External analysis: (Write in bullets )(5 factors in each point, input mainly from case)

PESTEL model:
Political: Political stability, Government regulations & deregulations. Changes in tax laws Special
tariffs Pressure groups ,Level of government subsidies(‫ )معدال‬Global relationships ,Trading policies&
Import-export regulations ,Political conditions in foreign countries/ stability
,Terrorist activity, severity if government protest )‫ (تاجاجتحالاو باهرالا‬Facilities for the entrance for new
foreign investment, Size of government budgets The relations with other countries

Economic forces:
The GDP and income level (which directly reflects on consumer spending power), Interest rates,
Inflation rates ,Unemployment Availability of credit and saving Exchange Rate Monetary policies
,Investment laws and regulations Level of disposable income, Propensity of people to spend (standard
of living) , Wages level ,Price elasticity of demand Stock Market trend
The currency depreciation or appreciation)‫(ةلمعال ةميق ضافخنا‬

Social, Cultural, Demographic:

Childbearing rates ,Immigration & emigration rates Avg. disposable income
Consumer behavior
Attitudes toward saving
Avg. educational level
minority workers Social Security programs.
Lifestyle.
size, structure, and regional distribution of the population Cultural fear or
freedom level
Population changes by race, age, sex and religion Cultural symbol
(status)
Technological forces:
Internet availability and usage E-commerce
The rate of development Spending on R&D
The presence of skilled persons
Presence of technological capabilities.
Substitute might replace the organization’s product.
Environmental Forces:
Governmental regulation, Waste management
Air & water pollution Ethical concerns ,Ozone depletion
Legal Forces:
Contract Law
Competition Law
Customer Protection Law (Law of Negligence)
Environmental Protection Law

Porter 5 Force Model: (only if required, stated specifically, advice CEO to enter the market or not,
choose between two markets) (30 mins)

1-Rivalry among existing firms:

Conditions That Cause High Rivalry Among Competing Firms
High number of competing firms Similar size of firms competing ,Similar capability of firms
competing
Falling demand for the industry’s products
Falling product/service prices in the industry When consumers can switch brands easily
When barriers to leaving the market are high When barriers to entering the market are low
When fixed costs are high among firms competing When the product is perishable
When rivals have excess capacity When consumer demand is falling When rivals have excess
inventory
When rivals sell similar products/services When mergers are common in the industry
Overall result for intensity of competitive rivalry: Attractive/not attractive
**Focus on competitive advantage of strategies

2-Barriers to entry:
The need to gain economic of scale quickly Product Differentiation
Switching Costs
The need to gain technology and specialized knowhow The lack of experience
Strong customer loyalty Strong brand preference
Large capital requirements
Lack of adequate distribution channels The potential saturation of market.
Government regulatory
Overall result for threats of new entry: Attractive/not attractive
**Quality, pricing, and marketing can overcome barriers.

3-Threats of substitutes:
Availability of substitute products
Relative price of substitute products declines
Consumers’ switching cost
Overall result for threat of substitute products: Attractive/not attractive
Firm’s plans for increased capacity & market penetration

4-Bargaining power of suppliers:

Number of suppliers to buyers (few suppliers higher power) Supplier product is unique (higher
power)
High switching cost (higher power)
Substitutes are not easily available (higher power) Product is critical for the business (higher power)
The target industry is NOT important to the supplier (higher power) Real threat of forward integration
from supplier (high power)
Overall result for bargaining power of suppliers: Attractive/not attractive
Backward integration can gain control or ownership of suppliers (This strategy is especially effective
when suppliers are unreliable, too costly, or not capable of meeting a firm’s needs on a consistent
basis)
However, in many industries it is more economical to use outside suppliers of component parts than to
self-manufacture the items, who
**specialize in such components and have huge economies of scale.

5-Bargaining power of Buyers:

Consumers gain increasing bargaining power under the following circumstances: If they can
inexpensively switch to competing brands or substitutes
If they are particularly important to the seller
If sellers are struggling in the face of falling consumer demand

If they are informed about sellers’ products, prices, and costs

If they have discretion )‫ (ريدقت‬in whether and when they purchase the product.
 A buyer purchase a large proportion of the seller’s product or service.
A buyer has the potential to integrate backward by producing the product itself.
Alternative suppliers are plentiful )‫ (رفاو‬because the product is standard or undifferentiated.
**Changing supplier’s costs very little.

The purchase product represents a high percentage of a buyer’s costs, thus providing incentive to shop
around for a lower price.
A buyer earns low profits and is thus very sensitive to costs and service differentiation.
The purchased product is unimportant to the final quality or price of a buyer’s products or service.
When customers are concentrated, large and buy in volume Availability of sellers

Porter’s five forces Attractiveness of the market

Internal rivalry Not Attractive
New Entry (relative to existing co. Attractive
in the market)
Substitutes/complements Not Attractive
Buyer power Not Attractive
Supplier power Attractive

**Final conclusion, the porter’s five forces model shows that the -----
industry in Egypt/market is “attractive/not attractive” to enter this market with “high/ moderate/low”
level competition.

External analysis Summary:

Write the opportunities and threats in points and give them numbers (O1 T1) write from (5-10) points
in each.
Organize them from most importance to least
1- Corporate level (government restriction)
2- 2- Business level (competition)
3- Functional level (operations, head hunting). (Consumer purchase power, competition, market size,
market growth, new trends, government regulations)
Scope Business Strategy Marketing Strategy Common Decisions for TOWS
Market Penetration (Existing product,
Increase Economy of scale
existing market)
Horizontal Integration Increasing market share
Market Development (Existing product, new
Divisional structure
market)
Increasing market share in a growing
Cost Leadership
industry
Backward Integration Market Penetration (Existing product,
Market penetration pricing St. Or
existing market)
Cost Plus
High growing industry – increase
Market Penetration (Existing product,
market share
Forward Integration existing market)
Control Retail
Differentiation
Create Market Monopoly (if possible)
Increasing market share in an
Growth growing industry
Market penetration pricing St. Or
Cost Leadership
Cost Plus
Market Penetration (Existing product,
Vertical Integration High growing industry – increase
existing market)
market share
Differentiation
Control Retail
 Create Market Monopoly ( if possible
)
Market Penetration ( Existing product , Increasing market share
Market Penetration
existing market ) Penetration pricing
Increase market share ( unsaturated
Market Development ( Existing product ,
Market Development market)
new market )
Increase sales
Product Development ( New product , New Brand ( 4Ps)
Product Development
existing market ) Increase no. of customers
Increase revenue
Market Penetration ( Existing product ,
Market Penetration Enhance operational quality
existing market )
Penetration pricing
Product Development ( New product , Enhance operational quality
Stability Product Development
existing market ) Target a non-user
Diversification ( New product , new market ) Increase profit & Sales
Diversification (Related) Product Development ( New product ,
existing market )
Retrenchment Cost Leadership Reduce Cost internally & Externally
Decline Divest a Brand
Divestiture NA
Divest a Department