External Situational Analysis
An external Situation analysis looks at macro factors affecting business. Examining your external research/analysis gives a complete picture of the current situation and planning a marketing strategy.
A Typical market system comprises of
- Core environment (producer-strategy-channel- market-end user) external factors: socio-economic, government policies, technology, intermediary, competitors, suppliers.
- Complementary goods and competition goods
- Essential terms: types of markets (monopoly, oligopoly, monopolistic and perfect market) and their characteristics.
List of external factors:
- Political: Qatar- development, Trump- H1B visa.
- Economic: RBI changes rates cyclically to attract customers, 9/11 and COVID-19 effects
- Sociology: L’Oréal/ PNG replacing the word “fair.”
- Demographic: Baby boomers, GEN-X, Millennials
- Government policies: E.g., China- blocking trade and encouraging MSME.
- Technology: Packaging, Safety, and health- COVID-19, disruptive changes- Live streaming- forward integration- subscription by Rhapsody.
- Intermediaries: Location, willingness, capability to provide support services, increase in E-commerce, wholesalers (preferable more than distributors), online food delivery- Swiggy/ Zomato
- Explore important events- get inputs from experts- solution suggestions of experts- find high/medium/low priorities- implement solutions strategies. E.g., Machine learning’s impact on different industries.
ETOP: Opportunities and Threats (only external environment)
- Qualitative analysis: forces are high/moderate/low
- Threats: competitors, substitutes, new entrants, buyers, and suppliers (porter’s five forces)
- E.g., BHEL, a Sports cycle manufacturer.
EFEM: Quantitative analysis
- Find external factors- Give them weight- do the rating of the elements- weight*Rating (weighted score)- count the total weighted score of the company.
The external analysis includes macroeconomic, global, political, social, demographic, and technological research on a macro scale. The primary purpose of the external study is to determine the opportunities and threats in an industry or any segment that will drive profitability, growth, and volatility.