3. Market Orientation

8/2/2019 3. Market Orientation

1/27

Session-3

Market Orientation


2/27

Identify & Evaluate factors beyond the

control of a single firmIncreased foreign competitionPopulation shiftsInformation technology

External StrategicManagement Audit


3/27

CompetitorsSuppliers

DistributorsCreditors

Customers

EmployeesCommunities

ManagersStockholdersLabor Unions

Special InterestGroups

ProductsServices

Key

ExternalForces

Opportunities&

Threats

Key External Forces & theOrganization Beyond control of

organization!


4/27

Performing ExternalAudit

ExternalFactors

Measurable

Long-term orientation

Applicable tocompeting firms

Hierarchical


5/27

Economies of Scale

Industry Properties

Barriers to market entry

Product differentiation

Level of competitiveness

I/O Perspective Firm Performance


6/27


7/27

Social, Cultural,Demographic &

Environmental ForcesIndia. Facts

Young population

Less Caucasian

Widening gap between rich &poor

2025 = 18.5% population >65years

2075 = no ethnic or racialmajority


8/27

Key Social, Cultural, Demographic& Environmental Variables

Number of marriages & divorces

Number of special interest groups

Number of births & deaths

Immigration & emigration rates

Childbearing rates


9/27

Political, Government &Legal Forces

Worldwide trend toward similarconsumption patterns

Global buyers and sellers

E-commerce

Technology for instant currencytransfers

Globalization of Industry


10/27

Competitive Forces

Strengths

Weaknesses

Capabilities

Opportunities

Threats

Objectives

Strategies

Identifying Rival Firms


11/27

Competitive Forces

1. Market share matters2. Understand what business you

are in

3. Broke or not, fix it

4. Innovate or evaporate

7 Characteristics of mostCompetitive Firms:


12/27

Competitive Forces

5. Acquisition is essential togrowth

6. People make a difference

7. No substitute for quality

7 Characteristics of mostCompetitive Firms:


13/27

The Five-Forces Model of Competition (Porter)

Potential developmentof substitute products

Rivalry amongcompeting firmsBargaining powerof suppliers

Potential entry of newcompetitors

Bargaining powerof consumers


14/27

The Global Challenge

Faced by Firms --

Gain & maintain exports to

other nations

Defend domestic marketsagainst imported goods


15/27

Industry Analysis: The ExternalFactor Evaluation (EFE) Matrix

CompetitivePoliticalCultural

TechnologicalEnvironmentalSocial

GovernmentalDemographicEconomic

Summarize & Evaluate


16/27


17/27


18/27

External FactorsIts hard to write them!Exercise: Write the external factors for your

own organization
http://mymaritimeblog.wordpress.com/2007/09/13/intuit-web-site/http://mymaritimeblog.wordpress.com/2007/09/13/intuit-web-site/


19/27

Total weighted score of 4.0Organization response is outstanding to threats and

weaknesses

Industry Analysis EFE

Total weighted score of 1.0Firms strategies not capitalizing on

opportunities or avoiding threats


20/27

Industry Analysis: CompetitiveProfile Matrix (CPM)

Identifies firms major

competitors and their strengths& weaknesses in relation to asample firms strategic

positions


21/27

Gateway Apple Dell

CSFs Wt Rating WtdScore Rating WtdScore Rating WtdScore

Market share 0.15 3 0.45 2 0.30 4 0.60

Inventory sys 0.08 2 0.16 2 0.16 4 0.32

Fin. position 0.10 2 0.20 3 0.30 3 0.30Prod. Quality 0.08 3 0.24 4 0.32 3 0.24

Cons. Loyalty 0.02 3 0.06 3 0.06 4 0.08

Sales Distr 0.10 3 0.30 2 0.20 3 0.30

Global Exp. 0.15 3 0.45 2 0.30 4 0.60

Org. Structure 0.05 3 0.15 3 0.15 3 0.15


22/27

Gateway Apple Dell

CSFs (contd) Wt Rating WtdScore Rating WtdScore Rating WtdScore

Prod. Capacity 0.04 3 0.12 3 0.12 3 0.12

E-commerce 0.10 3 0.30 3 0.30 3 0.30

Customer Serv 0.10 3 0.30 2 0.20 4 0.40Pricecompetitive

0.02 4 0.08 1 0.02 3 0.06

Mgt. experience 0.01 2 0.02 4 0.04 2 0.02

Total 1.00 2.83 2.47 3.49


23/27

.201.20Clinton Administration

.202.10Bad media exposure from FDA

.102.05Smokeless market SE region U.S.

.153.05Production limits on tobacco

.202.10Legislation against the tobacco industry

Th rea t s .303.10More social pressure to quit smoking

2.101.00TOTAL

.604.15Pinkerton leader in discount market

.051.05Astronomical Internet growth

.153.05Increased demand

.151.15Global markets untapped

Weighted

scoreRatingWeight

Universal System TechnologiesKey External Factors

Oppo r t un i t i e s


24/27

(Competitive Profile Matrix)ProcterAvon LOreal & Gamble

2.803.253.151.00Total

0.1530.2040.0510.05Market Share0.4020.4020.8040.20Global Expansion

0.2020.4040.4040.10Customer Loyalty

0.4530.4530.6040.15Financial Position

0.3030.3030.4040.10Management

0.4040.3030.3030.10Price Competition

0.3030.4040.4040.10Product Quality

0.6030.8040.2010.20Advertising

ScoreRatingScoreRatingScoreRatingWeightrit ical SuccessFactor


25/27


26/27

Competitive Profile Matrix RoyalCaribbean

RCL CCL POC

Critical Success

Factors

W eight Rating W eighted

Score

Rating Weighted

Score

Rating W eighted

Score

Market Share

Customer Loyalty

Distribution NetworkFinancial Position

Global Expansion

Advertising

Product Quality

Expansion ofdeparture ports

0.20

0.15

0.150.10

0.05

0.05

0.15

0.15

3

3

41

4

3

4

4

0.60

0.45

0.600.10

0.20

0.15

0.60

0.60

4

4

34

3

4

3

3

0.80

0.60

0.450.40

0.15

0.20

0.45

0.45

2

2

23

2

2

2

2

0.40

0.30

0.300.30

0.10

0.10

0.30

0.30

Total 1.00 3.30 3.50 2.10


27/27

EFE Matrix

Key External Factors Weight Rating Weighted Score

Opportunities

Nearly 88% of North Americans have never been ona cruise.

0.15 4 0.60

Cruise vacations are seen as a choice of oldertravelers; leaving minorities and young adult marketsvirtually untapped

0.08 3 0.24

Distribution networks at home and abroad may be anuntapped source for generating increased business

0.07 3 0.21

Internet use is increasing; commonly the tool used tosecure reservations for many travelers

0.08 3 0.24

Several markets overseas, such as, France, Italy, havea market of would be cruisers

0.10 2 0.20

Threats

Increase in regulation by US regardingenvironmental issues and economic downturns

0.08 2 0.16

Alaskan legislators are considering a $50 tax percruise ship passenger

0.05 2 0.10

Location and severity of terrorist attacks; namely

September 11th events

0.10 3 0.30

War and political uprisings 0.10 3 0.30

Drastic changes in the world oil market and currencyexchange

0.02 1 0.02

Existing and potential litigation 0.02 1 0.02

Increased capacity of competitors and pricing wars 0.05 2 0.10

Transfer of information through collective bargainingagreements

0.03 1 0.03

Competitors: Carnival and P & O 0.07 2 0.14

Total 1.00 2.56

Documents

3. Market Orientation