Retail biznes environment 2

RETAIL BUSINESS ENVIRONMENT 2

Ms Rosmin Iqbal Hussain

Boptom (UKM), CMBA (UNIMAS)

Alternating Strategies

Generating Alternative Strategies From SWOT

SWOT analysis is a tool for helping assess the current situation for the firm.

However, we need to be able to combine the information in the SWOT analysis in a meaningful way to generate alternative strategies that we might pursue

*Use TOWS matrix

The SWOT that we’ve been dealing with in the other slaid has been a useful tool to helping identify key characteristics of our businesses

But it doesn’t really help guide us to choosing strategies

For that there is the TOWS matrix which will integrate some of the things we’ve used to create the SWOT

SWOT Analysis

Opportunities1.2.3.

Strengths1.2.3.

Threats1.2.3.

Weaknesses1.2.3.

Internal Environment

ExternalEnvironment

That is the SWOT tool we introduced in the previous section. SWOT is a conceptual framework for a systematic analysis that helps organize the external threats and opportunities with the internal weaknesses and strengths of the organization. To use it you simply list the strengths/weaknesses you have in your business and the opportunities and threats you face

SWOT analysis is the simplest way to conduct environmental scanning. A SWOT analysis should result in the identification of an organization’s core competencies, and of opportunities that the company is unable to take advantage of due to a lack of, or insufficient, current resources

Let’s take this a step further and develop some useful strategies out of the assessments you’ve done, using the TOWS matrix

TOWS Matrix

The TOWS matrix is a tool designed to match external opportunities and threats with our internal strengths and weaknesses

TOWS Matrix

Technique used in strategy formulation for combining • External analysis

Opportunities Threats

• Internal analysis Strengths Weaknesses

TOWS Matrix

Weaknesses:1.2.3.

Strengths:1.2.3.

WO StrategiesUse Opportunities to

overcome weaknesses

SO StrategiesUse strengths to take advantage of opportunities

Opportunities:1.2.3.

WT StrategiesDefensive strategies

to minimize weaknesses and

avoid threats

ST StrategiesTake advantage of

Strengths to avoid

threats

Threats:1.2.3.

From Internal Analysis

(IFAS)

From External Analysis (EFAS)

Source: Weihrich

• The TOWS tool combines the ingredients of SWOT (our assessment of the internal and external environments, which used the EFAS and IFAS tables) in a way that can suggest some strategies. It matches external opportunities and threats facing a particular company with that company’s internal strengths and weaknesses to result in four sets of possible strategic alternatives

• - Therefore we got some strategies:

* SO Strategies

* ST Strategies

* WO Strategies

* WT Strategies

COMPETITION

Industry Analysis

Porter’s 5 Forces

Rivals

Business & Competition

Though a business does not want competition from other businesses, inevitably most will face a degree of competition

The amount and type of competition depends on the market the business operates in• Many small rival businesses e.g. a shopping mall or city

centre arcade *close rivalry• A few large rival firms e.g. in a small town / rural area• A rapidly changing market e.g. where the technology is

being developed very quickly & competitors adopting new techs

Competitor Analysis

Reacting to Competition

A business could react to an increase in competition (e.g. a launch of rival product) in the following ways• Cut prices (but can reduce profits)• Improve quality (but increases costs)• Spend more on promotion (e.g. do more

advertising, increase brand loyalty; but costs money)

• Cut costs, e.g. use cheaper materials, make some workers redundant

Weapons for Competing

Vigorous price competition More or different

performance features Better product

performance Higher quality Stronger brand image &

appeal Wider selection of models

& styles

Bigger / better dealer network

Low interest rate financing Higher levels of advertising Stronger product

innovation capabilities Better customer services Stronger capabilities to

provide buyers with custom-made products

Substitutes

Force of Substitute Products

Substitutes matter when customers are attracted to the products of firms in other industries / products of other firms• Eyeglasses and contact lens VS laser surgery• Eyeglasses and contact lens VS Ortho-K• Eyeglasses VS CL: cases where one practice doesn’t

offer variable products• MPs VS full regime cleaning: which do we carry• Hidrogen peroxide syst VS enzymatic cleaner: trend

How to Tell Whether Substitute Products Are a Strong Force

Whether substitutes are readily available and attractively priced

Whether buyers of ur market view substitutes as being comparable or better

How much it costs end users to switch to

Suppliers

Competitive Pressures From Suppliers

Whether supplier-seller relationships represent a weak or strong competitive force depends on • Whether suppliers can exercise sufficient

bargaining leverage to influence terms of supply in their favor

• Nature and extent of supplier-seller collaboration in the industry

When Is the Bargaining Power of Suppliers Stronger?

There are only a few suppliers of a specific input • Ortho-K lenses, Keratoconus lenses

They provide unique and differentiated products• Branded CLs, MultiFocalss

Customer is not important• Ex: Ortho-K lenses, Keratoconus lenses, Equipments

suppliers

Buyers

Bargaining Power of Buyers

Whether seller-buyer relationships represent a weak or strong competitive force depends on • Whether buyers have sufficient bargaining

leverage to influence terms of sale in their favor

• Extent and competitive importance of seller-buyer strategic partnerships in the industry

When Is the Bargaining Power of Buyers Stronger: ur profit amount is smaller?

Small number of buyers • Ex: daily disposal CL

Buyers purchase standard, commodity products• Branded SGlass

Possibility of backward integration• Departmental stores carrying Sglasses /

reading glasses

Implications

Strategic Implications of The Five Competitive Forces

Competitive environment is unattractive from the standpoint of earning good profits when • Rivalry is vigorous• Entry barriers are low and entry is likely • Competition from substitutes is strong • Suppliers and customers have considerable

bargaining power

Strategic Implications of The Five Competitive Forces

Competitive environment is ideal from a profit- making standpoint when • Rivalry is moderate • Entry barriers are high and no firm is likely to enter • Good substitutes do not exist • Suppliers and customers are in a weak bargaining position

Example: Therapeutic lens industry Orto-K, added services unavailable elsewhere (Visual Therapy), & those that can provide these service is limited (limited entry into ur service market)

Competitive Advantage

Resources & Competitive Advantage

*Resources refers to products / services

Sustainable Competitive Advantage

The Business Environment Model

The value of services/ products u create

that gives the end profit

END