Company and Competitor Analysis: The 3Cs and Porter’s Five Forces, SWOT, Environmental scanning

What are Ohmae's 3Cs?

Customers, company, and competitors. Strategy should connect customer needs with company capabilities and a profitable advantage over alternatives.

What questions should a 3C analysis answer?

What do customers value? Can the company deliver it? Can it deliver better value than competitors? Can it do so profitably?

What does Porter's five-forces framework assess?

The competitive pressures affecting an industry's attractiveness and profit potential. It examines more than rivalry between existing brands.

What are the five forces?

Supplier power, buyer power, threat of new entrants, threat of substitutes, and rivalry among existing firms.

What is supplier bargaining power?

Suppliers' ability to influence input prices, quality, availability, or terms in ways that affect the purchasing firm's profitability.

When are suppliers more powerful?

Supplier power tends to rise when suppliers are concentrated or when the buyer has few satisfactory alternatives.

Case: Starbucks input costs. Costs of beans, milk, labor, and property increased, squeezing Starbucks' profits. Starbucks raised some customer prices. Which force is illustrated, and why does it matter?

Supplier/input-cost pressure. Higher costs reduce contribution unless the firm increases prices, improves efficiency, changes inputs, or otherwise absorbs the increase. Its ability to pass costs to customers depends on customer value and competitive conditions.

Case: Coca-Cola's inputs. Coca-Cola requires ingredients, sweeteners, packaging, equipment, and other services. How should supplier power be analyzed?

Identify the relevant suppliers for each input and evaluate their concentration, alternatives, and bargaining position. Different input markets can create different levels of supplier power.

What is the threat of new entrants?

The risk that new firms enter the market, add capacity, compete for customers, and reduce incumbents' profit opportunities.

What creates barriers to entry?

Capital requirements, regulation, proprietary knowledge or products, strong brands, and difficulty accessing distribution.

Case: Soft drinks. New beverage brands must compete with strong established brands and limited retail shelf space. Why is entry difficult?

Brand familiarity and scarce distribution access create barriers. A new entrant must persuade both customers and intermediaries that its product deserves attention and space.

How can the internet change entry barriers?

It can lower some communication, selling, and distribution-access costs. However, brand strength, scale, logistics, and other capabilities can still make successful entry difficult.

What is buyer bargaining power?

Buyers' ability to demand lower prices, better terms, or additional benefits from sellers.

When are buyers more powerful?

When products are undifferentiated, switching is easy, buyers purchase large volumes, or buyers are concentrated.

Case: Walmart. Walmart pressures suppliers over product design, materials, pricing, and cost reductions. Suppliers may depend heavily on access to Walmart customers. Which force does this illustrate?

Buyer power. A large, important buyer can negotiate strongly because losing its business would be costly to the supplier.

What is a substitute in Porter's framework?

An offering from another product category or industry that satisfies a similar underlying need.

How do substitutes affect an industry?

They can limit the price customers will pay and reduce demand for the entire category, not merely shift sales between existing brands.

Case: Videoconferencing. A company replaces some business trips with online meetings. Why is videoconferencing a substitute rather than a direct airline competitor?

It satisfies the need to meet and communicate through a different product category. It can reduce the total need for air travel.

Case: Coke and Pepsi versus other drinks. Water, tea, coffee, and juice offer alternative ways to satisfy thirst. How can soft-drink brands sustain prices despite substitutes?

By creating additional perceived value through taste, image, lifestyle, familiarity, and experience. Differentiation can make the offering more valuable than a basic thirst solution.

What is rivalry among existing firms?

Competition between incumbent firms for customers, sales, and market position. It may involve prices, promotion, features, service, or distribution.

What is industry concentration?

The degree to which a small number of firms account for a large proportion of market sales.

How can concentration relate to rivalry and entry?

A concentrated industry may have strong incumbents and significant entry barriers. A fragmented industry may contain many firms competing intensely. Concentration alone does not prove that rivalry is weak.

What is SWOT analysis?

An assessment of strengths, weaknesses, opportunities, and threats used to understand the firm's current position and strategic options.

Which SWOT factors are internal?

Strengths and weaknesses. They concern the firm's resources, capabilities, and performance.

Which SWOT factors are external?

Opportunities and threats. They arise from conditions outside the firm.

What is a strength?

An internal resource or capability that helps the firm achieve its objectives or perform well relative to competitors.

What is a weakness?

An internal limitation that reduces the firm's ability to achieve objectives or compete effectively.

What is an opportunity?

A favorable external condition or trend that the firm may exploit. The opportunity is the condition, not merely the company's planned response.

What is a threat?

An unfavorable external condition or trend that may damage performance or make success more difficult.

What is a core competency?

A distinctive skill or expertise that directly supports superior performance. It concerns what the firm does particularly well, rather than every activity it performs.

Case: Sony. Sony combined microelectronics expertise and innovative design to create consumer products. Why can this be considered a core competency?

The combination represents a distinctive capability that can support several products and create customer value. Its strategic importance comes from superior execution, not simply participation in electronics manufacturing.

What should an internal analysis examine?

Current performance, brand strength, cost structure, product portfolio, R&D pipeline, technical capabilities, employee skills, and organizational culture.

What should an external analysis examine?

Customers, competitors, suppliers, distribution, pricing constraints, technology, the economy, regulation, workstyle trends, uncertainty, and potential partners.

What is environmental scanning?

Monitoring the external environment to identify changes that may create opportunities or threats.

What are the five environmental-force categories?

Social, economic, technological, competitive, and regulatory. These differ from Porter's five industry forces.

What should marketers examine under social forces?

Demographics, aging, cultural diversity, lifestyles, customer needs, buying patterns, and ethical concerns.

How can population distribution affect marketing?

Market potential is geographically uneven. Population size, density, age, and composition influence demand and the appropriate distribution or communication approach.

How can aging affect marketing opportunities?

It can change demand for healthcare, travel, mobility, convenience, financial services, and other offerings. Firms should connect age-related changes to specific needs rather than assume all older consumers behave identically.

How can health and obesity trends affect marketing?

They may change demand for food, exercise, health-related products, and product information, while increasing scrutiny of marketing practices.

How can increasing cultural diversity affect strategy?

Firms may need to adapt language, products, communication, channels, or service to different cultural groups and local market compositions.

What economic factors should be monitored?

Economic growth, inflation, unemployment, exchange rates, consumer confidence, and their effects on purchasing power and operating costs.

What technological factors should be monitored?

Current and emerging technologies, competing technologies, innovation opportunities, consumer adoption, and relevant regulation.

Case: Netflix and DVD rental. Netflix offered a more convenient way to obtain movies, forcing traditional rental businesses to respond. What does this show about technological change?

Technology can change the value customers expect, alter distribution, and reshape competition. Firms must monitor new ways of satisfying needs, not only improvements within their existing business model.

How can AI be used in marketing?

Product recommendations based on behavior, chatbots for routine questions and transactions, travel booking, and new automated service experiences.

What should competitive environmental scanning examine?

Direct and indirect competitors, competitive intensity, rivals' strategies and results, customer reasons for choosing them, and their strengths and weaknesses.

What should regulatory scanning examine?

Current and proposed laws, consumer protection, privacy, lobbying, political conditions, and environmental requirements.

Why do privacy issues matter to marketers?

Customer information can improve personalization, but its collection and use also affect trust, customer expectations, and regulatory obligations.

Case: Starbucks SWOT. Consider a premium coffee business with a recognized brand, substantial operating costs, possible expansion opportunities, and competing drink alternatives. How can these be classified?

Strength: recognized brand and experience. Weakness: costly operations. Opportunity: an underserved market or new consumption occasion. Threat: rising input costs or stronger substitutes. These are illustrative classifications; each claim requires evidence in an actual analysis.