ANALYTICAL TOOLS

1. SWOT ANALYSIS using EFE, IFE matrices

a. Strengths – internal to the firm

Examples : i. Strong nationwide distribution network

ii. Excellent credit standing
iii. Commanding market share

b. Weaknesses – internal to the firm

Examples : i. Lack regional advertising campaign

ii. Poor research and development (R&D) department
c. Opportunities – external to the firm

Examples : i. Untapped global markets

ii. Favorable and predictable weather conditions (Fruit Plantations in
Mindanao)

d. Threats – external to the firm

Examples : i. Economic crisis / Decrease in spending budget

ii. Legislations (Smoking ban or clean air act)
iii. Fluctuations in dollar-peso exchange rate

2. DEMAND AND SUPPLY ANALYSIS – Analyze the relationship between the demand
and supply situation taking into consideration the following : population growth,
country’s economy, consumption expenditures, consumer profile, buying decisions,
number of suppliers, prices, etc.

Demand - the quantity that consumers are willing and able to buy at a specific price and time
period

Supply – the quantity of a product that producers are willing to make available to the market
at a given price and time period

3. PORTER’S 5 FORCES OF COMPETITION – Analyze company and industry based

on the 5 forces and give rating (high, medium or low)

- Harvard University’s Professor Michael Porter developed the 5 Forces Model of

competitive analysis to develop strategies in many industries.

- The nature of competitiveness in a given industry can be viewed as a composite of 5

forces:

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 Potential development of
substitute products
Bargaining power of Rivalry among competing Bargaining power of
suppliers firms consumers
Potential entry of new
competitors

Potential development of substitute products – Intensity of competition is high for firms

that produce substitute products in other industries.
Examples :

i. Plastic container producers compete with glass, paperboard or aluminum

can companies.
ii. Instant noodles can be a meal substitute over sardines.

Bargaining power of suppliers – Intensity of competition is affected in an industry when

there is a big or small number of suppliers of raw materials.
Examples :

i. Crude oil is imported by only 3 big players namely : Petron, Shell and
Caltex.
ii. Abundant fish catch brings down prices for canneries.

Rivalry among competing firms – Intensity of competition increases as the number of

players in the market increases or when competitors become equal in size and capability yet
demand for products declines.
Example :

i. Intense competition between Jack n Jill vs. Oishi snacks and Nestle vs.
Selecta ice creams

Bargaining power of consumers – Intensity of competition is higher when products being

offered are standard or homogeneous thus consumers have the power to select which
company offers the best bargain.
Examples :

i. Soft drinks (Coke, Pepsi & Pop) are all cola flavored beverages that
consumers can easily choose from.
ii. Consumers can choose between Toyota Altis or Honda Civic.

Potential entry of new competitors – Intensity of competition increases or decreases

depending on how easy or hard for a new player to enter the market. Barriers to entry include:
large capital requirements, technology, etc.

Examples :

i. Flour or sugar mills needs huge capital outlays or investments for start up operations
thus limiting the number of players in the industry.
ii. Channel ABC 5 now owned by Mr. Tonyboy Cojuangco challenging ABS CBN 2 of
the Lopez’s and GMA 7 of the Gozun’s.

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 4. DETERMINATION OF KEY SUCCESS FACTORS using CPM matrix
– Identify and analyze important factors to determine a company’s success or failure.

Examples: Low prices, variety of models, strategic locations, etc.

5. NATURE OF ENTRY AND EXIT BARRIERS – Discuss and analyze how easy or
difficult it is for a company to enter or leave the industry.

Examples: Capital requirements, availability of raw materials, technology and equipment

needed, etc.

6. BOSTON CONSULTING GROUP MATRIX

- Introduced by Bruce Henderson in the mid 1960s.

- Uses 2 key success factors (market shares and market growth rates) to plot the
competitive position of companies in their industries and to determine market
attractiveness.
- Quadrant matrix characterized by the cash / profit contributions to the company.

Market Share
10% 1%
STAR QUESTION
MARK

(Growth Stage) (Introduction Stage)

CASH DOG
COW

(Maturity Stage) (Decline Stage)

Market Growth 1%

Stars – are known to be “Tomorrow’s Breadwinners” since companies will have to re-invest its
profits back to a growing business in order to maintain strong competitive position by increasing
its market shares.

Cash cows – referred to as “Today’s Businesses” generates hefty profits to a company because of
their big market share and lower funding requirements due to a mature market situation.

Question marks – drains the company’s profitability wherein resources are needed in a growing
market but generating low market share.

Dogs – are “Yesterday’s Has Beens” with low market shares in a low market growth
environment. No point of reinvesting profits in a business where market share is weak and
potential market growth is low.

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7. FINANCIAL RATIOS - Analyze company’s financial health (refer to company’s Balance
sheet and Income statement) (compare company with at least 2 competitors)

a. Current ratio – extent to which a firm can meet its short-term obligations. Current assets
include cash, accounts receivables, inventories, etc. Current liabilities consist of accounts
payable, debt, etc.

Formula : Current assets

______________

Current Liabilities

b. Total Assets Turnover – whether a firm is generating sufficient volume of business for
the size of its asset investment.

Formula : Sales
________

Total assets

c. Return on Assets (ROA) – after tax profits per peso of assets, also known as return on
investment (ROI).

Formula : Net Income

__________

Total assets

d. Return on Stockholder’s Equity (ROE) – after tax profits per peso of stockholders’
investment in the firm.

Formula : Net Income

_____________________

Total stockholders’ equity

e. Net Profit Margin – after tax profits per peso of sales

Formula : Net Income

___________

Sales