360 DEGREE

A PESTEL analysis or PESTLE analysis (formerly known as PEST analysis) is a framework or tool used to analyse and monitor the macro-environmental factors that may have a profound impact on an organisation’s performance. This tool is especially useful when starting a new business or entering a foreign market. It is often used in collaboration with other analytical business tools such as the SWOT analysis and Porter’s Five Forces to give a clear understanding of a situation and related internal and external factors.

PESTEL is an acronym that stand for Political, Economic, Social, Technological, Environmental and Legal factors. However, throughout the years the framework has been expanded with factors such as Demographics, Intercultural, Ethical and Ecological resulting in variants such as STEEPLED, DESTEP and SLEPIT.

Examine the past trends in an industry, the current demand and supply mechanics, and the future outlook of the industry. Evaluate the viability of investing in a company.

To come up with a good strategy to deal with the competition in the industry, you must first understand the industry itself. After this, you can make informed choices on the best competitive strategy to use. By the time you develop a competitor analysis, you should be able to:

• Know your position in the industry
• Identify opportunities and threats within the industry
• Highlight the strengths and weaknesses of your organization
• Pinpoint the areas where strategic changes will lead to high returns

Identify direct or indirect competitors and, at the same time, comprehend their mission, vision, core values, niche market, strengths and weaknesses.

In the volatile nature of the business world, where companies represent a competition to others, this analysis will help you to establish a new mind-set which facilitates the creation of strategic competitiveness.

Porter’s Five Forces analysis is a framework that helps analyzing the level of competition within a certain industry. It is especially useful when starting a new business or when entering a new industry sector. According to this framework, competitiveness does not only come from competitors. Rather, the state of competition in an industry depends on five basic forces:

Threat of new entrants

• Economies of scale
• Product differentiation
• Brand identity/loyalty
• Access to distribution channels
• Capital requirements
• Access to latest technology
• Access to necessary inputs
• Absolute cost advantages
• Experience and learning effects
• Government policies
• Switching costs
• Expected retaliation from existing players

Bargaining power of suppliers

• Number of suppliers
• Size of suppliers
• Supplier concentration
• Availability of substitutes for the supplier’s products
• Uniqueness of supplier’s products or services (differentiation)
• Switching cost for supplier’s products
• Supplier’s threat of forward integration
• Industry threat of backward integration
• Supplier’s contribution to quality or service of the industry products
• Importance of volume to supplier
• Total industry cost contributed by suppliers
• Importance of the industry to supplier’s profit

Bargaining power of buyers

• Buyer volume (number of customers)
• Size of each buyer’s order
• Buyer concentration
• Buyer’s ability to substitute
• Buyer’s switching costs
• Buyer’s information availability
• Buyer’s threat of backward integration
• Industry threat of forward integration
• Price sensitivity

Threat of substitute products or services

• Number of substitute products available
• Buyer’s propensity to substitute
• Relative price performance of substitutes
• Perceived level of product differentiation
• Switching costs
• Substitute producer’s profitability & aggressiveness

Rivalry among existing competitors

• Number of competitors
• Diversity of competitors
• Industry concentration and balance
• Industry growth
• Industry life cycle
• Quality differences
• Product differentiation
• Brand identity/loyalty
• Switching costs
• Intermittent overcapacity
• Informational complexity
• Barriers to exit

Estimate the potential of a market. It is particularly important for companies looking to launch a new product or service. We define for you:

• The total size (or potential size) of a market
• The major competitors in a market by category
• The composition and profile of a target customer
• The products/services available in the market
• The most significant trends in the market

Companies that create exceptional customer experiences (CX) can set themselves apart from their competitors.

The whole idea around CX is to maintain an ongoing deliberate effort to keeping customers pleased with the service they have received so that continuous improvement is something that exists as a real process.

Armed with advanced analytics, CX leaders gain rapid insights to build customer loyalty, make employees happier, achieve revenue gains of 5 to 10 percent, and reduce costs by 15 to 25 percent within two or three years. But it takes patience and guts to train an organization to see the world through the customer’s eyes and to redesign functions to create value in a customer-centric way. The management task begins with considering the customer, not the organization, at the center of the exercise.

How does recent customer experience rate as opposed to overall customer satisfaction? One answer to this question is to recognize that CS is captured as a point in time measure that relates to a range of time over which a product or service was procured, while customer experience is a real time measure relating to the most recent touch point of a customer with company’s product or service. While CS is important for capturing the high-level view of “how we are doing”, CX provides us with an opportunity to improve in a rapid fashion.

The product development lifecycle (PDLC) takes many steps into consideration from the beginning of an idea through its production into a working product or service. The CX component needs to be at the heart of the PDLC of any product or service. This goes beyond just including various customer audiences to be part of the review process, it also needs to encompass a mechanism for how customers who use the product/service will interact with the company to resolve matters, improve service and build a better experience as close to real time as possible.

An emphasis on CX can bring a level of transparency and accountability that forces a decision, embeds a sense of urgency and causes companies to respond and resolve matters instead of burying the bad ones under the rug or letting them get lost in the survey frenzy of traditional CS models.

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