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Strategic planning: Internal and external analysis tools
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April 25, 2021
Written by Sebastian Tagle City
Every planning process must begin with an internal and external analysis that serves to diagnose how the business is doing today. Below are some tools that exist to perform this analysis.
PEST
Political – Legal: These are elements that influence the entrepreneurial context. A stable country where the rules are clear and respected is attractive for investment. Are there policies to encourage employment? To develop certain industries? Or certain regions/localities of the country?
Economic: How is economic growth projected? And employment? Both are factors that can influence how much your business will sell in the coming years.
Socio-cultural: What changes are happening in society? How could they relate to my business? For example, during the social unrest of 2019, businesses were affected. But others also benefited. You should always observe what is happening in society because it allows you to anticipate opportunities or react in time to threats.
Technological: How do technological changes affect my business? Is there technology that can replace my product or service? How could technological
Porter's forces
It is a model created by Michael Porter, a professor at Harvard University . It is used to analyze the industry to which a business belongs, considering its five forces:
Bargaining power of buyers or customers. If there are few customers (or if they are well organized), they have greater bargaining power. Also, if there are many companies competing with yours, again customers have bargaining power because it is more likely that if they demand a low price for high quality, there will be someone willing to provide it.
Bargaining power of suppliers or vendors. This is similar to the previous point, but with roles swapped. This time, your business is like the customer. If there are few customers, you have more bargaining power and can haggle over prices. On the other hand, if there are many suppliers, you can negotiate better. But be careful, if there are only a few suppliers, you may become dependent on them, which is a risk for your business.
Entry Competitors: How easy is it to enter this market with a new business? The more difficult it is, the better for you because it decreases the likelihood of competitors appearing.
Threat of substitute products: When a product is very unique, it is difficult to copy. phone number in philippines Pharmaceutical or technological products, for example, are difficult to copy because they have patents and rights. What can you do in your business? Differentiate yourself. Try to make your product or service unique, or at least very difficult to copy.
Rivalry among competitors: Are there many competitors? How different are they? How aggressive is the competition? These are elements that can make an industry more or less attractive when it comes to investing.
CANVAS
Although the Canvas is a tool for analyzing the business model, it also provides information on how the company manages to add value to its customers. Therefore, it can be used as an internal analysis tool.
Keywords: Customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure
Growth and participation matrix
Products and services can be classified according to the following categories.
Stars
are those that are in high-growth industries and have a high market share. They bring in a lot of money and are worth investing in.
Cows
are the most profitable products and should be milked to provide as much money as possible. Money earned from cows should be invested in stars to support their growth.
Dog
The dog quadrant has a low market share. It is not worth investing in them. They may be worth it to the extent that they complement other products or if they are expected to be profitable in the long term.
Question Mark
Question marks require closer analysis because they have a low market share. To gain ground, it is worth investing in them to make them stars. But the outcome is uncertain as it could lead to losses.
SWOT
SWOT is a tool that is used to perform both internal and external analysis.
Strengths: This belongs to the internal section and refers mainly to the things you do well in your business, to the positive qualities you have.
Back to Blog
April 25, 2021
Written by Sebastian Tagle City
Every planning process must begin with an internal and external analysis that serves to diagnose how the business is doing today. Below are some tools that exist to perform this analysis.
PEST
Political – Legal: These are elements that influence the entrepreneurial context. A stable country where the rules are clear and respected is attractive for investment. Are there policies to encourage employment? To develop certain industries? Or certain regions/localities of the country?
Economic: How is economic growth projected? And employment? Both are factors that can influence how much your business will sell in the coming years.
Socio-cultural: What changes are happening in society? How could they relate to my business? For example, during the social unrest of 2019, businesses were affected. But others also benefited. You should always observe what is happening in society because it allows you to anticipate opportunities or react in time to threats.
Technological: How do technological changes affect my business? Is there technology that can replace my product or service? How could technological
Porter's forces
It is a model created by Michael Porter, a professor at Harvard University . It is used to analyze the industry to which a business belongs, considering its five forces:
Bargaining power of buyers or customers. If there are few customers (or if they are well organized), they have greater bargaining power. Also, if there are many companies competing with yours, again customers have bargaining power because it is more likely that if they demand a low price for high quality, there will be someone willing to provide it.
Bargaining power of suppliers or vendors. This is similar to the previous point, but with roles swapped. This time, your business is like the customer. If there are few customers, you have more bargaining power and can haggle over prices. On the other hand, if there are many suppliers, you can negotiate better. But be careful, if there are only a few suppliers, you may become dependent on them, which is a risk for your business.
Entry Competitors: How easy is it to enter this market with a new business? The more difficult it is, the better for you because it decreases the likelihood of competitors appearing.
Threat of substitute products: When a product is very unique, it is difficult to copy. phone number in philippines Pharmaceutical or technological products, for example, are difficult to copy because they have patents and rights. What can you do in your business? Differentiate yourself. Try to make your product or service unique, or at least very difficult to copy.
Rivalry among competitors: Are there many competitors? How different are they? How aggressive is the competition? These are elements that can make an industry more or less attractive when it comes to investing.
CANVAS
Although the Canvas is a tool for analyzing the business model, it also provides information on how the company manages to add value to its customers. Therefore, it can be used as an internal analysis tool.
Keywords: Customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure
Growth and participation matrix
Products and services can be classified according to the following categories.
Stars
are those that are in high-growth industries and have a high market share. They bring in a lot of money and are worth investing in.
Cows
are the most profitable products and should be milked to provide as much money as possible. Money earned from cows should be invested in stars to support their growth.
Dog
The dog quadrant has a low market share. It is not worth investing in them. They may be worth it to the extent that they complement other products or if they are expected to be profitable in the long term.
Question Mark
Question marks require closer analysis because they have a low market share. To gain ground, it is worth investing in them to make them stars. But the outcome is uncertain as it could lead to losses.
SWOT
SWOT is a tool that is used to perform both internal and external analysis.
Strengths: This belongs to the internal section and refers mainly to the things you do well in your business, to the positive qualities you have.