Technique 2.78 Macro-scanning

Macro scanning (explore trends, market forces, macroeconomic forces and industry sources)

  environmental social technology  
  political vertical_arrow legal  
supplier & other value chain actors   Key Trends (PESTLE)   market segments
stakeholders   vertical_arrow   needs and demands
competitors (current) Industry Forces Macro Scanning Market Forces market issues
new entrants (disrupters)   vertical_arrow   switching costs
substitute products and services   Macro Economic Forces   revenue attractiveness
    vertical_arrow economic infrastructure  
  global market conditions capital markets commodities & other resources  

Industry Forces (one of the elements of macro scanning)

    1. Who are the key players in your industry value chain?
2. To what extent does your business model depend on other players?
3. Are other players emerging?
4. Which is the most powerful part of the value chain?
    supplier & other value chain actors - describe the key value chain players ( current & future)
1. Who are the new entrants in your market?
2. How are they different?
3. What competitive advantage or disadvantage do they have?
4. Which barriers must they overcome?
5. What are their strengths?
6. What customer segment are they focused on?
7. What is their cost structure?
8. To what extent do they influence our customer segments, revenue streams and margins?
new entrants (disrupters) - identify new, insurgent players & their business model Industry Forces stakeholders - identify which players can impact on your organisation
1. Which stakeholders might influence the way you do business?
2. How influential are the stakeholders, ie staff, government, lobbyists, bureaucrats, etc?
  substitute products & services - described potential substitutes for your goods and services   competitors (current & potential) - identify them and their relative strengths  
1. Which of your products or services are replaceable?
2. What is the cost comparison?
3. How easy is it for customers to switch?
4. Where do these substitute products come from? (like mobile phones v cameras, skype v long distance telcos)

      1. Who are competitors, now and in the future?
2. Who are the dominant players in your particular sector?
3. What are their competitive advantages or disadvantages?
4. What are their main products and services?
5. Which customer segment are they focusing on?
6. What is their cost structure?
7. How much influence can they have on customer segment, revenue streams & margins?


An example of the industrial force

Pharmaceutical industry (see Alexander Osterwalder et al, 2010)

1. Competition
- several large and medium-sized players compete in this industry
- most players are struggling with empty product lines and low R&D productivity
- growing trend towards consolidation through mergers and acquisitions
- major players require biotech, specialty drug developers to fill product lines
- several players starting to build open innovation process

2. New entrants
- little destruction of the pharmaceutical industry over the last decade
- main new entrants are generic drug companies, eg Indian

3. Substitute Products and Services
- to a certain extent, prevention represents substitution for treatment
- patent-expired drugs replaced by low-cost generics

4. Suppliers and Other Value Chain Actors
- increasing use of research contractors
- biotech firms, eg specialty drug developers are important as new product generators
- doctors and health care providers
- insurance companies
- bioinformatics provider is growing in importance
- laboratories

5. Stakeholders
- shareholders' pressure forces drug companies to focus on short-term, eg quarterly, financial results
- governments/regulators have a pivotal role in the health care service
- lobbyists, NGOs, foundations, etc (including those pursuing an agenda like low-cost treatment for patients in developing countries)
- scientists who work in the drug manufacturing industry

Now consider the pharmaceutical industry through the prism of some of the 10 building blocks around industrial forces
i) value proposition (needs to accommodate shifts in focus like biotech, generic, etc and any changes in regulatory environment)
ii) customer segment (extra segment are patients in developing countries)
iii) revenue streams (identify which parts the pharmaceutical industry offer the greatest earning potential)
iv) key resources (identify new products in the value-adding chain that need to be developed in-house, like bioinformatics)
v) key relationships (identify smaller firms, like research contractors, in the industry that can provide products and are best done outside; regulators, etc)
vi) non-customer stakeholders (explore partnerships with other players, like researchers, healthcare professionals, etc in the pharmaceutical industry re generics, biotech; regulators, etc)
vii) challenges (regulation, research and development, technological changes around health care)

Key Trends (one of the elements of macro scanning - see PESTLE)

What are the major technology trends both inside and outside your market?
What technologies represent important opportunities or disruptive threats?
Which emerging technologies are peripheral customers adapting?
      Which regulatory trends influence your market?
What rules may affect your business?
Which regulations and taxes affect customer demand?
  Technology Trends
Key Trends
  Societal & Cultural
What are the key demographic trends? How would you describe income/wealth distribution in your market?
How high are disposable incomes?
Describe the spending patterns in your market e.g. housing, health care, entertainment, food, etc
What portion of the population live in urban areas as opposed to a rural setting?
      Describe key societal trends?
Which culture or societal values impact your business?
Which trends may influence buyer behaviour?

An example of the key trends
Pharmaceutical industry (see Alexander Osterwalder et al, 2010)

1. Technology Trends
- the emergence of pharmacogenomics, declining cost of gene sequencing & rise of personalised treatments/medicines
- major advances in diagnostics
- use of pervasive computing and nanotechnology for the treatment/injection/delivery of drugs/medicines

2. Regulatory Trends
- heterogeneous global regulatory environment
- restrictions on drug firms dealing directly with customers
- regularly feel pressure to publish data on unsuccessful clinical trials

3. Societal and Cultural Trends
- generally undefinable public image of big drug makers
- increasing social awareness among customers
- increasing awareness of sustainability issues with preference for environmentally-friendly products
- customers better informed about drug makers' activities in developing countries, eg HIV/AIDS drugs

4. Socio-economic Trends
- an aging society in mature markets
- good but costly healthcare infrastructure in mature markets
- growing middle class in emerging markets
- large, unsatisfied healthcare needs in developing countries

Then consider the pharmaceutical industry through the prism of the 10 building blocks around key trends
i) value proposition (identify technologies most likely to improve competitiveness in the evolving pharmaceutical landscape)
ii) customer segment (understand how your customers are reacting to new technological developments in the pharmaceutical industry)
iii) revenue streams (explore how to convert advances in pharmacogenetics, diagnostics, pervasive computing, nanotechnology, etc into new revenue opportunities)
iv) cost structures (examine the impact on costs of  advances in pharmacogenetics, diagnostics, pervasive computing, nanotechnology, etc)
v) stakeholders (locate suitable partners to integrate advances in pharmacogenetics, diagnostics, pervasive computing, nanotechnology, etc)
vi) key sources (identify new resources and activities to handle personalised drugs and diagnostics as their use increases)

Market Forces (one of the elements of macro scanning)

How good is the public infrastructure in your market?
Rank your ease of access to transport, trade, school quality and access to suppliers and customers, etc
How high are tax rates (personal, business, local, etc)?
What is the quality of public services available for firms?
How would you rate the quality of life?

Is the economy in a boom or bust phase?
Describe general market sentiment.
What is the GDP growth rate?
How high is the unemployment rate?
  Economic Infrastructure   Global Market Conditions  
    Macro-economic Forces    
  Commodities & Other Resources   Capital Markets  
Describe the current status of the market for commodities and other resources essential to your business like oil prices, labour costs, etc
How easy is it to obtain resources (labour, capital, raw materials, etc) needed to conduct business?
How costly are these resources?
Are prices changing?
What is the state of the capital markets?
How easy is it to obtain funding in your particular market?
Is seed capital, venture capital, public funding, market capital or credit readily available?
How costly is it to procure funds?

An example of the macro-economic trends
Pharmaceutical industry (see Alexander Osterwalder et al, 2010)

1. Global Market Conditions
- global recession
- negative GDP growth in Europe, Japan and USA
- slower growth rates in China and India
- uncertainty as to when recovery will occur

2. Capital Markets
- tight capital markets
- credit availability restricted due to banking crisis
- little venture capital available
- risk capital market availability extremely limited

3. Commodities and Other Resources
- strong competition for talent
- preference for working with pharmaceutical firms with a positive public image
- commodity prices (including oil) low
- low demand for natural resources but expected to change with economic recovery

4. Economic Infrastructure
- identify the region where firm operates

Then consider the pharmaceutical industry through the prism of the 10 building blocks around the macro-economic forces
i) channels (is the current infrastructure, trade environment, etc adequate?)
ii) key activities (does the economic infrastructure adequately support key activities?)
iii) key resources (do the local education system produce enough qualified, suitable graduates?)
iv) cost structure ( how will taxes - local & national - impact?)

(source: Alexander Osterwalder et al, 2010)


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