, sooner or later it will take care of you itself."
Rice. 1.3.
Political factors affecting business include all legislative acts, presidential decrees, government orders regulating business activities, as well as similar orders of local authorities. Entrepreneurs should closely monitor the formation and development of the legal framework in order not to make mistakes.
Economic forces - this is the economic situation of the country; purchasing power of citizens; dynamics and structure of consumption; financial, currency, credit position of the country. Strategic planners and marketing specialists should be aware of the main trends in changes in the population's income, since the general purchasing power of the population is determined by current income, savings and price levels.
Demographic factors - This is the population size, its density; territorial location; age structure, fertility, mortality; the number of marriages and divorces; ethnic and religious structure of the population. There are many demographic indicators - all are not listed here. It is quite difficult to influence their development at the level of an individual entrepreneur, but it is necessary to track their change. After all, the market as a set of real and potential buyers is based on a demographic basis. One of the leading demographic trends is the change in the age structure of the population, which is expressed in an increase in the proportion of older people and in a decrease in the proportion of young people. This trend is typical for all European countries, many countries in Asia and America. It is also typical for Russia.
Peter Drucker attached great importance to demographic factors, believing that there is nothing more stupid than ignoring demographics. The main suggestion is that the composition of the population is inherently unstable and subject to sudden, dramatic changes. And this is the primary external factor that is analyzed and considered by those who make decisions, be they businessmen or politicians.
Sociocultural factors - This is the level of cultural development, forms of cultures, features of cultural and moral values of consumer groups, the degree of susceptibility of public consciousness to the influence of external factors. The cultural environment includes institutions that influence the core values, preferences and behaviors of a society.
Scientific and technical factors - these are the pace and scale of scientific, technical and technological changes, the intensity of innovation, the innovative potential of the organization and its main competitors, the requirements for the safety of innovations, the amount of R&D costs, the qualifications of personnel.
Natural factors - the natural resources of the country (region), the prospects for their use, the degree of provision of national production with the main types of raw materials and fuels, the influence of state bodies on the intensity of resource consumption, the level of environmental pollution in general and in individual regions.
An organization needs to study the factors of the macroenvironment, predict their dynamics from a strategic perspective, and adjust its internal factors to these dynamics. At the same time, the organization may not have a direct impact on the factors of the macroenvironment, except for adaptation to the forms of their manifestation. For example, an organization can create demand in the market, manage demand, create new needs, which is a direct impact on such an external factor as consumers.
Strategic management must ensure that the organization interacts with the marketing environment in a way that enables the organization to maintain the capacity required to achieve its objectives and to enable it to survive in the long term.
The definition of the vision, mission and goals of the organization, considered as one of the strategic management processes, consists of three stages, each of which requires a large and extremely responsible work.
The first step is to create vision of the organization - an ideal picture of the organization's future, rather not the goal itself, but a view of "what the organization is going to do in the future and what it wants to achieve." Strategic vision is a perspective view of the direction of development of the organization's activities, the basic concept of what the organization is trying to do, what it is striving for. A strategic vision is necessary for the leadership of the organization to remove all doubts about the long-term prospects for the development of the organization. A well-founded strategic vision is a prerequisite for ensuring strategic leadership. It is impossible to develop a successful strategy for the development of an organization without defining the concept of your business.
The second stage is shaping mission of the organization, which in a concentrated form expresses the meaning of the organization's existence, its purpose. Purpose (mission) of the organization - the answer to the question: "What is our activity, and what will we do?", Which is offered to the clients of the firm. The mission statement emphasizes the main content and direction of the organization. The mission gives the organization originality, fills the work of people with a special meaning.
Next comes the stage of determining long-term tactical goals. Long-term goals are results that must be achieved either over the next three to five years, or consistently achieved from year to year.
And this part of the strategic management of the establishment ends short-term operational goals. Short-term goals are the immediate goals of the organization. They are aimed at improving the performance of the organization and reflect how quickly management is trying to achieve long-term goals. Forming a mission and setting goals for the organization leads to the fact that it becomes clear what the organization is functioning for and what it is striving for.
After the vision, mission and goals have been determined, the stage begins analysis and choice of strategy. At this stage, a decision is made on how, by what means, the organization will achieve the goals. The strategy development process is considered to be the core of strategic management. Defining a strategy is not about making an action plan. Defining a strategy is deciding what to do with a particular business or products, how and in what direction the organization should develop, what place to occupy in the market, etc.
I. Ansoff, considering the distinctive features of the strategy, gives the following definition of the strategy and its benchmark (vision): the benchmark is the goal that the organization seeks to achieve, and the strategy is the means to the goal.
Strategy - the process of establishing a connection between the organization and its environment, consisting in the implementation of the selected goals and in attempts to achieve the desired state of relationship with the environment through the allocation of resources, which allows the organization and its departments to act effectively and efficiently.
Strategy can be seen as the main link between what the organization wants to achieve - its goals, and the line of conduct chosen to achieve those goals. The strategy should become a "thread of time" linking the past and the future, while simultaneously marking the path to development. Strategy is a manager's tool for accomplishing strategic objectives.
The definition of a strategy fundamentally depends on the specific situation in which the organization finds itself. However, there are certain general approaches to strategy formulation and some framework within which the strategies fit.
When choosing an organization's strategy, management is faced with three main questions related to the position of the organization in the market: which business to stop, which business to continue, to which business to move? This means that the strategy focuses on what the organization does and does not do, which is more important and what is less important in the current activities of the organization.
M. Porter, one of the leading theorists and specialists in the field of strategic management, believes that there are three main areas for developing a strategy for the behavior of an organization in the market.
The first area is related to leadership in minimizing costs production. This type of strategy is associated with the fact that the organization achieves the lowest costs of production and sale of its products. As a result, it can win a larger market share due to lower prices for similar products. This basic strategy relies on performance and is usually linked to existing experience. It implies careful control over fixed costs. Investments in production are aimed at the implementation of experience, a thorough study of the design of new products. Marketing does not play a big role and is aimed at lowering sales and advertising costs. The focus of the entire strategy is on low costs compared to competitors. Leadership through cost savings provides strong protection, as the least efficient organizations experience competition.
The second area of strategy development is related to specialization in the manufacture of products. An organization can achieve leadership in the production of its products only through highly specialized production and marketing. This leads to the fact that buyers choose this brand even at a fairly high price. Organizations implementing this type of strategy must have a high R&D potential, high-quality designers, an excellent system for ensuring high quality products, and a well-developed marketing system.
The goal of this strategy is to better meet the needs of the selected target market segment than competitors. Such a strategy can rely on both differentiation and cost leadership, or both, but only within the target market segment.
The third area of definition of strategy relates to the fixation of a certain market segment and the concentration of the organization's efforts on this market segment. In this case, the organization does not seek to work on the entire market, but works on its clearly defined segment, clarifying in detail the market needs for products of a certain type. In this case, the organization can strive to reduce costs, or pursue a policy of specialization in the production of the product. A combination of these two approaches is also possible. However, to carry out a strategy of the third type, an organization must necessarily base its activities primarily on the analysis of the needs of customers of a certain market segment, i.e. in its intentions, it should proceed not from the needs of the market in general, but from the needs of quite specific or further specific customers.
The goal of such a strategy is to give the product distinctive features that are important to the buyer and distinguish the product from competitors' offerings. The organization seeks to create a situation of monopolistic competition in which it, due to its distinctive features, has significant market power.
The peculiarity of the process of implementing a strategy is that it is not a process of its implementation, but only creates the basis for the implementation of the strategy and the achievement of the company's goals. The main task of the implementation phase of the strategy is to create the necessary prerequisites for the successful implementation of the strategy. Thus, the implementation of the strategy is the implementation of strategic changes in the organization, translating it into a state in which the organization will be ready to carry out the strategy in life.
There are six tasks for implementing the strategy:
- 1) creation of an efficient organizational structure;
- 2) directing a sufficient amount of resources to strategically important areas and business units;
- 3) development and implementation of measures to support the strategy;
- 4) creation of internal support systems that contribute to the improvement of work;
- 5) implementation of the personnel motivation policy;
- 6) development of a reward system.
The end result of an organization's functioning largely depends on the effective implementation of its strategy.
The implementation of the organization's strategy is carried out within the framework of the existing organizational structure. The leader of the organization should understand how the existing structure can help or hinder the successful implementation of the strategy. The number of levels of management in an organization or the slow change of these levels in accordance with new conditions can make it difficult to successfully implement the strategy.
Therefore, in some cases, the formal organizational structure is subject to change.
In addition, it is necessary to clearly define what levels of leadership and who in the organization will be responsible for the various tasks. Radical strategic changes and enterprise reorientation are usually driven by the CEO, while ordinary strategic changes can be carried out by middle management.
For the successful implementation of the strategy, the level of informal relations in the organization is of great importance, i.e. the level of organizational culture. For example, if regional managers know each other well and consult on implementation issues, such an informal relationship will facilitate the rapid implementation of strategic objectives.
There are several types of approach to strategy implementation: a team approach, a coordination approach, a cultural approach, a resolute approach.
Within the framework of team approach the manager concentrates his efforts on strategy formulation using rigorous logic and analysis. A leader or top manager can either develop a strategy on their own, or lead a group of strategists who are faced with the task of determining the optimal order of events for the respective organization. After the best strategy has been chosen, subordinates receive information about it and are ordered to ensure the implementation of the strategy by order. In this case, the manager does not play an active role in the implementation of the strategy. However, to ensure the successful implementation and use of this approach, three conditions must be met:
- 1) it is necessary to have accurate and timely information about the marketing environment of the organization;
- 2) the marketing environment of the enterprise must be sufficiently stable;
- 3) the leader or manager who formulates the strategy must be free from subjective preferences and political influences, otherwise it will affect the content of the strategy.
At coordinating approach to strategy implementation, the top manager brings together a group of managers to conduct a brainstorming session in order to formulate and implement a strategy. In this case, the senior manager plays the role of a coordinator who uses his understanding of the dynamics of the group, so that only sound ideas are discussed and analyzed.
Cultural approach occurs through the inclusion in the work of the lower levels of the organization. In this approach, the leader leads the organization, acquainting its members with their perception of the main task, and allows staff to independently choose the course of action that would be appropriate for this task. After formulating the strategy, the leader begins to play the role of a coach, outlining general directions, but at the same time encouraging individual decisions on operational issues of strategy implementation.
Leader choosing hard-core approach to the implementation of the strategy, is engaged in both the formulation and implementation of the strategy. However, the leader himself is not engaged in solving these problems, but directs his subordinates to independently formulate, justify and implement the strategy.
Professor at Harvard Business School Thomas Bonoma believes that in order to successfully implement a strategy, a manager needs to possess four basic types of execution skills.
Interaction skills or interactive skills are expressed in the ability of a manager to control his own behavior and the behavior of others in order to achieve a goal. Depending on the level of strategic change required to implement the strategy, managers need to influence others both within and outside their organization. T. Bonoma argues that the one who has the ability to feel how others feel and has good bargaining skills is the best implementer.
Distribution skills reflect the manager's ability to effectively plan events, time, budget funds and other resources. Able managers avoid investing excessive resources in well-proven programs and know that risky programs often require large investments.
Tracking skills are in the effective use of information by the manager to correct any situations and problems that arise during the implementation process. Good implementers create an effective feedback system to analyze the strategy implementation process and emerging problems.
Organization skills related to the manager's ability to create a new informal organization or network for each problem that arises.
Good implementers know all the people in the organization (and outside) who, because of mutual affection, sympathy, or some other affection, can help with all their might. In other words, good implementers are able to leverage the informal organization of the team to ensure effective task completion.
Thus, the implementation of a strategy often requires managers with the specific skills needed to overcome obstacles and accomplish the assigned tasks. Throughout the implementation process, managers must continually assess how well the strategy is being implemented.
In addition, at the stage of assessing the results of the implementation of the strategy, the manager must already clearly understand the level of strategic change that needs to be achieved.
Evaluation and control over the implementation of the strategy is the logical final process carried out in strategic management. This process provides a stable feedback between the progress of the process of achieving goals and the actual goals facing the organization.
Evaluation of the chosen strategy consists in analyzing the correctness of the choice of the main factors that determine the possibility of implementing the strategy. The main criterion for evaluating the chosen strategy is the answer to the question: will it lead to the achievement of the firm's goals? If the strategy is consistent with the goals of the organization, its further assessment is carried out in the following areas:
- compliance of the chosen strategy with the state and requirements of the environment. It is checked to what extent the strategy is linked to the requirements of the main subjects of the environment, to what extent the factors of the market dynamics and the dynamics of the development of the product life cycle are taken into account, whether the implementation of the strategy will lead to the emergence of new competitive advantages, etc.;
- compliance of the chosen strategy with the potential and capabilities of the organization. In this case, it is assessed how the chosen strategy is linked to other strategies, whether the strategy corresponds to the staff's capabilities, whether the existing structure allows the strategy to be successfully implemented, whether the program for implementing the strategy is verified in time, etc .;
- acceptability of the risk inherent in the strategy. Assessment of the justification of risk is carried out in three directions: are the assumptions underlying the choice of strategy realistic; what negative consequences for the organization can lead to the failure of the strategy; whether the possible positive result justifies the risk of losses from failure in the implementation of the strategy.
Monitoring the implementation of the strategy is the final stage of the strategic management process.
Strategic control - This is a special type of organizational control, which consists in monitoring the process of strategic management and its assessment to ensure correct functioning. Strategic control is designed so that the management of the organization can solve the problems of the organization by observing the strategic management process, as well as to determine the correctness of the course of the strategic management process, and assess its effectiveness. In fact, strategic control is carried out to implement all plans outlined by strategic management.
Monitoring the implementation of the strategy - this is a kind of feedback mechanism that allows you to make the necessary adjustments at each stage of strategic management.
Strategic control is aimed at finding out to what extent the implementation of the strategy leads to the achievement of the organization's goals. This fundamentally distinguishes strategic control from managerial or operational control, since it is not interested in the correctness of the implementation of the strategy or the correctness of the performance of individual works, functions and operations. Strategic control is focused on finding out whether it is possible to implement the adopted strategy in the future, and whether its implementation will lead to the achievement of the set goals.
Special methods and techniques of strategic analysis will help managers evaluate and rank different types of business, focus on solving problems and directions, and ultimately ensure the sustainable development of the enterprise in the long term.
Analysis of the macroenvironment is the process of collecting and interpreting data collected through its study for the subsequent assessment of the impact of macroenvironment factors on the activities of an enterprise.
The enterprise, directly or indirectly, is influenced by macroenvironmental factors: economic, political, legal, demographic, social, natural, technological and cultural. Despite the fact that the enterprise is not able to manage the environmental factors, it has the ability to simulate their impact and adapt to them.
When assessing the influence of macroenvironmental factors, it is necessary to take into account:
- interconnectedness of environmental factors - the level of force with which a change in one factor affects others. A change in any environmental factor can cause a change in others;
- the complexity of the external environment - the number of factors that the industry must respond to, as well as the level of variability of each factor;
- environmental mobility - the rate at which the changes occur. The mobility of the external environment may be higher for some trade enterprises and lower for others. In a highly mobile environment, an organization or department must rely on more diverse information to make effective decisions;
- uncertainty of the external environment - the relationship between the amount of information the industry has about the environment and the confidence in the accuracy of that information.
The more uncertain the external environment, the more difficult it is to make effective decisions.
One of the most common ways to assess the external marketing environment is PEST analysis, which is carried out in order to study the key factors of the macroenvironment (political and legal, economic, socio-cultural and technological) and determine their impact on the results of the current and future activities of the enterprise (Figure 9.1).
Rice. 9.1.
Political factors the external environment is studied in order to obtain data on the intentions of public authorities in relation to the development of society and on the means by which the state intends to implement its policy.
Economic forces analyzed to understand the economic situation, determine the level of inflation, market conditions, etc.
The study social factors the external environment is carried out to assess the degree of influence on business of such social phenomena as people's attitude to work and quality of life, people's mobility, consumer activity, etc.
Analysis technological factors allows you to foresee the opportunities associated with the development of science and technology, to reorganize in a timely manner to the production and implementation of a technologically promising product, to predict the moment of abandonment of the technology used.
There are the following stages of PEST analysis:
- 1) development of a list of external factors that have a high probability of implementation and impact on the functioning of the enterprise;
- 2) an assessment of the significance (probability of occurrence) of each event for a given enterprise by assigning a certain weight to it from one (most important) to zero (insignificant). In this case, the sum of the weights must be equal to one;
- 3) assessment of the degree of influence of each factor-event on the strategy of the enterprise on a five-point scale: 5 - strong impact, serious danger; 1 - no impact, threat;
- 4) determination of weighted estimates by multiplying the weight of a factor by the strength of its impact and calculating a total weighted estimate for a given enterprise, which indicates the degree of the enterprise's readiness to respond to current and projected environmental factors.
In addition to PEST analysis, there are other methods for assessing environmental factors.
So, for example, for assessing the impact of the macroenvironment on enterprises in the industry N you can use the following technique:
- determine the factors and their actual significance;
- determine by expert means the nature of the influence (+, -);
- evaluate expertly the degree of influence of each factor on a five-point scale and the coefficient of importance, taking into account the fact that the sum of all coefficients is equal to one (Table 9.2 )TO
Table 9.2
Assessment of the influence of macroenvironmental factors
Integral assessment of the impact of macro-environment factors on trade (IO) can be determined by the formula
where L, B y C - scoring of environmental factors; a, p, y - coefficients of the importance of influence.
You can also assess the external environment using profiles , for which a list of factors is determined, the degree of their importance and the direction of influence on the industry (Figure 9.2).
Rice. 9.2.
The results are presented in the form shown in table. 9.3. Then the profile of the environment is determined, which is adjusted taking into account the specific situation, and an integral score is calculated, indicating the degree of importance of the factor for the organization:
where A - importance to the industry; V - ; WITH - direction of influence.
Table 93
Environmental profile
|
Environmental factors |
Importance |
Impact on the sales organization |
Focus |
Integral estimate ( 2 - 3 - 4 ) |
|
Economic forces |
||||
|
||||
|
Socio-demographic factors |
||||
|
||||
|
Environmental factors |
Importance |
Impact on the sales organization |
Focus |
Integral (2 - 3 - 4 ) |
|
1 |
4 |
|||
|
||||
|
Political and legal factors |
||||
|
||||
|
Scientific, technical and technological factors |
||||
|
||||
|
Natural and climatic factors |
||||
| ||||
Based on the compiled profile of the external environment, it is possible to draw conclusions about which factors to a greater and which to a lesser extent affect the enterprise.
In the theoretical aspect, the factors of the external environment are considered separately, but in practice it makes sense to study their complex impact on the enterprise, for example, using the index factor model, one can determine the turnover per capita and identify the influence of environmental factors on this indicator.
Trade turnover per capita (PQ; V rubles) in actual or comparable prices is calculated by the formula
where PQ - total volume of goods turnover, rubles; S - average annual population, people
One of the most important objects of study is the socio-economic environment, since demand and supply in the market depend on the events taking place in it. The general state of the economy determines the financial capabilities of buyers.
The following macroeconomic indicators are analyzed:
- gross domestic product / regional product - products produced within the country / region only using their own factors of production are calculated in physical and value terms. Chain and baseline growth rates are also determined;
- employment rate - characterizes the security of supply in the labor market;
- population income - the receipt of goods in possession over a certain period of time, consists of the monetary (salary, stipend, pension, etc.) and in kind (receipts from the personal economy, benefits) part. The analysis takes into account nominal (in monetary units), real (adjusted for the consumer price index) income, as well as the ratio of total income to GDP. In order to reveal the distribution of income between households, the average income indicators for 10% of population groups are calculated, then, as the ratio of the average incomes of the richest 10% and the poorest 10%, it is calculated decile factor by income. The decile coefficient for wages is calculated in a similar way. Average per capita income is an indicator characterizing the purchasing power of the population. Changes in the structure of purchases are consistent with Engel's law, which reflects the amount of funds from the personal budget spent on the purchase of food;
- consumer spending of the population - consist of the purchase of food, non-food products, as well as services, excluding savings, taxes and other mandatory payments;
- inflation rate , g.e. the relative change in the average price level for a certain period of time, which is characterized by the price index or percentage change. In the case of determining the price index for consumer goods / services, price indices for consumer services, food, non-food products are calculated, within which it is possible to determine price indices for individual goods and services and their dynamics.
Table 9.4 reflects the algorithm for calculating the main macroeconomic indicators.
Algorithm for calculating macroeconomic indicators
Table 9.4
|
Indices and indicators |
Calculation algorithm |
Note |
|
Economic growth rate (GDP) |
Modified Harrod model. 1. Technological GDP growth rate: * GDP = ^ OFP + i k "^ k-
V K 3. The resulting GDP growth rate: ' R _ ^ OFP "and K" ^ VK pvp 1-a to? AIFO with [) |
And c - gross investment; V K - physical volume of capital; Вк - the rate of capital outflow; API - investment accelerator; FO cf - average return on assets |
|
GDP per capita |
This is the ratio of GDP to the country's population (PN): GDPdn = GDP |
Shows how much of the gross product produced in a country per year and expressed in value terms per 1 inhabitant of a given country |
|
Interest rate level (interest rate) |
This is the amount indicated as a percentage of the loan amount that the recipient of the loan pays for using it, calculated for a certain period (month, quarter, year) |
From March 29, 2010, the Central Bank of the Russian Federation (No. 2415-U) set the refinancing interest rate (discount rate) at 8.25. From March 2017 discount rate - 9.75 |
|
Consumer Price Index (CPI) |
This is a price index calculated for a group of goods and services included in the consumer basket of an average urban dweller. PKt „ipts = tts |
PK TC and PK B c - consumer basket, respectively, at current and base prices |
|
Average per capita cash income |
The ratio of the total amount of money income of the population for the year (or the current period) to the average annual number of the available population |
|
|
The quantity tax |
Since January 1, 2016, the constituent entities of the Russian Federation have been granted the right to establish differentiated tax rates on the simplified tax system for the object “income”. |
This is the amount of tax charges per unit of measurement of the tax base |
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Indices and indicators |
Calculation algorithm |
Note |
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accessibility |
This is the awareness of borrowers about the conditions for obtaining a loan. |
Depends on the following conditions: Ease of obtaining a loan (taking into account the reduction of requirements for borrowers, for example, loans are the most affordable with a minimum down payment);
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magnitude credit |
Average rates on the market today are about 20% per annum |
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purchasing capabilities population |
The ratio of the average per capita monetary income of the population as a whole (or a separate group) (DD) to the average price of a purchase or service (ATP): |
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consumption consumption) |
The ratio of the volume of goods and services consumed by the population for the year to the average annual number, both in general and in group indicators |
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Dynamics consumption |
It is determined using the aggregate consumption volume index (^ op): j _X + IVo YjQqPo + X s ok) |
q v s 0 - the amount of goods and services consumed in the reporting and base periods, respectively; p 0, t 0 - price of goods and tariff for a specific service in the base period |
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Elasticity consumption |
The ability of consumption to change within certain limits under the influence of a number of economic factors. Determined by the coefficient of elasticity: To e = AQ / AP |
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Indices and indicators |
Calculation algorithm |
Note |
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The coefficient of satisfaction of the need for the / -m product |
(fiф - actual consumption of i-ro goods on average per capita; q in- normative level of consumption of i-ro goods on average per capita |
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inflation |
Indicator of the average level of change in prices of goods and services relative to the base period |
Used as a measure of inflation and expressed as a percentage for the year |
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Exchange rate |
The value of the ruble in relation to the value of the monetary units of other countries |
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The level of population mobility (share of the population with cars, U mn) |
b / m - the share of the population with cars; NS - the population of the country |
The influence of environmental factors on an organization, for example, a retail trade organization, can also be determined using N.V. technique . Merciful , according to which the assessment is carried out in the following stages.
- 1. The direction of development of the trade organization is determined. Portfolio analysis methods are used as tools for choosing the direction of development, including an assessment of the attractiveness of the market and threats (external factors), the competitive position and internal capabilities of the organization (internal factors).
- 2. The objects of assessment are determined, which can be regional markets. External and internal factors for each region are characterized by a set of indicators.
- 3. The external factors influencing regional trade are determined. The attractiveness of the regional market and the opportunities for development in this market are determined by economic, political and social factors of the macroenvironment.
- 4. Indicators characterizing the factors of the external environment are determined: retail trade turnover, monetary incomes of the population, growth of retail trade turnover in comparable prices, rating of the investment climate.
- 5. The rating scale is determined, which consists of two indicators: investment potential, the level of investment risk.
- resource and raw materials (weighted average provision with balance reserves of the main types of natural resources);
- production (the aggregate result of economic activity of the population in the region);
- consumer (aggregate purchasing power of the region's population);
- infrastructural (economic and geographical location of the region and its infrastructure);
- intellectual (educational level of the population);
- institutional (the degree of development of the leading institutions of a market economy);
- innovative (the level of implementation of the achievements of scientific and technological progress in the region).
The value of the integral rating of each region is calculated in a similar way. the level of investment risks, including the following types of risk:
- economic (trends in the economic development of the region);
- political (polarization of the political sympathies of the population following the results of the last parliamentary elections);
- social (level of social tension);
- ecological (level of environmental pollution, including radiation);
- criminal (the level of crime in the region, taking into account the severity of the crime).
In addition, it is necessary to take into account such factors as the level and structure of competition in the market.
Competition level, or the degree of saturation of the retail market can be quantified using the following indicators:
- number of residents per retailer;
- average sales:
- - to a retail store,
- - the category of the retail store,
- - per capita or per household,
- - square meter of retail space;
- average sales per employee in a retail store;
- average number of retail space per capita.
As an indicator characterizing the level of competition, we use indicator of the provision of the population with retail space. The higher the provision of the population with retail space, the higher the level of concentration of retail trade organizations and, accordingly, competition.
6. The indicators are being evaluated. The listed indicators of the external environment have different units of measurement, therefore, in order to obtain a formal, quantitative assessment, each indicator must be evaluated on a five-point scale. At the same time, the factors that characterize the attractiveness of the market are assessed with a "plus" sign, factors posing threats - with a "minus" sign.
The factors that determine the attractiveness of regional markets have a positive meaning; accordingly, the higher the score, the more opportunities exist in this market. The determinants of threats or restrictions operate in the opposite direction, i.e. the higher the influence of the factor, the less attractive the market is. Accordingly, these factors can nullify attractiveness if they are stronger than positive factors.
In order to assess the factors of the macroenvironment, it is necessary to compare the absolute values of the indicators that determine it, for all objects of comparison (markets, regions, etc.), to determine the maximum and minimum values of the indicators.
The maximum number of points is set to the maximum value of the indicator. The rest of the scores are calculated using the formula
where a n - assessment of the region's indicator n N n - value of the region indicator NS; LTah - the maximum value of the indicator for all regions; iV min - the minimum value of the indicator for all regions.
Table 9.5 shows the scheme for calculating the assessment of market opportunities.
Table 9.5
Assessment of external factors that determine attractiveness
retail markets and possible restrictions or existing threats
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Assessment factors |
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External factors: market opportunities |
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Retail trade turnover, thousand rubles |
a |
a |
a |
a |
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Retail trade turnover,% of the previous year in comparable prices |
a 2 |
a 2 |
a 2 |
a 2 |
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Total cash income of the population, thousand rubles |
a 3 |
a h |
a 3 |
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a 4 |
a 4 |
a 4 |
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Mean |
a |
a |
a |
a |
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External factors: strategy limitations |
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Provision of the population with retail space Miloserdova II. B. Marketing strategy of a retail trade organization: choose the rationale: dis ... cand. ekoy. sciences. M., 2010. | ||||
No organization can function in isolation, regardless of the external environment. An organization as an open system can survive only in connection with the external environment.
External environment are factors that are outside the scope of the organization and contribute to its functioning, survival and growth when used skillfully.
There are four main types of external environment.:
1. A changing environment characterized by rapid change. These can be technical innovations, economic changes (changes in the inflation rate), changes in legislation, innovations in the policies of competitors, etc. Such an unstable environment, which creates great difficulties for management, is inherent in the Russian market.
2. Hostile environment created by fierce competition, the struggle for consumers and markets. Such an environment is inherent, for example, in the automotive industry in the United States, Western Europe and Japan.
3. Diverse environment typical of global business. A typical example of a global business is McDonald's, with operations in many countries (and therefore serving many multilingual clients), with diverse cultures and consumer tastes. This diverse environment influences the organization's activities, its policies for influencing consumers.
4. Technically challenging environment... In such an environment, electronics, computer technology, telecommunications are developing, which require complex information and highly qualified service personnel. The strategic management of enterprises in a technically complex environment must be focused on innovation, as products in this case quickly become obsolete.
Analysis of the external environment requires processing a large amount of information. But at the same time, there is a serious danger of getting carried away with the collection of information in the absence of clearly formulated goals of the analysis. The boundaries of the collection of information are determined by the goals set.
The main purpose of the analysis of the external environment- to identify and effectively use in the development of the strategy the opportunities and threats that exist at present and that may arise for the organization in the future.
As mentioned earlier, the external environment is divided into a macroenvironment and a microenvironment. Their analysis is carried out by various tools.
Macroenvironment includes general factors that are not directly related to the short-term activities of the organization, but can influence its long-term decisions.
Strategic factors of the macroenvironment are considered to be such directions of its development, which, firstly, have a high probability of implementation and, secondly, a high probability of impact on the functioning of the enterprise.
Changes in the macroenvironment affect the strategic position of the organization in the market, affecting the elements of the microenvironment. That's why the purpose of analyzing the macroenvironment is the tracking (monitoring) and analysis of trends / events outside the control of the organization, which may affect the potential effectiveness of its strategy.
Since the number of possible factors of the macroenvironment is large enough, when analyzing the macroenvironment, it is recommended to consider four nodal directions, the analysis of which is called PEST analysis(according to the first letters of the English words political-legal - political and legal; economic - economic; sociocultural - socio-cultural; technological - technological factors) (Table 6.1).
In addition to the macroenvironment factors indicated in the table, of course, other specific factors can influence the organization's activities. For example, the natural environment affects the activities of agricultural enterprises and the construction industry.
Table 6.1
PEST analysis or analysis of macroeconomic factors
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Political and legal factors: government stability; tax policy in this area; antitrust legislation; environmental protection laws; regulation of employment of the population; foreign economic legislation; the position of the state in relation to foreign capital; unions and other pressure groups |
Economic forces: trends in gross national product; business cycle stage; interest rate and exchange rate of the national currency; the amount of money in circulation; inflation rate; unemployment rate; control over prices and wages; energy prices; investment policy |
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Socio-cultural factors: demographic structure of the population; lifestyle, customs and habits; social mobility of the population; consumer activity |
Technological factors: R&D costs from various sources; protection of intellectual property; state policy in the field of scientific and technological progress; new products (update rate, sources of ideas) |
There are the following stages of PEST analysis:
1. A list of external strategic factors that have a high probability of implementation and impact on the activities of the enterprise is being developed.
2. The significance (probability of occurrence) of each event for a given enterprise is estimated by assigning a certain weight to it from one (most important) to zero (insignificant). The sum of the weights must be equal to one, which is ensured by standardization.
3. The assessment of the level of accounting for each factor in the enterprise strategy is given on a 5-point scale:
- "five" - the influence of the factor is fully taken into account in the strategy;
- "unit" - the impact of the factor is not taken into account in the strategy.
4. Weighted scores are determined by multiplying the weight of the factor by the strength of its impact, and a total weighted score is calculated. It indicates the degree of readiness of the organization to respond to the current and projected factors of the macroenvironment: the closer the score is to one, the lower the degree of readiness of the organization.
For the convenience of analysis, it is recommended to present the results of PEST analysis as follows (Table 6. 2).
Table 6.2
PEST analysis results
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Factor weight |
Assessment of factor accounting in the strategy |
Weighted score |
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Features of legislation |
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Tax policy |
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GNP trends |
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Interest rate level |
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Mentality |
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Consumer activity |
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Government spending on R&D |
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STP level |
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Various methods are used to analyze and forecast the development of the macroenvironment: forecasting individual trends and events, scenario analysis, simulation, factor analysis, expert methods are widely used. Unfortunately, these methods have not yet become widespread in Russian practice for various reasons, including the lack of a reliable information base.
The large number of groups interested in the organization's activities creates management difficulties associated with the fact that each group uses its own criteria for assessing the functioning of the organization, and the activities of managers from the point of view of their interests. For example, the ratio of consumer properties to the price of a product, its availability and level of service are important for buyers; for suppliers - the speed of payment for orders and their stability; shareholders are primarily interested in dividends and the market value of securities, etc. To the extent that the interested group is not satisfied with the performance of the enterprise, it will put pressure on it to change the situation. This, in fact, is what many Russian enterprises face. The conflicting interests of different groups must be taken into account when making any strategic decision. And the priority must be set depending on the specific situation.
Microenvironment organization represents the level of the external environment, consisting of components that have a direct impact on the development of the organization. First of all, it is the industry in which the organization operates. Therefore, microenvironment analysis can be called industry analysis.
Industry is a collection of organizations competing with similar goods or services in the same consumer market.
The purpose of industry analysis is to determine the attractiveness of the industry and its individual product markets. This analysis allows you to understand the structure and dynamics of the industry, its characteristic opportunities and existing threats, to identify the key success factors and, on this basis, develop a strategy for the organization's behavior in the market.
There are the following industry analysis stages:
1) determination of the economic characteristics of the industry environment;
2) assessment of the degree of competition;
3) identification of key success factors;
4) conclusion on the degree of attractiveness of the industry.
Stage 1. Determination of economic characteristics
industry environment
The economic characteristics of an industry are important because they impose constraints on the variety of strategic approaches that an organization can take in a given industry. For example, in a capital-intensive industry, where a single plant can cost hundreds of millions of dollars, a company can alleviate some of the heavy burden of high fixed costs by adopting a capital-intensive strategy, thus generating revenue that is one dollar more than its fixed assets.
To assess the overall situation in the industry, the following are used indicators:
a) the phase of the life cycle of the industry;
b) real and potential market size;
c) growth rates of the industry and trends in its development;
d) the structure of sectoral costs;
e) product marketing system;
f) average industry profit;
g) the rate of technological changes and product innovations, etc. (the degree of product differentiation; the amount of economy on the scale of production, transportation, etc.).
a) Phase of the life cycle of the industry
It is necessary to determine the stages of the life cycle of the industry and individual product markets. The life cycle of an industry development refers to a model that has five phases.
Rice. 6.1. Industry life cycle stages
Competitive factors affecting an organization in an industry evolve over the life of an industry:
1. Formation period of the industry weakens competitive forces. At this stage, there are favorable opportunities for expansion and capture of market areas.
2. During the growth of the industry the threat of competition, especially price competition, is growing.
3. During maturity industries the threat of competition is reduced and there is an opportunity to limit price competition through the consent of price leaders. Therefore, relatively high profitability is observed at this stage. Non-price competition can play a big role and is important for companies taking advantage of product differentiation.
4. During the recession competition intensifies in industries, especially if exit barriers are high, profits fall and the danger of a price war is significant.
5. During the destruction of the industry it is supposed to use strategies of targeted reduction and transition of the organization to another industry.
At the same time, the strategic interest lies not in the analysis of history (although such analysis helps to separate hopes from reality), but in predicting tipping points(points) when the rate and, possibly, the direction of growth may change. In the forecast, you can use the experience of other industries or products (for example, sales of color and black-and-white TVs have a similar model of market behavior, which is followed by enterprises that produce TVs).
b) Real and potential market size
Knowing the size of the market is important for evaluating investments and determining the market share of competitors.
Market size is measured by the following indicators:
- the volume of the offer. The main subjects of the proposal and their shares in the total volume of the proposal should be determined;
- the volume of demand. It is necessary to identify the main consumers and potential ones. Determine the basic requirements of consumers (quality, price level, influence of fashion, season, etc.);
- growth potential. It may turn out to be illusory: there is demand, but consumers practically do not have financial opportunities to expand it. Therefore, it is important to understand the conditions for the development of the market potential of the industry, which is influenced by many factors: environmental (opposition to the construction of nuclear power plants, a high-speed road from Moscow to St. Petersburg), economic (lack of funds in the budget to support Russian military plants), political (accelerated privatization of enterprises, weak protection of Russian producers from foreign competition), etc.
c) Growth rates of the industry and trends in its development
In any industry, there are certain development trends that affect the level of competition.
We will consider industry development trends from the point of view driving forces concept.
Driving forces - these are the factors that have the greatest impact and determine the nature of change in the industry.
The analysis of driving forces includes two stages: determining the driving forces themselves and determining the degree of their influence on the industry.
At the first stage, the following are distinguished main groups of driving forces:
1. Changes in long-term trends in the economic growth of the industry. This factor affects the ratio of supply and demand in the industry, the ease of market penetration and exit. Continuous growth in demand attracts new firms to the market and encourages investment from firms already in the market. In a shrinking market, there are trends in the reduction of production volumes and the number of competing firms (some of them go to other industries).
2. Changes in the composition of consumers, which can be caused by demographic shifts.
3. Changes in the way the product is used. New ways of using the goods expand the range of services provided to consumers (credit, technical assistance, repairs), cause changes in the distribution network (dealers, retailers), update the approach to sales and advertising.
4. Introduction of new products and know-how. This factor expands the circle of consumers, gives impetus to the development of the industry and increases the level of differentiation of goods among competing selling companies.
5. Technological changes... Advantage in technology improves product quality, lowers costs and opens up new perspectives for the industry as a whole.
6. Changes in the marketing system, allow expand demand for products across the industry, increase product differentiation and / or reduce unit costs.
7. Large firms entering or leaving the market, which entails a change in balance and intensifies competition (either for a vacant seat, or for a newly entered company).
8. Increasing globalization of the industry, that is, the industry reaches the world level, which entails qualitative and quantitative changes in the competitive composition of the industry.
9. Changes in the structure of costs and productivity. This factor is influential in those industries where economies of scale are important. In this case, firms are trying to increase their market share, as this becomes an important advantage, there is no “growth race” in the industry and many organizations seek to apply a strategy of increasing production volumes.
10. The transition of consumer preferences from differentiated to standard products (or vice versa). Such changes in consumer preferences can lead to an increase in demand for cheaper mass goods and price competition.
11. Impact of changes in legislation and government policy. Domestic laws and government actions can cause major changes in firms' behavior and strategies. Deregulation has been a major driving force in industries such as banking, natural gas, air travel, and telecommunications.
12. Changing social values, orientation and lifestyle. The emergence of new problems of concern to society, a change in attitudes towards various products, a changing lifestyle are all a powerful source of change in the industry. Consumer concerns about salt, sugar, cholesterol, and chemical additives in a product are forcing food companies to introduce new technology, reorient R&D, and introduce healthier products.
13. Reducing the influence of uncertainty and risk factors, which is associated with the stabilization of the situation in the industry. It leads to the expansion of manufacturers of these products, because they are attracted by easy working conditions.
Thus, the industry is influenced by a huge number of factors, but only two or three of them can be considered driving forces, since they are the ones who determine how the industry develops.
The practical implications of driving forces analysis is as follows:
1. It shows managers which external forces will have the greatest impact on the organization in the next 1-3 years.
2. Identification and characterization of driving forces allows you to take into account their positive and negative impact on the organization.
3. Knowing the driving forces allows them to be used to develop an effective strategy.
Thus, the task of driving forces analysis is to separate the main reasons that led to changes in the industry, and the insignificant ones; usually no more than three or four highlighted factors are the driving forces.
d) Structure of sectoral costs
Costs- these are the costs of various factors for the production of products.
Industry costs is the total average costs for the industry.
The price of a product, and hence its competitiveness, directly depends on the level of costs. If a firm has costs below the industry level, then it receives superprofits and a sustainable competitive advantage. In the opposite situation, the firm is at a loss.
Production costs depend on the following factors:
- prices for raw materials and auxiliary materials;
- costs of delivery of goods to consumers;
- qualifications of personnel and their work experience;
- production volume;
- labor productivity;
- production technology;
- costs for the location of production facilities (rent, taxes);
- quality management, etc.
e) Product marketing system
At this stage, the following industry characteristics are analyzed:
- the number of consumers of industry products and their integration;
- what distribution channels prevail in the industry;
- availability of alternative distribution channels;
- access or control over distribution channels.
f) Average industry profit
Commercial enterprises strive to ensure that the income received from the sale of manufactured goods exceeds the cost of production of this product - this is commercial settlement principle.
The total income received from the sale of manufactured goods forms gross proceeds organization, which is designated TR. Usually, its receipt completes a certain stage of work, as a rule, the production of a batch of goods.
The amount of revenue depends on two components:
- production volume (q);
- the prices of this product (p):
This dependence is graphically shown in Fig. 6.2.
Rice. 6.2. Gross revenue of the organization
In the figure, the shaded area represents the amount of revenue. You can increase revenue by raising the price or increasing the volume of production.
It should be remembered that if an enterprise is not the only manufacturer of a given product, then it cannot set prices itself, the price is set as a result of intra-industry and inter-industry competition. This means that at a given price for the goods proceeds depends on the volume of production, which the company determines itself.
The dependence of revenue on the volume of production at constant prices is shown in Fig. 6.3:
Rice. 6.3. Dependence of revenue on production volume
The figure clearly shows that there is a direct dependence of revenue on the volume of goods produced: the larger the volume, the greater the revenue.
However, any commercial enterprise works for the sake of arrived(P), which appears as the difference between revenue (TR) and production costs (TC):
Industry average profit(AR) is the average profit attributable to each firm operating in the industry:
AP = е P i / I,
where AR is the industry average profit;
åP i - the sum of the profit received by each organization operating in the given industry;
I - the number of organizations working in this industry.
g) Rate of technological change and product innovation
The level of technological development largely determines the possibility of access to the industry by random competitors that increase competition, and also affects the amount of initial capital required to enter this market.
Stage 2. Assessment of the degree of competition
The analysis of the competitive forces acting on the organization is carried out in accordance with models of the five forces of competition(Fig. 6.4), proposed by a professor at Harvard Business School M. E. Porter.
Rice. 6.4. Porter's "five forces" model
Porter identified five forces of competition and proved that the higher the pressure of these forces, the less opportunity for existing companies to increase prices and profits. The weakening of forces creates favorable opportunities for the company.
The main task of the manager is to find such a field of activity, which would provide protection from the action of these competitive forces and / or would be able to use them for their own purposes. Of the five factors of competition in the industry, as a rule, one factor dominates, which becomes decisive in the development of an enterprise's strategy.
Let's take a closer look at each of Porter's strengths.
Porter's first strength:
Competition among firms operating in the industry
Rivalry among existing firms depends on many factors. Let's name the main ones:
1. An increase in the number of rival firms that are approximately the same in size and production... This is due to the fact that when competing firms are approximately equal in size and production, they are approximately in equal conditions, and it is difficult for one or two firms to win the competitive “battle” and take a leading position in the market. The more competitors there are, the more likely new, creative strategic initiatives will emerge.
2. The growth rate of demand for products. If demand grows along with the market, then companies can increase the rate of return on investment, and this makes the company more attractive. A firm can spend all of its financial and management resources just to keep up with growing demand, and not to intercept buyers from other firms. On the contrary, a decline in growth causes a lot of competition, companies can take away sales markets only from other companies. Expansion-oriented firms or firms with overcapacity often cut prices and use other sales growth techniques. The resulting competition for market share can push weaker and less efficient firms out of the market. Then the industry will consolidate into a small group of producers, each of which, nevertheless, has a strong position.
3. Special business conditions the industry is pushing firms to lower prices or use other means of increasing sales and production. Fixed costs in any case make up a significant part of production costs, but the cost of one unit of production decreases with full or almost full utilization of production facilities, since in this case the fixed costs are divided over a larger number of products. Unloaded capacities cause a noticeable increase in the cost of one unit of production, since the burden of fixed costs falls on a smaller number of products. In this case, if demand decreases and capacity utilization falls, the pressure of rising unit costs pushes firms to enter into secret agreements to reduce prices, to apply special discounts and other methods of stimulating sales, which sharpens the competition. Likewise, perishable, seasonal products, products that are expensive to store, can be dumped on the market when competitive pressures force one or more companies to dump surplus stocks.
4. Low level of costs for buyers when switching from the consumption of one brand of goods to the consumption of another. On the one hand, low brand change costs make it easier for firms to poach consumers for competing products. On the other hand, the high cost of changing brands protects manufacturers from competing attempts to attract consumers of their products.
5. One or more organizations are dissatisfied with their market share... They are trying to increase it by using the share of competitors. Firms in weakening or financially distressed often act aggressively, buying out smaller rivals, introducing new products, increasing advertising costs, setting special prices, and so on. Such actions can start a new round of competition and exacerbate the battle for competition. market share.
6. Competition intensifies in proportion to the growth in profits from successful strategic decisions. The higher the potential profit, the more likely it is that some firms will act in accordance with a given strategy in order to obtain this profit. The profit margins depend on how soon competitors respond. When their response is delayed (or none at all), the company that first adopts a new competitive strategy can generate revenues over a period of time and perhaps seize the initiative so confidently that rivals are doomed to lag behind. The greater the potential profit for a first-mover firm, the more likely a firm will take the risk of taking the first step.
7. Exit barriers are a serious hazard, especially when industry demand falls.
Exit barriers are the economic and emotional factors that keep a company in the industry, even if revenues are low. The result is surplus production capacity, which leads to increased price competition as companies cut prices in an attempt to exploit idle capacity.
Exit barriers include the following circumstances:
Investments in equipment have no alternatives for their use and, if the company leaves the industry, they should be written off;
Significant financial expenses for the payment of benefits to dismissed employees;
Emotional attraction to the industry;
Strategic relationships between structural divisions of the firm, such as considerations of synergy or integration between them;
Economic dependence on an industry, for example, if a company is not diversified, it is forced to stay in the industry.
8. The difference in the priorities of firms, their strategies, resources, personal qualities of their leaders and the country where they are registered. Differences among competitors allow everyone to find their own competitive advantages, which somewhat weakens intra-industry competition.
9. Large companies operating in other industries are acquiring any failing firm in the industry and are taking decisive and well-funded efforts to transform the firm they have bought into a market leader.
For example, Philippe Maurice, a leading cigarette company with superior marketing know-how, completely changed the marketing approach to the brewing industry when it acquired the unremarkable Miller Breeving in the late 1960s. Within a short period of time, Philippe Maurice developed a marketing program for Miller beer and brought this brand to the second place in terms of the number of sales.
10. The degree of consolidation in the industry. Allocate fragmented industries(with monopolistic competition), where a significant number of similar firms operate (the children's toys industry); oligopolistic industries where there are several large companies that are closely dependent on each other (metallurgical industry); monopolistic industries, where one manufacturer operates (the energy sector - OJSC E&E Chelyabenergo).
Fragmented industries pose potentially more threats than opportunities because entry into such industries is relatively easy. Competition in such industries is conducted mainly by price methods.
In consolidated industries, companies tend to be large and independent. And the competitive actions of one company directly affect the market share of competitors, provoking their retaliatory actions and unwinding the spiral of competition. Competition in these industries is conducted mainly by non-price methods (quality of service, additional qualities).
Thus, competition among organizations operating in the industry depends on many factors, among which there is a close relationship. Competitive factors affecting a firm in an industry evolve over the life of the industry. The industry's rapid growth is weakening competitive forces. At this stage, there are favorable opportunities for expansion and capture of market areas. During a period of slowing growth, the threat of competition, especially price competition, increases. At the stage of maturity, threats to competition subside due to the agreement of price leaders. Therefore, relatively high profitability is observed at this stage. During the downturn, competition grows rapidly, especially if exit barriers are high, profits are falling, and the danger of a price war is significant.
The main problems in the analysis of competitors are related to the fact that it is difficult to identify all competitors, it is also difficult to observe all of them, since there can be a lot of competitors. The idea of identifying strategic groups of competitors proposed by M. Porter makes it possible to make the process of analyzing competition manageable. This approach is useful when an industry consists of several groups of competitors, each with a distinct buyer, distinct market position, and different ways of dealing with buyers.
Strategic group of competitors is a set of competing firms in a particular industry that have common features (similar competition strategies, similar market positions, similar products, distribution channels, service and other marketing elements).
Establishing a strategic group means defining the boundaries that separate one group from another. Such boundaries can be the size of enterprises, differentiation of goods, specialized labor force, unique technologies, availability of patents, etc. For example, the following groups can be distinguished in the financial services market:
Local banks;
Branches of large nonresident banks;
Non-banking institutions;
Insurance companies.
A visual form of understanding of certain strategic groups of competitors operating in the industry is positional maps(fig. 6.5).
Building a positional map is a sequence of the following steps:
1. Choose a dimension - weighty characteristics that allow differentiating various enterprises in the industry. In this case, such characteristics are the price and quality of the product.
2. Based on preliminary research and analysis, classify enterprises in accordance with the specified characteristics.
3. To combine enterprises with similar characteristics into strategic groups. Ideally, the size of the circle representing each group should be directly proportional to the group's sales in the corresponding area of the positional map.
Enterprises of the same strategic group are obvious rivals, while enterprises from distant groups are unlikely to compete at all. The difficulties in constructing positional maps are associated with the fact that if the selected characteristics are interconnected, then such a map is not of interest.
Porter's second strength:
The risk of potential competitors entering the market
The possibility of new competitors emerging in the industry depends on two factors: the presence of barriers to entry into the industry and the reaction of organizations already operating in the market to the arrival of a new rival.
Barriers to entry into the industry- these are the obstacles that need to be overcome to organize a business in this industry and successfully compete in it.
main sources barriers to entry into the industry:
1. Economies of scale, which is associated with a decrease in costs while increasing the volume of production.
2. Difficulties in accessing technology and know-how... Many industries require technologically sophisticated equipment and skills that are not always easy for beginners to acquire.
3. Personnel qualifications and experience. The longer a person works in any area, the more effective his work becomes. Therefore, the productivity of newcomers is lower than that of competitors with extensive experience in the production of this product. And, consequently, the profit decreases.
4. Consumer loyalty to certain brands. It is difficult to attract a consumer to a new brand of products already on the market. This requires high advertising costs, setting discounts, improving service quality, increasing manufacturer costs, which means lower profits and increased risk for start-up companies, which are especially dependent on fast and large profits necessary for further development.
5. Significant initial investment. At the initial stage of activity, funds are needed to purchase or build an enterprise, purchase equipment, create the necessary inventories, advertise, create a circle of buyers and cover losses. The more money you need to invest in a business in order to successfully establish itself in the market, the smaller the circle of enterprises that have the opportunity to do this.
For example, to open a private grocery store, the costs are not significant, compared to the construction of a large entertainment complex such as "Megapolis".
6. Access to distribution channels. A newcomer may face the problem of access to distribution channels. For example, wholesalers prefer to buy a product known to the consumer. Retailers display hot products at better places than new ones.
To remove these barriers, newcomers will have to “buy” access to distribution channels by providing dealers and distributors with heavy price discounts as well as promotional discounts or some kind of sales promotion. As a result, the beginner's income is reduced.
7. Actions of regulatory authorities. Government authorities can restrict or deny market access through licenses and permits. The following sectors are currently regulated by the state: banking, insurance, radio and television, the sale of alcoholic beverages and the pharmaceutical industry.
8. Tax restrictions. National governments often set tariff and non-tariff barriers to make it difficult for foreign firms to enter their market.
The second factor affecting the possibility of the emergence of new competitors in the industry, is the reaction of organizations already operating in this market to the arrival of a new rival.
The position of companies in relation to the newcomer can be of two types:
Passive reaction;
Active defense of positions.
The main reasons for competitors' behavior are:
Industry size;
Industry growth rates;
Expected income.
If there is painlessly enough space, then competitors will have no reason to waste time pushing new firms out of the industry. They already have room for growth. The stronger the threat from the emergence of new competitors, the more reason for firms operating in the industry to strengthen their position, making it difficult for newcomers to enter the market.
Porter's third strength:
Threat of appearance of substitute products (substitute goods)
Organizations in one industry often compete with organizations in another industry, since the products they produce are interchangeable.
For example, eyeglass manufacturers compete with contact lens manufacturers; the sugar industry competes with sugar substitute companies; Aspirin manufacturers must consider how their products are perceived in comparison to other pain relievers.
The threat level of substitute goods depends on the following factors:
1) the production price of the substitute product;
2) the buyer's willingness to accept the replacement (transition costs; habits, convenience, terms of service, prestige, etc.);
3) quality and environmental characteristics of products (margarine is cheaper than butter, but inferior to it in taste; sugar substitutes are unhealthy);
4) additional benefits (post-warranty service).
Thus, the presence in the industry of the threat of substitute goods exacerbates the competition, which is carried out both by price and non-price methods. But in addition to difficulties, this factor of competition also creates advantages that must be used when building a strategy.
Porter's fourth strength:
Economic opportunities for suppliers
Suppliers- this is a real market power if the goods they provide make up a significant part of the costs in the production of industry products. They can influence the industry by increasing the price or decreasing the quality of the raw materials or services supplied.
The conditions for the high influence of suppliers on the industry are as follows:
1. Dominance of several supplier enterprises.
2. Lack of substitute products for the supplied products.
3. High concentration in the supplying industry (oligopoly, monopoly).
4. The products supplied are unique or the transition costs are too high.
5. When enterprises in the industry are not large (important) consumers for supplier firms. For example, all enterprises are forced to take electricity from one monopolist, and the refusal of one of them to pay will not cause significant losses to the energy company.
6. When the transition of consuming enterprises to other products requires high costs (re-equipment, changeover of machine tools, change of technology). For example, the change of gasoline engines in a transport company to gas equipment and vice versa.
Porter's fifth strength:
Economic opportunities for buyers
The ability of buyers to agree among themselves and dictate the terms of the transaction significantly reduces the profits of organizations in the industry.
Buyers seek to reduce the price, purchase goods / services of higher quality, pushing competitors against each other.
The conditions for the high influence of buyers on the industry are as follows:
Industry standardized products (they can buy goods from any manufacturer, which intensifies competition);
Large and small buyers and many manufacturers (eg defense industry, elevators);
Buyers make purchases in large quantities, that is, they significantly affect production volumes;
There are alternative manufacturers of replacement products;
Transition costs are quite low and buyers have the opportunity to directly integrate and establish their own production of products (this is typical for factories that can produce the parts necessary for the final product on site).
In Russian practice, the influence of buyers is great, for example, in the market of dairy products, bread, potatoes. On the one hand, the population, as a direct consumer, has the opportunity to choose the place of purchase (street trade of the producers themselves or purchase in stores), on the other hand, processors of agricultural products as wholesale buyers significantly reduce the profits of Russian producers of milk, grain and other products. A promising strategy in this situation is the integration of market participants.
Strategic implications of the five competitive forces
In order to analyze the competitive environment, leaders should assess the capabilities of each of the five competing forces. The collective influence of these forces determines the nature of the competitive struggle in a given market.
The most intense competition arises when these five forces create tough conditions in the market, ensuring equal profitability or equal loss-making for the majority of organizations in the industry in the future.
The structure of competition in the industry is clearly unattractive In terms of profitability, if rivalry between sellers is very strong, barriers to entry are low, competition from substitute products is high, and both sellers and buyers can reap significant benefits from participating in transactions. But if competitive forces as a whole do not have a significant impact on the position in the industry, then this industry becomes prosperous and attractive from the point of view of obtaining super-profits.
An ideal competitive environment in terms of making a profit, this is an environment in which both suppliers and buyers have a weak position in trade negotiations, when there are no good substitutes, barriers to market entry are relatively high and competition between existing sellers is rather moderate.
In order to be successful in the market, managers must develop strategies that have the following characteristics:
1) isolate the organization as much as possible from the five forces of competition;
2) influence the laws of competition in the industry in a direction favorable to the organization;
3) provide the creation of a competitive advantage and a strong position that guarantees success in the competitive "game" that has engulfed this industry.
Thus, the more effective the company's competitive strategy is, the more it provides protection against the five competitive forces, influences the laws of competition in the industry for the good of the company and contributes to the creation of additional competitive advantage.
Stage 3. Key factors of competitive success
Key success factors(KFU) are control variables common to all enterprises in the industry, the implementation of which makes it possible to improve the competitive position of the enterprise in the industry.
Key success factors vary across industries. In addition, they can change over time in the same industry under the influence of changes in the general situation in it, for example, in accordance with the stages of the industry life cycle.
The following are highlighted types of KFU and their components:
1. Factors related to technology:
- competence in scientific research (especially in knowledge-intensive industries);
- the ability to innovate in production processes;
- the ability to innovate in products;
- the role of experts in this technology.
2. Factors related to production:
- the efficiency of low-cost production (economies of scale of production, the effect of the accumulation of experience);
- high quality production;
- high return on assets;
- location of production, which guarantees low costs;
- provision of adequate qualified specialists;
- high labor productivity (especially in labor-intensive industries);
- cheap design and technical support;
- production flexibility when changing models and sizes.
3. Factors related to distribution:
- a strong network of distributors / dealers;
- the possibility of income in retail;
- own sales network of the company;
- fast delivery.
4. Factors related to marketing:
- a well-tried, proven way of selling;
- convenient, affordable service and maintenance;
- exact satisfaction of customer requests;
- the breadth of the range of goods;
- commercial art;
- attractive design and packaging;
- providing guarantees to buyers.
5. Factors related to qualifications:
- outstanding talents;
- "know-how" in quality control;
- design experts;
- technology experts;
- the ability to obtain as a result of development new products in the R&D phase and quickly bring them to the market.
6. Factors related to the organization's capabilities:
- modern information systems;
- the ability to quickly respond to changing market conditions;
- Competence in management and availability of management know-how.
7. Other types of KFU:
- favorable image and reputation;
- advantageous location;
- pleasant, friendly service;
- access to financial capital;
- patent protection.
It is very rare to identify more than three or four key success factors in a particular industry at a given time. And even among these three or four KFUs usually only one or two are most important.
In the process of strategic analysis, it is necessary to first highlight the key success factors for a given industry, and then develop measures to master the most important factors for success in competition, that is, determine what needs to be done in order to succeed in this type of activity.
Stage 4. Conclusion on the degree of attractiveness of the industry
Based on the information obtained from the analysis of the industry, the leader should draw a balanced conclusion about the risks facing the organization in the market and the benefits that the organization will receive after overcoming all obstacles and entering the analyzed industry.
Thus, the analysis of the external environment includes the analysis of the macro and microenvironment of the company. Its main purpose is to identify and assess the opportunities and threats that may arise for the enterprise and to identify strategic alternatives.
In practice, various methods of responding to changes in environmental factors are used. The most common among them are the following approaches:
- "Fire fighting", or reactive control style. This post-change management approach is still prevalent in many Russian enterprises;
- expansion of areas of activity, or diversification of production as a means of possible reduction of commercial risk when changing environmental factors;
- improvement of the organizational structure of management to increase its flexibility. In this case, the enterprise can create profit centers, strategic business units and other flexible structures focused on achieving final results;
- strategic management.
In any case, the organization should organize the collection of strategic information about the external environment, which is most often built on an informal and individual basis. Sources of such information can be special bodies (chamber of commerce, consumer society, state and municipal authorities), suppliers and intermediaries, buyers, service organizations (banks, advertising, audit firms). An important source of information about the external environment are the specialists and employees of the enterprise themselves.
At Procter & Gambel, for example, individual brand managers work with sales and market research leaders to compile reports on competitive activity for each product category. Likewise, procurement staff prepare reports on innovations in supplier industries. These and other reports are summarized and shared with senior management for use in strategic decision-making.
In domestic practice, systems for monitoring and analyzing information about the external environment are most developed in financial structures - commercial banks, investment financial and insurance companies are actively involved in this. At Russian industrial enterprises, such activities should be the responsibility of the marketing service, but the small number of such services (as a rule, less than 1% of the total headcount of the enterprise), the limited budget of their monitoring of the external environment. As before, the main form of such an analysis is an informal exchange of views between enterprise specialists during meetings, planning meetings, etc. Although, of course, there are certain shifts in this direction.
Thus, at one Altai enterprise, the marketing service has developed a special form that is issued to each specialist who goes on a business trip. As a result of the trip, employees reflect in this form the opportunities for expanding the sales of the company's products, indicating the reasons that hinder this process, and also provide information about competitors.
The process of creating a system of regional representative offices of Russian enterprises will contribute to the collection of versatile external information, since such representatives are tasked with analyzing the actions of competitors, studying the needs of existing and potential consumers, studying the local specifics of the market, etc.
1. What is considered the external environment of the organization and what types of it are distinguished?
2. What is the purpose of analyzing the macroenvironment?
3. Expand the content of the PEST analysis.
4. What is a microenvironment, what elements does it consist of?
5. What are the main stages of industry analysis.
6. Define the driving forces of the industry. How many factors can be considered as driving forces?
7. What are the driving forces of the modern automotive industry?
8. Conduct an analysis of Porter's five competitive forces for Chelyabinsk State University.
9. Identify the key factors of competitive success for an enterprise operating in Chelyabinsk in the food industry.
10. What are barriers to entry and exit to the industry?
11. Indicate the methods of responding to changes in the external environment.
