Figure 7.1 Porter’s value chain
It is important to note that a company’s corporate resources may extend beyond the assets it owns and can include other companies which have similar goals (i.e. licensing agreements) or formed partnerships to achieve a greater market share (Murphy, 2005, pg 35).
The strongest types of alliances are when joint ventures are established by both companies purchasing shares in the other company. In competitive intelligence terms, these are typically highly visible and are easy to research and analyse.
While the previous section analysed a company’s internal drivers, this section of the report explores the external drivers. It is important to note that while the external drivers can influence a company’s financial wellbeing, the company may have no direct control of these elements. Murphy’s STEEP framework (2005, pg 37) is used to understand these elements. This framework includes Social and Cultural, Economic, Environmental and Political, regulatory and legal drivers.
Social and Cultural
Some social developments are on a grand scale and take form over a lengthy period of time and are ingrained in our history, for example, the United Kingdom of Great Britain achieved a superior sailing industry, which enabled and lead to a greater colonisation by the English. Other social shifts in attitudes and behaviours are less visible and harder to predict. For example, the speed and strong uptake of TradeMe in New Zealand has rapidly changed the business environment for second hand trading companies, e.g. New Zealand Cash Converter’s retail shops. These companies are faced with the decision to join or adopt new business models to compete with this new e-commerce channel.
It is important to mention the role of demographic drivers under the Social and Cultural theme. As the majority of businesses now compete in a global market, companies need to tailor strategies that not only support the local population patterns, but also attract global populations (e.g. people who are online purchasing from international website. Companies who are just focusing on local population will still need to adapt marketing strategies to match their market demographic such as sex, ethnic culture and household structures. For example, in the USA the Hispanic population will increase from 13 percent in 2000 to an expected 24 percent by 2050 (Murphy, 2005, pg 38). This has led some companies to create marketing campaigns with the use of Spanish speaking role models.
The impact of technology innovations can also play a role or change the Social and Cultural environment. Chandler (2002) believed “To prescribe to the theory of Technological Determinism one must believe that technology shapes society rather than people, their actions and beliefs shape society”. There are two types of innovations. The smaller innovation which provides incremental improvements to techniques (for example the personal computer), the second, is on a larger scale and can be classed as the ‘killer app’. Examples of these innovations range from the more obvious such as the World Wide Web, and others like “the stirrup” which was the medieval killer app. It allowed the Franks-Germanic (tribes who ruled central Europe) mounted fighter to strike with his lance without falling off his horse, greatly increasing the force that could be put behind such a blow. It proved decisive in the Franks' efforts to turn back the marauding Saracens (White, 2009).
Another form of ‘killer app’ communication is the cellular phone, which has radically changed not only the way we communicate, but has changed our acceptance of technology within the Social and Cultural environment (e.g. children’s use of cell phones).
Economy
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