Environmental and Industry Analysis
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The Tubbesing Solutions operates in technology industry. The company offers engineering services bordering on data facilities. In particular, the firm extends Solutions, Services and Software to customers. It is noted that the industry is highly innovative besides being subject to intense and constant developments. The sector is also a source of remarkable changes in the field of business and other many sectors. In the current times, data usage and its volume has grown exponentially leading to the need for easier ways to operate such data. Thus, it is not surprising that now consumers and businesses expect increased utility owing to expansion in the manner in which the data is collected, stored and analyzed.
The area of software has various subdivisions. For instance, enterprise applications, relational databases and horizontal office applications are some of the products that fall under the software category. It is noted that the technology sector is characterized by a revolutionary trend since new technologies keep emerging within short spells. Despite the rapid pace of changes, the possibility of such having major ramifications for businesses and other organizations remains high. For instance, the changing technology landscape has a bearing on how processes such as outsourcing, subcontracting and customer service among others are carried out.
Information technology remains the most influential development in the recent times. Projections also back the observation as more and more organizations adopt up-to-date technologies in order to enhance their positions as competitive players in their areas of specialization. Since the Tubbesing Solutions is in the business of extending information technology services, it has an opportunity to increase its market reach. However, attractive nature of the industry is likely to attract new players. The implication is that the Tubbesing Solutions cannot gain simply because the demand for technology services is on the rise. On the contrary, the organization must work on improving its competitiveness in order to attract customers.
When analyzing a business environment, reference to Porter&rquo;s Five Forces is often invoked. Developed in 1979 by Michael Porter, the five forces are critical in understanding an entity’s competitive position. The underlying theory of the competitive forces is that there are certain aspects that influence competitive intensity witnessed within a given market or industry. Assessed together, the five forces are also critical in highlighting an industry’s attractiveness. It is also noted that since entities can know where they stand in terms of weaknesses and strengths, they can strategies on how to improve or to take advantage of their competitive position. In the next paragraph, description of the five forces is given.
The first force is based on supplier power. When analyzing supplier power, focus is on the ease for suppliers to influence product prices. The power is affected by the number of suppliers, nature of inputs, size of major suppliers, cost of switching among suppliers and product uniqueness. The Tubbesing Solutions deals in technology an industry with a wide array of suppliers of its inputs. Hence, supplier power is low.
The second force is buyer power. The force relates to possibility that buyers would influence prices. The buyer’s power to influence prices is subjected to their number, significance of each buyer and the cost attributable to switching between buyers. The case of Tubbesing Solutions does not demonstrate dependence on a given buyer. It is also noted that in order to minimize the power held by customers, the company has continued to expand. Particularly, the Tubbesing Solutions has expanded from North Texas to Dallas, Houston and Oklahoma (Casey, 2012). It is also apparent that the industry has a wide spectrum of buyers who range from organizations to individuals. Hence, no buyer is in a position to dictate the engagement terms with Tubbesing Solutions.
Competitive rivalry is the third force in the business environment. Under the force, the number of capable competitors is put into perspective (Porter, 2008). In the technology sector, many players offer largely undifferentiated products. Such scenario is not favorable since it reduces level of attractiveness of the indusstry.
The fourth force is substitution threat which borders on the availability of close substitutes. In technology industry, there is a wide array of closely related products and services which lower the power of each player (Porter, 2008). Hence, the overall attractiveness of the industry is lowered. The final force considered is the threat posed by new entrants. In practice, profitable ventures attract new entrants leading to an influx of players. Hence, the level of profitability declines. Hence, incumbents need strong bases such as possession of patents, or capability of fashioning economies of scale in order to remain profitable. In the technology industry, the entry threat remains real.
The expansion process at the company demonstrates that there is a possibility of entering foreign markets. Hence, applying the CAGE analytical framework is important. Conducting a CAGE analysis is critical in determining whether a foreign market can absorb an entity’s members (Ghemawat, 2007). Hence, the analysis assists organizations to differentiate between markets that would receive change and those likely to prove costly to venture. It is noted that a big proportion of business practices and market differences arise from structural variations that are attributable to dissimilar regulations, laws, economic incentives, business relationships rather than culture.
CAGE Analysis requires entities seeking to enter foreign markets to avoid labeling any differences as cultural (Ghemawat, 2007). It is noted that it is difficult to alter cultural differences, although, there are possibilities of changing economic and legal aspects of business. The CAGE framework highlights a middle ground between the extremes of one-size-fits-all and mass-customization. Under CAGE Analysis, economic forces are deemed to play an important role in informing participants how similar markets behave in different ways within various countries or locations. Thus, using the framework, it is possible to identify regions that can offer a common market environment leading to development of products and extension of services that are suited for specific yet common markets.
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