Every organization needs an accurate analysis and assessment of the environment it operates in. The company can use environmental mapping as one of the techniques intended to capture the key characteristics of the environment in which the business operates. These factors, which may be supportive or constraining to the future development of the organization, provide the backcloth’ against which the future strategies and plans must be formulated. The model analyses the environment into four areas of focus. It should be used flexibly to reflect the nature of the relevant country/market environment.
This means that for a large corporate, with a significant spread of operations, it is appropriate to separately map the different environments in which the various parts of the organization operate (Ireland et al 123). A generic’ analysis may be too broad to be accurate and useful. The facts are normally identified by the senior management of the business from their personal knowledge and experience. Naturally, this assumes that they have sufficient background in the environment to generate accurate data. To ensure effective analysis and results, the company can use PEST and SWOT analysis.
Customers’ loyalty can be measured by Porter’s Five forces analysis and generic strategies. Even where knowledge is strong’ it is prudent to validate key facts/assumptions and to compare alternative views of the future. The analysis should be used to identify: This module introduces certain concepts for creating a map’ of the marketplace in which the firm operates. The purpose is to examine the relative position and strength of the business versus the competition. The analysis allows to compare current and past results and evaluates customers’ loyalty and preferences. This map’ identifies the degree to which market share is a driver of company growth.
Relative market share is the size of each firm’s share expressed as a proportion of the share held by the market leader. This map’ examines the correlation between the relative size of the business (defined as annual turnover) and company growth (Ireland et al 143). This reveals that in this market both large and small businesses are failing to grow whilst one medium-size player is bucking the trend and achieving high growth.
These two analyses help to build up a general picture of the market in which the business operates and the relative fortunes of the competitors. Different markets and products will have a different relationship between the key factors of market share, size, and growth. It is important to understand these relationships, and how they are changing over time, as part of the input to business development planning. Strategic planning must focus individually on each factor to define clearly targeted goals and actions. The approach to the development of each factor is likely to be different, reflecting the specific nature of the customer relationship, the competitive environment, and the key factors for successful development (Ireland et al 149).
Also, it is possible to use competitor profiling which provides for a direct ranking of the relative performance of the organization versus that of its competitors. It should be used to take a broad view of the relative competence of the firm and the analysis must deliberately be driven from a customer perspective. It is therefore important to take into account both facts and perceptions. Customers’ buying decisions are based on their perception of the relative advantages (price/cost, performance, quality, etc) of the firms offerings’ versus that of either direct competitors or substitute products/services. Successful businesses are those that effectively manage customer perceptions to ensure that their products/services are the preferred choices.
Works Cited
Ireland, R. D., Hoskisson, R. E., Hitt, M. A. Understanding Business Strategy. South-Western College Pub, 2005.