Business Business Management IIManagement II

OPPORTUNITIES & THREATSOPPORTUNITIES & THREATS• Opportunities & threats exists in external

environment. An external appraisal is required to identify profit-making opportunities which can be exploited by the company’s strength and also anticipate environmental threats for instance declining economy, competitors action, government legislation etc.

• For opportunities, it is necessary to decide:– What opportunities exist in the business

environment?– What is the capability profile of the competitors?

Are they better placed to exploit these opportunities?

– What is the company’s comparative performance potential in the filed of opportunity?

For threats, it is necessary to For threats, it is necessary to decide the followingdecide the following

• What threat might arise, to the company or its business environment?

• How will market player be affected?

Strengths Weaknesses

ConversionMATCHING

Opportunities Threats

Internal toThe

company

Exist External

To The company

GAP AnalysisGAP Analysis• Gap analysis is a comparison between an entity’s

ultimate objective (most commonly expressed in terms of demand, but may be reported in term of profit) and the expected performance of projects both planned and underway.

• The planning is not the gap between the current position organization and the desired future position.

• Point to note:– The planning gap is not the gap between the current

position of the organization and the desired future position.

Analyzing the Planning GAPAnalyzing the Planning GAP• Gap analysis quantifies the size of the gap

between the objective for the planning period and the forecast based on the current situation and current prospects.

• Gap analysis is based on two questions.– What are the organization’s target for

achievement over the planning period?– What would the organization be expected to

achieve if it ‘did nothing’ – ie did not develop any new strategies, but simply carried on in the current way with the same product and selling to the same market?

Analyzing an Existing GAP in Analyzing an Existing GAP in salessales

Pote

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Exis

ting

Dem

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Exis

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Sale

DistributionGap

Product Gap

CompetitiveGap

DemandGap

Continuous Gap AnalysisContinuous Gap Analysis• A gap analysis can be used as a means

of strategic control. This mean that the gap is regularly updated.– Were the assumptions in Fo forecast

justified?– A similar questions can be asked of the

other strategies which are supposed to fill the gap.• Have they been implemented as planned?• Have they generated the expected level of

sales or profit?

Using IS/IT As A Strategic ToolUsing IS/IT As A Strategic Tool

• Porter & Miller states that IT has the potential to change the nature of the competition within an industry in three ways. IT can– Change the industry structure– Create new business and industries– Be used to create competitive

advantages

Change the industry Change the industry structurestructure

• The threat of new entrants• The bargaining power of suppliers• The bargaining power of customers• The threat of substitute

product/services

Creating New Business Creating New Business OpportunitiesOpportunities

• IT is giving everyone ample opportunities to expand their business to the extent they want

• B2B, B2C etc are the examples of IT

Be used to create Be used to create competitive advantages competitive advantages

• Cost of leadership:– By facilitating reductions in cost level

e.g. reduction in administration staff.– Better resources utilization – Using J.I.T and advance manufacturing

systems.Reduction in cost by using emails, fax’s

multimedia conferences.