Chapter 2
EXTERNAL ANALYSIS: THE
IDENTIFICATION OF
OPPORTUNITIES AND
THREATS

Industry
“…a group of companies offering products or services that are close substitutes for each other… that satisfy the same basic customer need.”
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Sector
“…a group of closely related industries.”

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The Computer Sector:
Industries and Segments
Figure 2.1

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Market Segments
“…distinct groups of customers within a market that can be differentiated from each other on the basis of their distinct attributes and specific demands..”
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Clusters
…a group of closely related businesses usually within a geographic area.
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External Analysis
Identifies strategic opportunities & threats in an organization’s operating environment that will affect how it pursues its mission.
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External Analysis
Requires assessment of: o Industry environment
• Competitive structure of industry
• Competitive position of the company
• Competitiveness and position of major rivals

o Country/national environments in which a company competes o Wider socioeconomic/macroenvironment that may affect company and its industry
• Social
•
• Governmental •

Legal
•
International

Technological

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External Analysis:
Opportunities and Threats
Analyzing the dynamics of the industry in which an organization competes to help identify:

Opportunities

Threats

Conditions in the environment a company can take advantage of to become more profitable Conditions in the environment endanger the integrity and profitability of the company’s business.

How are these maximized and exploited?

Can these be minimized, or exploited?

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Porter’s Five Forces Model

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Porter’s Five