Identifying Competitive Position
- Competitive position refers the market position of an organization relative to its competitors on key strength factors.
- Competition can be in terms of product class, brand, generic or geographic.
- Competition will arise while being involved in satisfying the needs of same customer groups.
- External environmental factors, pressure of competition, strength of organizational resources and the market factors influence the competitive position of an organization.
- Strong competitive position provides competitive advantage over the competitors.
- The techniques used to identify a firm’s competitive position are:
- Competitor analysis
- Strategic group analysis
- Market analysis
- Market attractiveness and business strength analysis
Environmental Scanning
- Environmental scanning is the act of acquiring information from the environment to detect emerging trends and create scenarios.
- It monitors and interprets present changes and forecasts future development that have potential impact on the organization.
- It is done to identify opportunities and threats for the organization for strategy formulation.
- “ The process by which organizations monitor their relevant environment to identify opportunities and threats affecting their business is known as environmental scanning.”- Azhar Kazmi
- The variables considered for environmental scanning are changes in macro environment, structure of market, nature of competition, customers, product mix etc.
- The outcomes of environmental scanning is creation of most probable scenario, most favorable scenario and least favorable scenario.
Environmental Threats and Opportunity Profile (ETOP)
- ETOP is a technique to structure environmental factors.
- It is necessary to make the environmental factors meaningful to formulate strategy.
- Preparation of ETOP involves:
- Dividing the environment into different sectors.
- Analyzing the impact of each sector on the organization.
- Describing the impact in the form of a statement.
- Advantages of ETOP are:
- Provides a clear picture of environmental sector that have a favorable impact on the organization.
- Helps to assess competitive position of the organization.
- Helps to formulate appropriate strategies to take advantage of opportunities and counter the threats.
- Facilitates to have SWOT analysis.
Determining Opportunities and Threats through Environmental Analysis
Environmental analysis is managerial decision making based on the assessment of opportunities and threats in the environment.
The following steps will be taken in environmental analysis to determine opportunities and threats:
- Scanning:
- Involves information gathering and assessing their nature.
- Identify early signs and detects possible changes.
- Monitoring:
- Involves tracking environmental trends and events.
- Identify trends and events for monitoring and forecasting.
- Forecasting:
- Forecasts the future likely events.
- Helps to understand the nature of influencing factors and projects the alternatives.
- Assessment:
- Identifies the key opportunities and threats.
- Analyze the competitive position of the organization.
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