W3 Lecture 3-MSIN0144-Understanding the Market and the Opportunity

Lecture Overview

• Understanding the Market and the Opportunity

  • Business Scalability

  • Business Viability

  • Models Used:

    • PESTLE Model

    • CAGE Model

    • VRIO Model

    • Porter’s 5 Forces

    • SWOT Analysis

• Instructor: Dr. Evangelos Markopoulos

• Course Code: MSIN0144

Module Engagement

• Pulse Check 1: Assess understanding and engagement with the module.

  • Questions include:

    • Understanding of module learning objectives (Yes/No)

    • Awareness of assessment types and weightings (Yes/No)

    • Contact support resources (Yes/No)

    • Access to necessary resources (Yes/No)

    • Current progress rating (1-5)

• Online engagement tool: www.menti.com (Voting code: 2791 2130)

Global Business Perspectives

• Global Start-ups and Debates

  • Explores the concept of globalization discussed by Thomas Friedman.

• "The World is Flat" - Video Resource: https://www.youtube.com/watch?v=oM2BguxRSyY

  • Three Eras of Globalization:

    • First Era (1492-1800): Localized conditions within states.

    • Second Era (1800-2000): Increased global interdependence spurred by the Industrial Revolution.

    • Third Era (2000-Present): Individual participation in globalization from diverse regions and backgrounds.

Market Understanding

• Business Scalability

• Analysis Tools: PESTLE, CAGE, VRIO, Porter Five Forces, SWOT.

PESTLE Analysis

• Framework used to identify macro external forces affecting an organization.

  • Components include:

    • Political Factors: Government policies, stability, trade regulations.

    • Economic Factors: Interest rates, raw material costs, foreign exchange rates.

    • Social Factors: Demographic changes, cultural trends, lifestyle shifts.

    • Technological Factors: Innovation rate, automation, distribution methods.

    • Environmental Factors: Climate, sustainability practices, waste management.

    • Legal Factors: Local laws, regulations, employment law.

• Useful in identifying threats and weaknesses for SWOT analysis.

CAGE Model

• CAGE Framework by Pankaj Ghemawat focuses on:

  • Cultural Distance: Language, ethnicity, religion, social norms.

  • Administrative Distance: Government policies, colonial ties.

  • Geographic Distance: Physical remoteness, country size, communication barriers.

  • Economic Distance: Consumer income disparities, resource costs.

• Explore trade patterns and international business strategies.

Porter’s 5 Forces Analysis

• Competitive Dynamics:

  • Competitive Rivalry: Number of competitors, industry growth.

  • Threat of New Entrants: Entry barriers, industry economies of scale.

  • Buyer Power: Price sensitivity, buying volume.

  • Supplier Power: Number of suppliers, uniqueness of their products.

  • Threat of Substitutes: Availability and appeal of alternatives.

  • 

SWOT Analysis

• Framework for Strategic Planning: Strengths, Weaknesses, Opportunities, Threats.

  • Strengths: Core competencies, market coverage, brand reputation.

  • Weaknesses: Marketing skills, product line obsolescence.

  • Opportunities: Market expansion, exploitation of new trends.

  • Threats: Increased competition, and regulatory changes.

    

VRIO Model

• Framework for assessing resources:

  • Value: Ability to leverage opportunities or fend off threats.

  • Rarity: Scarcity adds competitive advantage.

  • Inimitability: Hard to replicate or substitute.

  • Organization: Capability to exploit resources effectively.

• Tools for competitive analysis and strategy formulation.

Summary of VRIO Model

• Evaluate whether a resource provides:

  • Competitive Advantage: If valued, rare and not easily imitable.

  • Temporary Advantages: If difficult to imitate but others can catch up.

  • Competitive Disadvantage: If not valuable or rare.

Resources and Capabilities

1. List Resources: Financial, Human, Material, Non-material.

2. Use VRIO Analysis: Assess based on value, rarity, inimitability, organization.

3. Effective Strategy Building utilizing assessed resources.