External Factor Analysis

External Factors analysis:

Technological factor:

Lower cost, outsourcing: global

Economic trend: decline, recession,

Social cultural: change in habit, change in trend

Threat: (threaten profit)

1. Intensifying competition
2. Growth in popularity of smartphones
3. Decreasing Margins
4. Customer not upgrading (hard to surprise them)

Opportunities:

1. Markets outside of the U.S:
2. Low cost production outside of the U.S
3. Increase in gov spending: stimulate economy, subsidize company.
4. IT services?
5. Target small business directly
6. Entrepreneur products: Network switches, printers…etc

Key success factors:

1. Brand management: more important than before.
2. Effective distribution channel**:
3. After Sale Support:
4. Operational (cost) efficiency: to offer low price products, you have to be effective (economics of scale)**
5. Access to global markets:
6. Speed to market**:

May 9th 

Internal Analysis

External factor during 2002-2009: 9.11 (substitute with other mode of transportation); global recession

Southwest: only company did better…keep lower cost

Apple: external factors only tell us the half of the story...other half is internal factors...

What company does inside to gain competitive advantages?

At the end of the day: maximize profits to stay in the business.

By…cost advantage

1. Decrease cost
2. Differentiation advantage
3. Dual advantage

Core competencies: set apart firm frim other firms

Do all core competencies turn into advantage over others? Anybody could be good at something.

Sustainable competitive advantages meet these criteria.

1. Valuable:
2. Rare: core competency must be rare.
3. Costly to imitate: ex) Apple’s integrated organization
4. Non substitutable:

These should result in better financial return:proof of an advantage ….

Value Chain: Supply Chan (chain of activities, turn raw materials into final products)

Main activities: supply chain (create value of end product), operations, distribution (predict demand), marketing and sales (high level of service), follow up service