External Analysis of Your Company

Integrating External Analysis into Your Company Analysis Project

This tutorial guides you through applying the three core frameworks of external analysis—Porter’s Five Forces, PESTLE analysis, and Strategic Group Analysis—to your company analysis project. By combining these frameworks, you’ll gain a comprehensive understanding of the external forces shaping your chosen company’s competitive landscape.

Common Steps

Before diving into the individual frameworks, there are a few common steps to ensure you’re well-prepared for the analysis:

  1. Identify Critical Industries:
    • List the industries where your company currently operates.
    • Consider both product and geographic markets.
    • Example: If your company is a global technology firm, you might list industries like software development, cloud computing, hardware manufacturing, and e-commerce.
    • If your company is active in a large number of industries, focus on the industries that account for a significant proportion of current revenues and future growth.
    • These are typically the industries to which a company’s “Cash Cow” and “Star” business units belong.
    • A company’s Form 10-K “Item 1: Business” section and recent Q4 earnings call transcripts provide relevant information to decipher this.
  2. Map the Ecosystem:
    • Identify industries that have supplier, customer, complementor, or substitute relationships with your company’s industries.
    • This helps understand the broader value chain and potential dependencies.
    • Example: For a software company, key suppliers might include semiconductor manufacturers and cloud service providers, while customers might include various industries using their software, such as healthcare, finance, and retail.
    • One approach is to start with a review of relevant industry reports from sources such as Market Scope Advisor’s industry survey and IBISWorld industry reports.
    • Remember that this is just a shortcut to jump-start your analysis.
    • You should review and brainstorm this information in your group to map the ecosystem and refrain from taking the reports at face value.

    Other Industry Analysis Resources:

    University of Pittsburgh Library System provides access to a number of industry research resources that could be useful in your analysis. See this link for more information: https://pitt.libguides.com/industryresearch/reports

  3. Identify Key Players:
    • List the companies that are active in your company’s business landscape.
    • Include direct competitors, indirect competitors, and potential disruptors.
    • Example: For a smartphone manufacturer, direct competitors might include other smartphone brands, while indirect competitors might include tablet or laptop manufacturers. Potential disruptors could be companies developing new technologies, such as foldable devices or augmented reality glasses.
  4. Update Your Notebook:
    • Identify relevant data sources and add them to your NotebookLM notebook.
    • If you find relevant information from industry surveys and reports, add them as notes to your notebook.
    • You may find useful industry profiles as YouTube videos. If adding them directly fails, adding nnnotes based on videos will often meet your needs.
  5. Apply a Structured Approach:
    • Given the use of NotebookLM and AI assistants in this course, you may be tempted to jump head first without a plan. Tread carefully.
    • In my experience, students and new analysts satisfice and move forward more prematurely when using AI-based tools. Often resulting in failure to meet analytical goals of the exercise.
    • Adopt a disciplined research workflow to prevent such failures. See the research workflow disucssion from the “Know Your Company” tutorial.

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