Strategic Group Analysis
From a competitive standpoint, the kind of technological leadership, distribution system, product quality, pricing and customer service that Amazon has sets it apart from eBay, Wal-Mart, Google, Apple, Yahoo! and the like. But Barnes and Noble and Wal-Martís E-How belong to the same strategic group as Amazon does. Hence, the competition is not only intense at present, but they have the potential to take Amazon down. Particularly, the size and capability of Wal-Mart apparently poses a serious challenge to Amazon. eBay is in a different class, insofar as it works to facilitate the transactions between consumers (C2C).
An understanding of the environment surrounding a firm is an essential element of the development of corporate strategy, because environment is the critical factor which either facilitates or thwarts the march of a firm by giving opportunities or posing threats. Simply stated, PEST is a checklist of factors arranged in four groups: political, economic, socio-cultural and technological. The first letters of the four groups are strung together to make the acronym, PEST. ( Lynch 1997, p.94). Lynch calls them Political future, Socio-cultural future, Economic future and Technological future. Since future derives its trends from the past, the environment that has existed until now, and what it does at present, is scanned to figure out what it will become in the future.
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