Friday, May 22, 2009

Response to, "economy, market and competitors are the major influence to business opportunities and threats. But how can we assess that?"

Response to, "economy, market and competitors are the major influence to business opportunities and threats. But how can we assess that?"

I like this question ( hope it wasn't rhetorical) as it is highly relevant to our plan results and my response may assist you in the interests of our own group self-interest! We can't take risk out of the mix completely. I think success is also a portion of "happy chance." However here are a few recommended steps. We work from the outside in to build our "roux" :

A. 1. Focus on key uncertainties of the industry or market itself: These are generally known, high level scans.

i. political: key factors implicating future stability or autonomy and investor confidence?

ii. economic: employment and growth, projected postiive or negative?

iii. cultural: relationship to market or product, importance of cultural integration of product or service?

iv. demographic: consumer profiling of product or service, growth or decline?

v. technological: ubiquitous rates of growth or cyclical trends?

Analysis is through review of any government, business , academic, periodical or news resource with integrative "bits and bytes" of information which begin to assist in the painting of a "background or context" to frame the product or service proposal. When I use the internet to do this it is like collecting lint out of the dryer after several cycles and trying to weave a thimble out of it.

A. 2. Return to the material in #1 and focus on at least two "spikes of data" which reveal certain elements of greater depth worth researching which provide more detailed weaving of the relevant data into a "snapshot" or product "sample" in trends for each set of variables for evaluation. The degree of depth provides irrefutable evidence of good research. I agree with what others have said. We need to examine the negative aspects of all of these factors to well plot worst case scenarios first. But it is similar to a circling of the wagons or setting up of the wigwams. These are mobile and changeable and need consistent updating.

B. Another useful analysis is Porter's Five Forces.

In this format one may examine worst case scenarios and problems as almost a secondary lower level scan with greater clarity of details as it is more familiar (especially if one has worked through the previous trends analysis). These factors include:

a. Identification of industry.

b. Threats of new entrants into industry sector, relevant barriers or regulatory environments which may encourage or prevent it. Local versus global hiring policies for example have not accompanied most FTAs other than in the EU.

c. Threats of substitutes: Other product or even industry placements or developments which may subvert or erode market share. As Emma mentioned difficult to pin-point but different markets rarely introduce or diffuse new products simultaneously everywhere.

d. Pressures from suppliers: Push versus pull environmental factors which will effect sources of materials and or pricing in future. Walmart versus industrial age of manfacturer determined products and inventories.

e. Pressures from customers: Effects on pricing, product or producer preferences, resource usage. Current global trends for lowest cost factor at times being seen opposed by certain fair trade or localization interests reminsicent of vertical integration practices of the 1970s.

f. Possible rivals: Current or future market participants. These may change as some nations introduce or adopt new technologies at different rates than others but may currently be in development in one while unavailable in another.

g. Focal Challenges and Opportunities: This a return to the "two spikes" description and an attempt to give a "heart beat" or pulse to data which unless well considered could appear overly baked or under examined or raw.

C. (Almost there!): Engage competitive analysis of actual product and business itself.

These KSFs or "key success factors" should reveal both value drivers and core competencies of the business itself arrived at through working over the previous two steps. It is a third closer to the product level analysis which relies on progressive working through of the previous steps.

D. Scenarios Planning

We may then develop scenarios and results effecting the business on a X/Y axis which reveal key trends in positive and negative possible futures in comparison to increase or decline over key uncertainties. These provide possible reference at the present time for future events and provide decision-makers with a blueprint or "fire alarm" response to actual problems which may occur while implementing the plan.

This is a pragmatic attempt and the best precis of it tailored to a lite model road map I could rustle up. Hope its useful?

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