Internal analysis helps to identify the core
competences of the business, while external
analysis, particularly of the
microenvironment, assists in identifying
those industries and markets where the
competences can be applied.
Industries are centered on the supply of a product
markets are concerned with the demand.
Factors in the environment, the industry and
market, will drive the enterprise toward one type
of international strategy either one that is fully
global or one that makes concessions to localized
One way of conceptualizing the external
environment is as a network of macro and
microenvironments, all of which are related to
Every international enterprise operates within one or
more industries and one or more markets which are
found in more than one country.
Analysis of the macroenvironmemt is
concerned with changes and trends in social
and cultural, demographic, political, legal,
technological, economic and financial factors.
The macroenvironment can be further
subdivided into both global and local (or
The global macroenvironment concerned
with global trends.
The national macroenvironment
concerned with trends and changes at the
level of the individual country
The microenvironment, the competitive
environment facing a business, consists of
the industries and markets in which the
organization conducts its business.
It can be subdivided:
The global microenvironment concerned
with global industry and market trends.
The national or regional microenvironment
concerned with national industry and
An industry consists of a A market comprises the
group of businesses demand side of an
producing similar outputs economic system.
They expect to share the
It is defined in terms of
following related features:
Skills and competences
Technology Products or services
Process & value-adding Customers
activities Customer requirements
Materials Distribution channels
Supplier channels competitors
Businesses gain competitive advantage by
developing core competences within an
industry which are then deployed in
markets to satisfy customer demands.
The success of a business will depend on
its competitive position in both areas of
operation as a supplier of outputs and as
a buyer of inputs.
Globalization of Industries and Markets
Industries and markets differ vastly in the extent
to which they are globalized.
The consumer electronic industry and its markets are
Both the market for personal banking and associated
industry providing banking services are still largely
Paint industry is largely globalized; packaging,
advertising and brand names are often adapted for
both linguistic and cultural reasons
Yip’s Globalization Drivers
There are four categories of drivers which
must be analyzed in order to determine the
degree of globalization within an industry
Gov. globalization drivers
Customers and channels
Cost globalization drivers Host Gov. concerns
Economies of scale & scope
Exports and imports
Country costs, productivity
and skills Competitors
Product life cycle and Interdependence of countries
product development costs
and and legal
The macroenvironment and globalization drivers
Advantage of using Yip’s framework
It allows identification of those drivers that are
global and those that are local, so that the
attributes of transnational strategy can be tailored
to match the drivers.
It can be used to analyze both industry and market
It can be mapped onto Porter’s five forces
Changes in the drivers can be indicated by
It assists in the identification of the critical success
factors of a global industry and market
Threats of substitute
power of Intensity of rivalry in the industry power of
Threats from new
Porter’s five-forces framework
Market segmentation analysis
Sensitivity to price
Sensitivity to quality
The extent of brand loyalty
In addition to above analyses, Porter’s five-
forces framework can also be applied to a
market or submarket within an industry.
Change structure and
Determinants of national competitive advantage – Porter’s diamond