Rizki Oeshya Lubis (29113343)

YP-50B
External Environmet
General environment is the factors that firm cannot directly control. There is seven segments of
general environment:
1. Demographic
2. Economic
3. Political/legal

4. Sociocultural
5. Technological
6. Global

7. Physic

8.
9. Industry environment is the factors that directly influence the firm. It can be anticipated
with right action and analysis. There is five factors of industry environment:
1. Threat of new entrants
2. Power of suppliers
3. Power of buyers

4. Threat of product substitutes

5. Intensify
of
rivalry
among
competitor

6. General environment can handle by seeing the trend that show in previous years.
Otherwise Industry environment can handle by analyze and make right decision of
competitors actions.
7. External environmental analysis can useful for firm to see opportunity and threat.
Opportunity is something in environment factors that can help firm achieve the goals.
Threat is something in environment factor that can make life of firm shorten. As an
example the prediction by trend see that man will be more aware of his skin in the future.
Thats why care Skin Company can see the opportunity to reach new segment.
Blackberry who has their own line of chat called BlackBerry Messenger (BBM), did not
see WhatsApp threat for their product. BBM that can only use by BlackBerry device,
likely to leave behind by WhatsApp that can use in iOs and Android. Blackberry with no
innovation has to admit they were leave behind by the competitor.
8. Component of the external environmental analysis:

Scanning. The process to identify the early signal of potential changes. This process
usually have ambiguous and incomplete data. Although there is ambiguous scanning is

important to firm, so they will be ready to face the changes that could happen.
Monitoring. Activity that have outcome to see the trend in different environmental. See
how customer behavior nowadays. Monitoring will be important to firm that compete in

high technology uncertainty.

Forecasting. After Scanning and Monitoring. The data will help forecasting process. In
forecasting firm have to predict the situation that can happen in future. Firm have to

develop feasible projection to anticipate and keep their product running.

Assessing. It is about the timing. Firm have done Scanning, Monitoring and Forecasting,
will face the problem about timing. The right time to apply their action of environmental
changing. Wrong time only can make firm loss and left by customers.to categorized the
change into opportunity or threat also happen in this component.

9. The Demographic Segment

Population size. The information about population size will be good thing for firm.
Information like the most population, the future growth and birth and death can be so

useful for firm to establish their goal.

Age structure. Every country have different spread of age range. Take a look and
America with their Baby Boomers era. In Japan they have older people (more than 60)

nowadays. But in USA they will face it in upcoming years.

Geographic distribution. The changes that happened also have to anticipate by firm.
People move from north to south, west to east. If their main target in north slowly move

to south they should be ready with new strategy.

Ethnic mix. Change of ethnic, growth of some ethnic in country could affect the
behavior of purchasing a product. In France there is so much immigrant from Africa, that

they sell a lot of product that close to Africa product to gain their customers.
Income distribution. Although it is getting better every time, but the preference of
spending money nowadays have shifted. In 90s people attend to buy something that real
and long lasting. In 2000s they changed to spending more in technology.

10. The Economic Segment. The nature of the economy in which a firm can compete or
may compete. Learn and study about the economic of country will have good impact for

firm. They know can they compete or not. Try to search country that have good economic
to expand.
11. The Political/ Legal Segment. Firm have to analyze the political segment. Country with
stabilized political will be an insurance for firm. This happen also with legal. Country
with problem with their legal, will be a threat for firm.
12. The Sociocultural Segment. Learn about societys attitude and social value. The changes
of culture can reflect on lifestyle. Take a look in what happening now. So much insurance
company get their client. Because with lifestyle that people do, they likely to get sick.
13. The Technological Segment. Technology adaptation, is one way to gain more profit.
Take a look on firm that adapting the new technology to produce their outcome. With
new technology, sometimes it can reduce the labor cost, so it will cut the operation cost.
But can sell it with the same price and get the bigger margin in product.
14. The Global Segment. Firm produce their product with global acceptance. Although it is
hard but sometimes it can work in certain product. Such as niche community. Leisure
hotel, yacht or high class recreational place is what this community search and usually
have the same taste all around the world. But, take a look to car. Every country have
different primary need. In Europe they will more concern about safety, on the other hand
in Asia they likely to choose style and less expensive car.
15. The Physical Environment Segment. Firm have to see potential changes in the physical
environment. The biggest problem people said nowadays are global warming and energy
crisis. The good firm have to consider this situation as threat, and use it as power to them.
With motto Go Green or anything else to attract customers.
16. Industry Environment Analysis. Threat of New Entrants will always haunted the firm.
But there is a way to avoid the newcomers. Barriers to entry is one of the solution. With
big economy of scale, product differentiation, capital requirement, switching costs, access
to distribution channel, cost disadvantage independent of scale and government policy.
With all the aspect, newcomers will think hard to enter the competition. Because the firm
have established create good impact in costumers. If customers want to change product it
will cost them a lot of money.

17. Bargaining power of suppliers will make firm in danger. With suppliers control the prices
and quality, firm doesnt have much choice.it also happen in bargaining power of buyers.
Buyers have full power to product that make firm have adjust their price to get the
customers. Both of this situation will decreased the profit for company and make the
company enter the more competitive market.
18. Threat of substitute products will make firms product leave behind by customers. People
always make an innovation in something so there will be product with less pricey, but
with same functionality. Although not full-function like firm products, sometimes for
customer it was enough.
19. Intensity of rivalry among competitors happen because of this factor:

Numerous

Balanced

Lack of Differentiation or Low

Competitors
Slow Industry Growth
High Fixed Costs or High Storage

Switching Cost
High strategic Stakes
High Exit Barriers

Costs

or

Equally

All of the factors make the firm compete in tight market. With equally competitor firm
cannot set price as they want. High exit barriers make firm stay in the competition
although it was hard for them. Try to make a firm that have specialty and be the first to
avoid intensity of rivalry of competitor.

Competitor analysis focused on which firm that compete directly. Such as Coca-Cola
with PepsiCo. To understand the competitor there are four components:

What drives the competitor, as shown by its future objectives

What the competitor is doing and can do, as revealed by its current strategy
What the competitor believes about the industry, as shown by its Assumptions
What the competitors capabilities are, as shown by its strengths and weaknesses

In Saudi Arabia, Petrochemical industry have high rival intensity. New entrant always
look a change to come to industry, although it needs a lot of capital. Bargaining of
supplier can see from the equipment that can be substituted and have to be there for
production. Bargaining customers can see in China. Saudi sell their product to large
country. Saudi have to think another market, not only China so China doesnt have the
power. Threat of substitution also happen because petroleum-based product is not safe
enough for environment. People nowadays try to find new and non-carbon material for
everything.