Title: Industry Analysis in a European Location
“Tourism in Greece”
Task instructions and details:
You work for a leading Business Consulting Firm and part of your brief is to provide your firm with an update on the “state of play” for a specific industry in a specific location in Europe.
You are to write a report providing an analysis of the general and task environment of this tourism industry in Greece, which it operates in the European Union (E.U.)
You are to use any of the tools with which you are familiar (e.g. PESTEL, Porters Five Forces, SWOT or others) to analyse both the general (including international) and task environments in which this industry operates. The tools or combination of tools that you use for the analysis is your choice and may be based upon what you deem as appropriate for the industry and location you are investigating.
Please Note: For notes ( PAGE 4 ) and 2 readings (ATTACHED) to help you better understand the use of these tools of analysis and the general and task environment
The report needs to give the reader a brief sense of what has transpired in this industry historically, but more importantly what is the ‘state of play’ at present and what does the future hold for this industry in this location. Ultimately, the report needs to address the question of whether this industry has a future in this location.
Therefore, key insights into the future of this industry (whether positive or negative) in this location will need to be explained.
The report should also provide recommendations in terms of the strategic direction this industry needs to adopt going forward if it is to have a sustainable and viable future in this location, if that is indeed what your investigation and analysis has revealed. If your analysis reveals that there is no longer a viable future for this industry in this location what are the recommendations for firms presently operating in this industry in this location. A solid justification based on your research and analysis needs to underpin your recommendations.
Word limit: 4,950 WORDS
An example of a suggested structure of a report follows.
Components of the Report
In no more than 300 words summarize the key message of your report. What was the problem, how was it investigated, what were your findings, conclusions and recommendations
Table of Contents
Provide a list of the major and minor sections of your report.
Set the scene by giving some background information about the topic. Some justification as to why you chose this topic and why is it worthy of investigation? What are the objectives or aims/purpose of the investigation? What are the parameters of the report and limitations? Provide the reader with an overall outline of the report structure.
Results and Discussion
Discuss the evidence you have gathered with specific reference to the problem or issue you are investigating. Discuss what you have investigated and found and provide analysis to justify the recommendations that you will make at the end of the report. Evidence based inquiry is required, what interpretations and what judgements have you made as a result of your analysis. Tables, graphs etc. can be used to argue and support your arguments.
Group your arguments and organise them into a logical sequence, using sections and sub-sections with appropriately sign-posted headings. The report should have a consistent and logical flow and should be easy to follow. Make sure you acknowledge and cite all your sources and references.
Conclusion and Recommendations
Answer the question asked of you in the report. What has been the overall significance of what you have found? It might be useful to remind the reader of the key points in terms of your findings. What are the recommendations that flow on from your conclusion? Are there appropriate policy actions that you can suggest going forward? The conclusion and recommendation need to be consistent with the discussion that takes place in the previous discussion section. Avoid introducing new material into the conclusion.
Provide a list of all the sources and references you have used in compiling the report.
Appendices are to be avoided, what needs to be said should be in the body of the report.
Other Report Tips
• Keep the report concise and to the point.
• Bullet points are acceptable however within reason, the report needs to analyse, explain and justify. So do not provide an endless list of bullet points which provide little in the way of explanation (this will not be rewarded).
Criteria for assessment:
• Research and intellectual extension (30%)
What contribution has the report made to the development of our knowledge and understanding of the industry investigated?
• Analysis and Discussion (60%)
To what extent has the author demonstrated identification, analysis and discussion of the issues and used the evidence available to provide for consistent and sound reasoning in order to reach his or her conclusions.
• Clarity and quality of presentation (10%)
To what extent does the report communicate a clear and coherent message? Are the language, grammar and referencing satisfactory?
Assessment criteria – grading descriptors table
a)Accuracy and relevance of knowledge
b)Ability to identify information, read widely and use information from academic and professional sources Demonstrates insight, awareness and understanding of the deeper and more subtle aspects of the topic. Ability to consider the topic in the broader context of the discipline
Strong evidence of independent reading beyond the core texts and materials
Evidence of an
awareness and understanding of the deeper and more subtle aspects of the
Evidence of reading beyond the core texts and materials Sound knowledge of
principles and concepts
Thorough understanding of the core texts and materials Knowledge of principles
Evidence of having read the core texts and materials Limited knowledge of principles and concepts
Very little evidence of having read any of the core texts and materials
Argument and Analysis: articulation of argument and analytical- evaluative skills Demonstrates original and independent thought and highly developed analytical and evaluative skills.
Evidence of high level reflective and critical thinking. Evidence of original and independent
thought and clear evidence of analytical and
evaluative skills. Evidence of reflective and critical thinking. Well-reasoned argument
based on broad evidence. Evidence of analytical and evaluative skills, reflective and critical thinking. Sound argument based on evidence. Some evidence of
analytical and evaluative skills and reflective and critical thinking. Very little evidence of an ability to construct coherent argument, analytical and evaluative skills. Very little evidence of reflective and critical thinking.
Written communication and presentation
Highly developed skills in expression and presentation and excellent academic referencing. Well-developed skills in expression and
presentation and academic referencing Good skills in expression
Accurate and consistent academic referencing
Adequate skills in expression and presentation. Demonstrates understanding
of academic referencing Inadequate skills in
presentation. Inaccurate and inconsistent academic referencing
Analysing the Business Environment
Three goals in analyzing the environment:
• Understanding of changes taking place in the environment
• A warning mechanism of potential threats to the firm
• Facilitate strategy development and ultimately strategic decisions within an organization.
Firms which systematically analyse and diagnose the environment are more effective than those which do not.
Process of Environmental Analysis:
The analysis consists of four steps:
Scanning : Detect early signals of possible environmental change and detect environmental change already underway.
Monitoring : Purpose of monitoring is to assemble sufficient data from the environments (general and task) to discern whether certain trends are emerging, identification of the trends and identification of areas for further scanning.
Forecasting : It is concerned with developing projections of the direction, scope and intensity of environmental change.
Assessment : To determine implications for the organisation’s current and potential strategy.
The Environments in which business operates is made up of:
The General Environment
• Outside elements or forces that have the potential to affect an organisation’s performance
• Generally indirectly affects the organisation because of factors generally beyond its control
The Task Environment
• Outside elements or forces that have the potential to affect an organisation’s performance
• Generally directly affects the organisation however factors may be generally beyond its control
The Internal Environment
• Those factors that are internal to an organisation and impact upon the organisation’s operations and activities.
• Generally directly affects the organisation
Indirectly affects the organisation
Factors generally beyond the control of an organisation or business. These include:
• Environment (natural)
General Environment – the macro environment that companies and industries face – analyzed through PESTEL
Political Environment refers to the political system in place in a society.
How democratic ?
Role of the Government in the Economy
Image of the country and its leaders
Laws governing business
Flexibility and adaptability of laws
The Judicial System
All forces which have an economic impact on Business.
The economic environment consists of the type of economic system, demand and supply, pricing factors, degree of competitiveness, and impact of profitability. Economic environment among other factors includes:
Broad Economics Trends
GDP national and per capita
Money and Capital Markets – Interest Rates
Monetary and Fiscal Policy
Institutional Set-Up (“rules of the game”)(North 1990)
Culture values and people’s attitude to business and work.
Ethics in business
Social responsibility/ Social audit
Diminishing natural resources
Oceans, Waterways, Soils
Climate change and global warming
Influence being brought upon organisations to meet their environmental responsibility.
New technological innovations, new products and ideas, the state of technology, the utilization of technology for maximum inputs and outputs,
obsolescence of technology and the dynamic changes that frequently occur in technologies which enable firms to get a competitive advantage
Helps in the productive capacity of firms
Firms need to invest in R & D and keep up with the technological improvements that are occurring
Technology results in new products and older products becoming redundant.
Technological advances leads to high expectations of consumers in terms of quality
Leads to complexity in the environment system – measure required to handle this environment – quickly changing
Demand for large amounts of capital to invest in technological systems
Those factors which are relevant to business coming from the international or global environment:
Trade treaties, WTO principles and agreements
Problems in one country or economic zone can affect an impact on business operations in another country
World is moving towards greater standardisation –one market
Global Finance –interlinked economies
Competition from MNEs
Capital, technology and knowledge transfers
Which markets to enter and what to produce?
Key Aspects of PESTEL Analysis
When analysing the General Environment of a country, region, city, or any location:
• Need to understand what are the key drivers of change in that environment
• Is there one key factor or many – is there likely to be a combined effect of some of these factors .
• Predicting the future impact of these factors
Has a direct effect on the operations and activities of an organisation.
Includes: various types of stakeholders
Includes industry and competitive variables
Analyzing the task environment involves understanding:
• the industry’s dominant economic characteristics
• the nature and intensity of competition
• Porter’s Five Forces Model
• Industry Key Success Factors (KSFs)
Industry’s dominant economic characteristics
Market size & growth rate
Scope of competitive rivalry
Number of competitors & their relative sizes
Prevalence of backward or forward integration
Entry/exit barriers & resource requirements
Nature & pace of technology
Product & customer characteristics
Scale economies & experience curve effects
The nature and intensity of competition
What to identify
• Main sources of competitive forces
• Rivals, suppliers, customers/buyers, types of products or services offered, government, entry barriers, etc
• Strength of competitive forces
• Strong, moderate, weak, etc.
The key analytical tool
• Porter’s Five Forces Model of Competition
Porter’s Five Forces Model
Assesses the strength of each competitive force (Strong? Moderate? Weak?)
• Rivalry among existing competitors
• Substitute products
• Threat of potential entrants
• Bargaining power of suppliers
• Bargaining power of buyers
Explains how each force acts to create competitive pressure
Determines whether overall competition is brutal, fierce, strong, moderate, or weak
Michael E Porter proposes that managers should view the organizational environments in terms of five competitive forces:
• The threat of new entrants
• Competitive rivalry
• The threat of substitute products
• The power of buyers
• The power of suppliers
1. Rivalry among existing competitors
Existing firms in an industry are an organization’s current & direct competitors
What causes strong rivalry?
• Lots of firms, more equal in size & capability
• Industry conditions tempt rivals to use price cuts and other offensive weapons to boost volume & market shares
• Customers have low switching costs
• One or more firms initiate moves to bolster their position at the expense of rivals
• High costs to exit business than to stay in
• Firms have diverse strategies, corporate priorities, resources and countries of origin
Firms in same strategic group (i.e. set of firms competing within an industry) have two or more competitive characteristics in common:
• Sell in same price/quality range
• Cover same geographic areas
• Be vertically integrated to the same degree
• Have comparable product line breath
• Emphasize same types of distribution channels
• Offer buyers similar services
• Use identical technological approaches
2. Threat of Potential Entrants
Seriousness of threat depends on barriers to entry and reactions of existing firms
Common Barriers to Entry
• Economies of scale
• Inability to gain access to specialized technology & know-how
• Existence of learning/experience curve effects
• Customer loyalty
• High capital and/or specialized resource requirements
• Access to distribution channels
• Regulatory policies, tariffs, trade restrictions
Threat of potential entry is greater when:
• Entry barriers are low
• Sizeable pool of potential entrants exists
• Established firms are unwilling or unable to contest a newcomer’s entry efforts
• Newcomers can expect to earn attractive profits
3. Bargaining Power of Buyers
Buyers are a strong when:
• Large and purchase a large % of industry’s product
• They can integrate backwards
• Industry’s product is standardized
• Switching costs to substitutes or other brands are low
• They can purchase from several suppliers
• The product purchased does not save the buyer money
Buyers are also strong when they have leverage to bargain over:
• Other terms and conditions of sales (e.g., warranties/guarantees)
4. Bargaining Power of Suppliers
Suppliers are a strong competitive force when:
• Items makes up large portion of product costs,
• Items crucial to production process, and/or significantly affects product quality
• It is costly for buyers to switch suppliers
• They have good reputations & growing demand
• They can supply a component cheaper than industry members can make it themselves
• They do not have to contend with substitutes
Suppliers are also stronger when they can exercise power over:
• Prices charged
• Quality and/or performance of items supplied
• Amounts and delivery times
5. Substitute Products
Substitutes matter when rival firms are able to attract customers with products from other industries that satisfy the same need
• Restrict the price able to be charged for those goods
When are substitutes a stronger force?
• Sale of substitute are growing rapidly
• Producers of substitutes are planning to add new capacity
• Profits of substitute producers are increasing
The competitive threat of substitutes is stronger when they are:
• Readily available
• Attractively priced
• Believed to have comparable or better performance features
• Customer switching costs are low
Strategic Implications of Porter’s 5 Forces Model
An Industry is attractive when:
• Rivalry is moderate or low
• Entry barriers are high
• Good substitutes do not exist
• Suppliers and buyers are in a weak bargaining position
An Industry is unattractive when
• Rivalry is strong
• Entry barriers are low
• Competition from substitutes are strong
• Suppliers and buyers have considerable bargaining power
Identifying Industry KSFs
KSF’s (Key Success Factors) in an industry spell difference between
• Profits and loss and success or failure
Three key questions underpin KSF’s
(1) On what basis do consumers decide between competing brands or sellers?
(2) How can a seller be competitive and successful – what are the resources and competitive capabilities required?
(3) What is required for sellers to gain a sustainable competitive advantage?
KSFs consist of 3-5 major determinants of financial & competitive success in an industry
Common Types of KSFs
• Product innovation capability; expertise in a given technology etc.
• Low-cost production efficiency; low cost plant location, etc
• Strong network of wholesaler distributors/dealers; ability to gain ample space on retail shelves; short delivery times, etc.
• Customer service; clever advertising; attractive styling or packaging, Guarantees & warrantees
• Superior workforce talent; quality control know-how; design expertise; technological expertise, etc.
• Superior information systems; ability to employ internet to conduct business; managerial expertise
Those factors that are internal to an organisation and impact upon the organization’s operations and activities.
Vision, Mission, Objectives
Company Image and Brand
SWOT stands for Strengths, Weaknesses, Opportunities and Threats
Please Note identification of the;
• Strengths and Weaknesses occur in the internal environment and
• Opportunities and Threats occur in the external environment of firms
The SWOT analysis provides a course of action to be developed in order to stimulate the growth a firm and helps with business policy formulation.
Strengths — internal to the firm.
• resources and capabilities used as a basis for developing a competitive advantage; strength should be realistic and not modest.
Questions to address?
• What are the unit’s advantages, what does it do well?
• What resources can you access?
• What are your strengths, as seen by others?
• What would be the positive ‘sell’ to an outsider about the unit?
• E.gs. positive reputation, resources, human capital, assets, experience, knowledge, know-how, management systems
• Think in terms of: capabilities; competitive advantages; resources, assets, people
• (experience, knowledge); marketing; quality; location; accreditations
• qualifications, certifications; processes/systems
Weaknesses —internal force serving as a barrier to acquiring a competitive advantage;
Is there a limitation, fault or defect that needs to be overcome? Introspection and facing the truth required in order that it is overcome as soon as possible.
Need to address these questions:
• How can we improve?
• What is done poorly?
• What should be avoided?
• How can we be more effective and efficient in what we do?
• If change is possible, what is one thing that would aid this unit to function better, what would you change?
Examples: gaps in capabilities, financial, morale/attitude, management, personnel, technological etc.
Opportunities – external to the firm.
Favorable situations present now or in the future in the external environment.
Examples: unfulfilled customer need, arrival of new technologies, loosening of regulations, global influences, economic boom, demographic shift, new markets,
Questions to address:
What are the opportunities facing you?
What are positive trends and forecasts are you are aware of?
Think of: market developments; competitor; vulnerabilities; industry/ lifestyle trends; geographical; partnerships
Threats – external force that can prevent a unit from achieving a competitive advantage;
May be an negative situation at present or likely to arise in the future causing damage to the firm
Examples: shifts in consumer tastes, new regulations, political or legislative effects, environmental effects, new technology, loss of personnel, economic recession, demographic changes, competitor intent; market demands, financial difficulties
Questions to be addressed:
What challenges and obstacles do you face?
What are your competitors doing?
Is the regulatory environment changing?
Is changing technology threatening your position?
Do you have financial problems?
Could any of your weaknesses seriously threaten your unit?
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