Questions 1 a) Explain the importance of analysing the micro-environment. Briefly
explain any three approaches that can be used to analyse the micro-environment. b)
Use the information in the case-study to Identify two strengths and two weaknesses.
10 MNG3701/101/3/2024 27 2 Strategic leaders...
, Question 1
a) Importance of Analyzing the Micro-Environment
Analyzing the micro-environment is crucial because it allows businesses to
understand the internal factors that can influence their operations, strategic
decisions, and overall performance. The micro-environment consists of factors
directly related to the company, including suppliers, customers, competitors,
distributors, and internal processes. Key reasons why analyzing the micro-
environment is important include:
Identifying Strengths and Weaknesses: Understanding what the company does well
(strengths) and areas that need improvement (weaknesses) helps in optimizing
operations and improving competitiveness.
Enhancing Customer Satisfaction: By analyzing customer needs and feedback,
companies can adjust their products or services to better meet market demand,
thereby increasing customer satisfaction and loyalty.
Anticipating Competitive Actions: Understanding competitors' strategies helps in
anticipating their moves and developing counter-strategies to maintain or improve
market position.
Approaches to Analyze the Micro-Environment
SWOT Analysis: This approach involves identifying the Strengths, Weaknesses,
Opportunities, and Threats of a company. Strengths and weaknesses are internal
factors, while opportunities and threats are external, providing a comprehensive view
of the company’s strategic position.
Porter's Five Forces Analysis: This model assesses the competitive forces within an
industry, including the bargaining power of suppliers and buyers, the threat of new
entrants, the threat of substitute products, and the intensity of competitive rivalry. It
helps businesses understand the dynamics affecting their competitive environment.
Value Chain Analysis: This approach examines the internal activities of a company
to identify areas where value can be added or costs can be reduced. It breaks down
the company’s operations into primary and support activities, assessing how each
contributes to the overall value delivered to customers.
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