How internal and external analysis can be used to decide on strategic options.
In order to make a business successful, a company needs to conduct internal and external analysis. The internal analysis focuses on evaluating all aspects of the organisation itself. For example, the company’s assets and capabilities spotlight its weaknesses and strengths.
The external analysis focuses on evaluating the external forces, including macroeconomic, global, political, social, demographic, and technological analysis. An organisation needs to be conscious of the external environment because it greatly affects its business operation. By conducting external analysis, an organisation can determine the opportunities and threats in a segment.
Conducting both external and internal analysis helps a company recognise its strengths, weaknesses, opportunities, and threats in its business sectors. Knowing the situation and the position of the business can help a company act beforehand in order to avoid the risk and gain opportunities.
The different approaches to internal environmental analysis
Gap analysis
It is a method of recognising how far the current state of operation is from their business goals. Organisations utilise gap analysis to identify its weaknesses and consider what steps should be taken to overcome them.
SWOT analysis
SWOT analysis analyses four aspects of a company: Strengths, Weaknesses, Opportunities, and Threats. In other words, it is a method for assessing the performance, competition, risk, and potential of an organisation as well as part of a business, for example, a product line or division, an industry, and so forth. It is a useful way to evaluate the full spectrum of a company’s abilities.
Mckinsey 7-S framework
Mckinsey 7-S framework helps a company to achieve its maximum success by looking into 7 elements that are important to the business and ensuring a company aligns these elements. 7 elements are composed of strategy, structure, systems, skills, shared values, style, and staff.
Core competencies analysis
Core competencies analysis identifies the advantages of a company’s services and productions compared to competitors’; in other words, it identifies the unique combination of qualities that separates the business from its competitors. It is helpful when determining ways to develop and improve unique products and services and surpass competitors.
The different approaches to external environmental analysis
Companies should consider the following elements in order to carry out a successful external environmental analysis: Supply chain, Industry, Economic trends, Competitors, Market demographics, etc.
Supply chain
A business supply chain is a network between a company and its suppliers to manufacture and distribute products or services to the customers. It is one of the components of an external analysis because it focuses on the following elements:
- The source of raw materials
- The manufacturing process turning raw materials into finished products
- The delivery of the final products to retail location
Better supply chain management brings about lower costs and a faster production cycle. Therefore, companies should monitor the supply chain process and improve it if needed so that they can maximise their efficiency.
Industry
In the industry section, a company needs to consider the following components:
- Current risks and opportunities within their industry.
- The current size of the industry
- Estimated growth of the industry
- Alternative industries to investigate or invest
It is crucial for organisations to analyse the above components in the industry as organisations are likely to make a prediction of whether their business will continue to thrive in the future. If they conduct precise analysis, they can take alternative measures against the expected threat to their businesses.
Economic trends
Paying attention to the expected changes in economic trends, such as interest rates, inflation, deflation, recession levels, and trading laws, could help a company determine how these components could impact their profits during a specific period of time.
For instance, a company conducts an external analysis to determine a possible economic recession in next month. Due to this, a company decides to decrease the number of products they purchase from retailers to be ready for the subsequent economic recession.
Competitors
Competitors are also an essential element to consider for a business to thrive.
A business needs to investigate the following areas such as:
- A number of existing competitors with similar products, services, prices, and targeted audiences.
- What the unique selling points of the other competitors are in the same industry.
- Optimal pricing a company can assign to products or services.
- Analyse what kind of business models could be a threat to a company.
For example, a toy store carries out an external analysis of the competitors’ stores that sell the same toy. They realise the competitors are selling the same toy at a lower price. Therefore, a company sets its own prices below the competitors’ so that it can generate profits.
Researching the competitors helps a company set the best price points, measures to improve the business models, products and services, and successful marketing tactics which could surpass its competitors.
Market demographics
Analysing market demographics helps a company determine its suitable targeted audience. Market demographics consist of some elements, which include:
- Age
- Economic status
- Location of residence
- Interests
- How helpful are the products to the targeted audience?
Narrowing down the targeted group allows a company to decide how to advertise their products suitable for the targeted customers and to consider whether there are needs for the products. Furthermore, it also helps a company deliver messages that resonate with the customers.
Marketing strategy of Starbucks
Introduction to Starbucks
Starbucks began in 1971 along the cobblestone streets of Seattle’s historic Pike Place Market. It is an American multinational chain of coffeehouses. With more than 32,000 stores in 80 countries, it is the world’s largest and most renowned coffeehouse chain (Starbucks, 2022)
Competitive positioning of Starbucks
Starbucks not only provides an excellent quality of products and services but also delivers a personalised in-store experience to its customers. For example, the store serves the beverage plastic cup with its customers’ names, satisfying customers with personalised experiences and obtaining premium brand statues (Haskova, 2015).
At Starbucks, customers can either spend their time in a comfortable environment with WiFi provided, or they can rapidly purchase the beverage and leave; it is flexible because the customers have options to choose either stay or leave and both of them give the customers unique experiences (Haskova, 2015).
In 2013, they launched the website called “MyStarbucksidea.com.” It allows customers to provide constant feedback on products or suggest new ideas. This system benefits both the company and the customers as the company can get feedback on their service for free, saving the cost of survey and time, and the customers can have better service based on their needs. Although the system only applies to the existing customers, it is still a sound system for researching customers’ satisfaction levels, leading to the improvement and development of the products.
Social media, especially Facebook and Twitter, is a major tool of Starbucks’ marketing. Starbucks uses social media marketing strategies – special offers, coupons, sapling, and discounts – distributed through Facebook. As a result, they successfully raised the awareness of their business and created high levels of engagement on the products. On social media, they have been uploading various types of content, such as a piece of writing about Starbucks and its employees and some videos which explain the process of growing coffee beans, attracting customers’ attention (MBA Knowledge Base, 2015). Howard Schultz (n.d., cited in MBA Knowledge Base, 2015), CEO of Starbucks, said, “We are not just selling a cup of tea, we are providing an experience.” It indicates that customers’ satisfaction is given top priority. Therefore, they have made one hundred use of social media to interact, communicate, and discuss with their customers.
The targeted audience is set to be 18-40 years old. In order to optimize their products for a wide range of customers, they suggest high-quality coffee for older customers and fresh and creative beverages for the younger age (Haskova, 2015). Consequently, the needs of both types of customers can be fulfilled.
In summary, Starbucks is a successful company in respect of both operation and marketing. They successfully utilise social media to interact with their customers, get individuals involved in a campaign and new ideas for future development, and get feedback with ease. There is always a demand for coffee. People tend to spend their time in café before work; therefore, Starbucks takes advantage of the market, prioritising their customers to provide the best experience.
SWOT analysis
| Strength 1. Strong brand image: premium brand, upper-middle class 2. Strong financial performance 3. Extensive internal supply chain 4. High quality, Guaranteed taste 5. Unique customer experiences 6. High demand for coffee Broad targeting (for example, between 18 to 40 years old could be the potential customers |
Weakness 1. High price 2. Generalised standards for most products 3. Difficult to maintain the same quality for all of the stores since there are over 16,000 stores worldwide 4. The possibility of a product recall 5. Although it was operated as a café for middle-class customers, it turned into fast food coffee chain since it expanded the business |
| Opportunity 1. Inventing new products or services 2. Partnerships with other companies 3. Further expansion in the developing market 4. Focus on the tea market |
Threat 1. Competition with other similar businesses that cost lower than them 2. Competition with outlets 3. Imitation 4. Independent house coffee movement 5. Philadelphia arrests (racism of Starbucks’ employees) harmed the business brand |
Marketing strategy of MasterClass
In 2015, David Rogier and Aaron Rasmussen launched Masterclass, an e-learning platform where people can learn new skills from the world’s best. Subscribers can get unlimited access to over 100 instructors across 11 categories: Arts and Entertainment, Business, Cooking, Gardening, Design and Style, Writing, etc. According to Rogier (2021, cited in Rothman, 2021), the demand for Masterclass spiked by over 1,000% during the pandemic. As demonstrated, Masterclass has become one of the successful companies in the EdTech industry.
Competitive positioning of MasterClass
One features that separate them from other EdTech firms is that they appointed many celebrities and stars in different fields, such as Chris Voss, Gordon Ramsay, and Natalie Portman, to teach their skills. It is the best place to learn because people want to learn from the best. Appointing real celebrities also benefits the company in respect of its marketing strategy. Attracting many famous instructors not only reinforces their company’s branding but also can tap into the fans of these celebrities, leading their fans to sign up.
The other feature of Masterclass that differentiates it from its competitors is its wide range of courses. The courses they have been providing vary greatly because there are over 100 instructors teaching their own expertise. There are courses where people can learn about the world rather than acquire a certain skill. For example, the course held by Chris Hadfield teaches Space exploration. However, the course is not aimed at teaching how to become an astronaut but rather like a documentary in that people can learn the possibilities of space and how astronauts’ life look like.
MasterClass utilises social media such as Facebook, Instagram, and YouTube for their marketing. However, they focus on creating video content rather than posting a picture. Seeing their Instagram profile, most of their posts are video content: interviews with their instructors, a brief introduction to the courses, announcements of new instructors, etc. They use the content from the course itself to create promotional video materials for social media. In so doing, it saves marketers time and effort to produce commercial materials from the ground up.
They also use storytelling as a tool for social media marketing. There are many videos featuring instructors telling their own stories, such as how they accomplished their goals, the struggles they faced, and their lifestyles. Most often, people are moved by the individuals’ stories; therefore, storytelling is a helpful way to attract the customers’ attention.
SWOT analysi
| Strength 1. A wide range of courses taught by many real celebrities 2. People can take courses anywhere and anytime as it is an online platform 3. Successful branding 4. Subscribers can take courses with ease 5. New classes are added every month |
Weakness 1. Imitation 2. Customers can only meet celebrities online 3. People cannot interact with others who are taking the same course. 4. The amount of content is limited; therefore, subscribers might unsubscribe it after taking all the courses |
| Opportunity 1. Appointing more celebrities from different fields 2. Invest into other things in the education industry 3. Further expansion in the developing market 4. Adopt the service at school as a learning course for students 5. Physical learning place |
Threat 1. Other EdTech companies, similar to their business model 2. Celebrities cause problems, losing credibility 3. Credit card fraud 4. Hacking |
Marketing strategy of Pixar
Introduction to Pixar
Pixar Animation Studios, known as Pixar, is an American animation film studio that creates digitally animated feature films. Pixar began as the Graphics Group in 1979 under the control of George Lucas. Under Steve Jobs’s financial backing, it was officially renamed Pixar in 1986 (Lawson, 2015). Pixar has created a lot of masterpieces; the presentative works, for example, are Cars, Toy Story, Monsters University, Brave, Monsters Inc., Incredibles, and so on. As Pixar has created many fascinating films, according to Linked in of Pixar Animation Studios, its movies have won 40 Academy Awards, and the films have grossed more than $14 billion worldwide.
Competitive positioning of Pixar
Pixar focuses on the quality of its works. What separates them from their competitors is that they produce one film every four to five years rather than creating one film every year; in other words, Pixar focuses on creating a fewer film that are all of high quality. In so doing, they can minimize the risk by ensuring the quality of these films through a sophisticated production process.
Pixar successfully utilises social media such as Facebook, Twitter, YouTube, Instagram for promotion. For example, they share multimedia content, including videos and images, to advertise upcoming movies or events on Facebook. Pixar’s official Facebook account has 14 million followers, and followers are highly engaged with the content Pixar posts. A lot of followers are likely to share their emotions and appreciation through the comments on social media posts. Pixar also has accounts for specific movies. For example, there is an account dedicated to Toy Story movies that has more than 30 million followers.
On Twitter, Pixar stays connected with its fans by posing one to two tweets per day so that Twitter users who are not using other social media can interact with the producers and other fans.
YouTube is also an excellent tool for promotion. Pixar has uploaded around 500 videos to its YouTube channel so far, and it has 18 million subscribers. Subscribers can enjoy watching upcoming movie retailers, behind the scenes, and exciting facts videos.
SWOT analysis
| Strength 1. Successful branding 2. Diverse portfolio 3. Sells toys linked to their movies 4. Collaboration with MacDonalds to sell happy meal toys 5. High-quality animation |
Weakness 1. High cost of animation 2. Many years to come up |
| Opportunity 1. Create a Pixar theme park 2. Create its own subscription service 3. Invest into other things in different sectors (for example, collaborating their movie characters with education materials) |
Threat 1. Changing technology 2. Global economy 3. Online TV and cheap online movie retail (Netflix, Nick Animation studios, etc) 4. Imitation 5. High cost of salary 6. The increasing piracy of intellectual content 7. The market size is small |
References
Starbucks. (2022). LEARN ABOUT OUR HISTORY. [online] Available at: https://www.starbucks.co.id/about-us/our-heritage [Accessed 8 Jun. 2022]
Haskova, K. (2015). Starbucks Marketing Analysis. CRIS – Bulletin of the Centre for Research and Interdisciplinary Study, [online] 2015(1), pp.11–29. doi:10.1515/cris-2015-0002.
MBA Knowledge Base. (2015). Case Study: Starbucks Social Media Marketing Strategy. [online] Available at: https://www.mbaknol.com/management-case-studies/case-study-starbucks-social-media-marketing-strategy/ [Accessed 5 Jun. 2022].
Rothman, D. (2021). MasterClass: In a class of its own. [online] www.cbsnews.com. Available at: https://www.cbsnews.com/news/masterclass-in-a-class-of-its-own/ [Accessed 6 Jun. 2022].
Lawson, K. (2015). A Brief History Of Pixar Studios | The Film Magazine. [online] THE FILM MAGAZINE. Available at: https://www.thefilmagazine.com/a-brief-history-of-pixar-animation-studios/ [Accessed 8 Jun. 2022].
