Competitive Forcesarguably The Most Important Part Of An External Audi ✓ Solved

Competitive Forces Arguably the most important part of an external audit is identifying rival firms and determining their strengths, weaknesses, capabilities, objectives, and strategies. George Salk stated, “If you’re not faster than your competitor, you’re in a tenuous position, and if you’re only half as fast, you’re terminal.†As indicated in Global Capsule 3 , Netflix is faster than its rival firms but staying ahead requires constant monitoring of what those firms are doing and why. Go to for information about competitors. Global Capsule 3 What Company Is Growing Fastest Globally? The answer to the question posed may be Netflix, a firm that pursues global expansion with a vengeance.

Netflix added 4.45 million new international subscribers in the third quarter (Q3) of 2017 alone, with Q3 revenue increasing 30 percent. Netflix is taking advantage of the opportunity associated with the population of the world approaching 7.5 billion; the United States has slightly more than 320 million people. That leaves billions of people outside the United States who may be interested in the products and services produced through domestic firms. Remaining solely domestic is an increasingly risky strategy, especially as the world population continues to grow to an estimated 8.6 billion in 2030, 9.8 billion in 2050, and 11.2 billion in 2100. Netflix is also mitigating an external threat in that some content owners such as Walt Disney Company are planning to offer their own movie- and video-streaming services instead of working with Netflix.

Apple also expects to spend more than billion in 2018 to produce its own original content. To combat this threat, Netflix is spending over billion on content annually, substantially more than its rivals Hulu, Amazon.com, and HBO. Netflix is focused on signing creative talent and acquiring its own production and intellectual property. For example, the company recently made it first acquisition, taking onboard the comic-book publisher Millarworld. In addition to continued global expansion, Netflix’s long-term strategy is to continue international expansion, rely less on licensing programs from content suppliers, and focus increasingly on acquiring original content.

Source: Based on Austen Hufford, “Netflix Subscriber Growth Surges,†Wall Street Journal, (October 17, 2017): B2. Competition in virtually all industries is intense—and sometimes cutthroat. Within the smartphone and personal tech industry, for example, GoPro Inc. is struggling to maintain market share. To differentiate its offerings from the latest smartphone camera technologies offered by Apple and Samsung, GoPro developed a new product called Fusion that features a 360-degree spherical camera with a unique Over-Capture capability, enabling users to capture pictures from every angle simultaneously. Addressing questions about competitors, such as those presented in Table 3-4 , is essential in performing an external audit.

Competitive intelligence (CI) , as formally defined by the Society of Competitive Intelligence Professionals (SCIP), is a systematic and ethical process for gathering and analyzing information about the competition’s activities and general business trends to further a business’s own goals (SCIP website). Quality competitive intelligence in business, as in the military, is one of the keys to success. Major competitors’ weaknesses can represent external opportunities; major competitors’ strengths may represent key threats. Table 3-4 Key Questions about Competitors 1. What are the strengths and weaknesses of our major competitors?

2. What products and services do we offer that are unique in the industry? 3. What are the objectives and strategies of our major competitors? 4.

How will our major competitors most likely respond to current economic, SCDE, political, governmental, legal, technological, and competitive trends affecting our industry? 5. How vulnerable are our major competitors to our new strategies, products, and services? 6. How vulnerable is our firm to successful counterattack by our major competitors?

7. How does our firm compare to rivals in mastering the social-media conversation in this industry? 8. To what extent are new firms entering and old firms leaving this industry? 9.

What key factors have resulted in our present competitive position in this industry? 10. How are supplier and distributor relationships changing in this industry? Various legal and ethical ways to obtain competitive intelligence include the following: · Reverse-engineer rival firms’ products. · Use surveys and interviews of customers, suppliers, and distributors of rival firms. · Analyze rival firm’s Form 10-K . · Conduct fly-over and drive-by visits to rival firm operations. · Search online databases and websites such as · Contact government agencies for public information about rival firms. · Monitor relevant trade publications, magazines, and newspapers. · Purchase social-media data about customers of all firms in the industry. · Hire top executives from rival firms.

Information gathering from employees, managers, suppliers, distributors, customers, creditors, and consultants can make the difference between having superior or just average intelligence and overall competitiveness. All members of an organization—from the CEO to custodians—are valuable intelligence agents for the firm. Special characteristics of a successful CI program include flexibility, usefulness, timeliness, and cross-functional cooperation. CI is not corporate espionage. Unethical tactics such as bribery, wiretapping, and computer hacking should never be used to obtain information.

Due to cybersecurity threats, CI must assure however that persons in a firm cannot access data and information unrelated to their job description because hackers exploit this avenue in firms. In performing an external assessment, competitor-related factors must be stated in AQCD terms to the extent possible to be useful in strategic planning. BUS 4302, Business Policy & Strategy 1 Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to: 3. Analyze external and internal audit processes. 3.1 Examine a company’s internal and external strengths and weaknesses.

9. Assess the strategy evaluation process. 9.1 Determine if a company’s strategy is effective or ineffective. Course/Unit Learning Outcomes Learning Activity 3.1 Unit Lesson Chapter 3 Chapter 4 Unit III Assessment Unit III Case Study 9.1 Unit Lesson Chapter 3 Chapter 4 Unit III Assessment Unit III Case Study Required Unit Resources Chapter 3: The External Assessment Chapter 4: The Internal Assessment Unit Lesson External Assessments During this unit, we will explore the factors that impact an internal and external assessment. Let us begin with the external assessment.

To effectively develop a successful strategic plan, the organization must be aware and adapt to the external environments. These environments include identifying and incorporating trends affecting their stakeholders. These trends can shift and be affected by the economy, competition, tax burdens, and many other factors. Research the Chipotle Mexican Grill by searching the web or the CSU Online Library. Chipotle is a chain of about 1,700 restaurants in the United States and in several other countries.

Chipotle Mexican Grill is considered as a fast, casual dining establishment whose vision statement is Food With Integrity. It extends many benefits to its salaried, part-time, and entry-level workers. It tries to meet society’s expectations for the humane treatment of animals. Unlike its competitors, it is experiencing revenue growth of about 20% a year. The restaurant sector grows about 1% annually.

Consider the sustainability of the Chipotle business strategy that invests in its workers, promotes its managers from within, and insists on humane operations. Do you think it will be able to maintain its revenue growth in 5, 10, and 20 years in a changing economy and with potential new competitors? What strategies would you recommend for them? Let us also consider external assessments outside of the United States. What happens when a company has reached its fullest potential within the United States?

Should they remain steady, or should they seek global UNIT III STUDY GUIDE External and Internal Assessment BUS 4302, Business Policy & Strategy 2 UNIT x STUDY GUIDE Title opportunities? Many organizations to include retailers, fast food, and other entities have expanded internationally to grow their companies. Examples include Starbucks, McDonalds, and Walmart, which can be found in many different countries. In addition, you may notice outside companies expanding within the United States. A prime example is Ikea, who continuously grows their North American operations.

Organizations also consider the economic outlook before proceeding with development in a country. For example, China has had a decade long economic boom, and many corporations have taken this opportunity to expand into new territories, thus increasing our overall reliance on a global-based community. Other external factors often affecting a corporation include political, governmental, and legal challenges both domestically and abroad. One issue with a clear divide is minimum wage and a living wage. The minimum wage is determined by the government, while a living wage can be influenced by the corporation and other competing factors.

Another governmental external factor is the Healthcare Reform Act, which requires corporations to provide health insurance for their employees. This cost can be expensive to the company and is generally passed on to consumers and also may decrease the overall salary of the employee. Another challenge is deciphering whether to tax or not to tax Internet commerce. Many states feel they are losing out on needed revenue due to the tax-free association with Internet sales. Some states have lobbied and passed bills to formally tax all internet sales transactions.

Amazon.com has been an opponent of taxation but must abide by the state requirements. As we have learned, the external assessment can be a very powerful tool if approached with the correct perspective. If the external assessment is used in a punitive way to restructure leadership or redesign the business structure, we have missed the boat on the real power of the external assessment. As leaders, we need to have a general understanding of the industry and be able to identify areas in which competitors are vulnerable and be able to predict potential moves that competitors might make that could be a threat to us. Successful businesses are constantly looking in the rear-view mirror while, at the same time, looking well into the economic future (David et al., 2020).

The key is to constantly be aware of the needs of the customer. Internal Assessments There is not a one size fits all related to an internal assessment of an organization. There are multiple types of organizations to include colleges, hospitals, retailers, and government. These entities all function differently and often need a customized assessment to truly assess their performance. An internal audit is the organization’s self-evaluation of their strength and weaknesses.

The audit can better illustrate how an organization’s departments are incorporated and how modifications and updates can be implemented. It is also just as important to ensure the organization properly communicates their intent and expectations of an audit to their employees. Every organization has an organizational culture. Let us use an example of the U.S. Armed Forces; the Army and Air Force have a very distinctive culture, even though they are both on the same side and work toward the same goals.

An organizational culture is defined by a pattern of behavior that an organization has developed to handle a problem or external threat. New members coming into the organization will often be integrated into the organization’s culture, thus continuing the pattern of behavior. These examples include ceremonial, values, beliefs, and rituals. Management and Marketing There are five main characteristics related to the activities of management. These include planning, organizing, motivating, staffing, and controlling.

Function Description Stage of Strategic Management Example Planning Preparing for the future. Strategy formulation Planning for the next release of a product or service. BUS 4302, Business Policy & Strategy 3 UNIT x STUDY GUIDE Title Organizing Job description, control and coordination. Strategy implementation Coordinating the efforts to release the product to include where and how. Motivating Shaping human behaviors Strategy implementation Encouraging the company’s sales associates to become excited and motivated by the release of the new product.

This excitement will trickle down to the consumer and other stakeholders. Staffing Human resource management Strategy implementation Identifying the right personnel for the organization to include implementers, managers, and leaders. Controlling Results oriented, rewards, sanctions Strategy evaluation Identifying goals and rewards for top sales person(s) for the new product release. Marketing Marketing includes the process of creating and fulfilling a customer’s needs and wants for a particular service or product. Let us use an example of the energy drink “Red Bull.†Who are the commercials targeting for this beverage?

The target audience can be a demographic of adventurous young adults who are seeking new challenges. The commercials promote that Red Bull “gives you wings,†thus you will feel a huge rush of energy and will have the ability to keep going well into the night. Red Bull must also consider pricing and distribution in an effort to remain relevant and profitable. For example, do you feel Red Bull would be a drink of choice at an affluent sushi bar, or would this drink be more appropriate at a sporting venue or a late- night concert? Reference David, F.

R., David, F. R., & David, M. E. (2020). Strategic management: A competitive advantage approach, concepts and cases (17th ed.). Pearson.

Suggested Unit Resources In order to access the following resources, click the links below. The chapter presentations below will provide you with additional information on this unit’s concepts. Access the Chapter 3 Presentation. Access the PDF version of the Chapter 3 Presentation. Access the Chapter 4 Presentation.

Access the PDF version of the Chapter 4 Presentation. Course Learning Outcomes for Unit III Learning Activity Required Unit Resources Unit Lesson External Assessments Internal Assessments Management and Marketing Marketing Reference Suggested Unit Resources

Paper for above instructions

Assessing Competitive Forces: The Case Study of Chipotle Mexican Grill

An external audit is a comprehensive examination of factors outside of a company that could influence its operational success and strategic direction. Among the numerous factors considered within an external audit, identifying and analyzing competitive forces stands out as paramount. This analysis culminates in understanding buyers’ preferences, rival strategies, and market dynamics, which ultimately dictate a Company's position within the industry (David et al., 2020). This paper will explore Chipotle Mexican Grill and use competitive forces, particularly focusing on its primary competitors while assessing its capability to sustain revenue growth in a rapidly evolving market landscape.

Competitive Landscape of Chipotle Mexican Grill

Chipotle Mexican Grill, a fast-casual dining restaurant chain, has established a unique selling proposition that is predominantly hinged on quality ingredients and customer service. Since its inception, Chipotle has emphasized its vision statement, “Food with Integrity,” which aims to provide ethically sourced and sustainably produced food options (Chipotle Mexican Grill, 2023). In a market characterized by fierce competition, it becomes critical to closely examine the strengths, weaknesses, objectives, and strategies of rival firms to understand Chipotle’s current positioning effectively.
##### Competitors Analysis
1. Taco Bell: As a significant player in the fast-food sector of Mexican cuisine, Taco Bell dominates with its aggressive pricing strategies and variety. It utilizes promotional tactics such as value menus to attract budget-conscious consumers, posing a direct challenge to Chipotle’s premium pricing strategy (Ramaswamy & Ozcan, 2020).
2. QDOBA Mexican Eats: This direct competitor also emphasizes customizable menu options similar to Chipotle’s offerings. QDOBA differentiates itself through its pricing strategies and promotional campaigns, often targeting younger demographics (Consumer Reports, 2022).
3. Domino's Pizza and Other Big Chains: Chains like Domino's have expanded their menus to include items inspired by various cuisines, including Mexican. This adaptation underscores the importance of not only analyzing direct competitors but also understanding how various food chains vie for the same consumer demographic (Industry Week, 2023).
Analyzing these competitors provides valuable insights into Chipotle's strategic formulation.

Opportunities and Threats

The competitive forces within the fast-casual dining sector present both threats and opportunities for Chipotle Mexican Grill. An ongoing opportunity for Chipotle lies in expanding its footprint into international markets where consumer demand for quality and fast-casual dining is increasing. According to a report by Research and Markets, the global fast-casual restaurant market is anticipated to grow significantly, reaching an estimated 8 billion by 2027 (Research and Markets, 2023).
Conversely, a prominent threat appears from rising operational costs, particularly regarding labor and ingredient sourcing. Additionally, competitive threats from both new startups and established chains that are diversifying their offerings require Chipotle to innovate and adapt quickly (Arnot, 2023).

Strategic Recommendations

To sustain its revenue growth trajectory within the next 5, 10, and 20 years, Chipotle must consider the following strategies:
1. Innovation in Menu Offerings: Continuous product innovation can cement customer loyalty. Chipotle could introduce seasonal menu items that cater to local tastes, as well as expand its options for vegetarian or vegan consumers (Melaniphy, 2021).
2. Technology Integration: In the age where digital platforms determine competitive edge, Chipotle must invest heavily in technology, enhancing its mobile app and online ordering system. The convenience of mobile ordering, coupled with efficient delivery services, could help attract a tech-savvy consumer base (Deloitte, 2022).
3. Sustainability Initiatives: As consumers become more environmentally conscious, promoting its sustainability initiatives—such as using responsibly sourced ingredients—can help bolster its brand image as a socially responsible company (Smith, 2021).
4. International Expansion: As previously noted, opportunities for expansion into international markets should be pursued actively. This process includes localized marketing strategies to ensure that cultural understandings guide restaurant operations (Zhang, 2022).
5. Competitive Intelligence: Utilizing competitive intelligence frameworks can guide ongoing assessments of rivals' strengths and weaknesses. Incorporating insights from competitors can lead to innovative approaches and preemptively address possible counterstrategies they might adopt (SCIP, 2023).

Conclusion

The fast-casual restaurant industry remains highly competitive, and for Chipotle Mexican Grill to maintain its revenue growth, strategic attentiveness to competitive forces is paramount. By leveraging its unique brand proposition while carefully analyzing market competitors, Chipotle can formulate adaptive strategies that allow it to thrive in an increasingly global market. As sustainability and technology continue to shift consumer preferences, strategies focused on innovation and responsible sourcing should be prioritized.

References

1. Arnot, C. (2023). Emerging Trends in Fast Casual Dining. Industry Week.
2. Chipotle Mexican Grill. (2023). 2022 Annual Report.
3. Consumer Reports. (2022). QDOBA and Chipotle’s Market Strategies.
4. Deloitte. (2022). Food for Thought: How Technology is Transforming the Restaurant Industry.
5. David, F. R., David, F. R., & David, M. E. (2020). Strategic Management: A competitive advantage approach, concepts and cases (17th ed.). Pearson.
6. Melaniphy, A. (2021). Innovating in the Fast-Casual Restaurant Frontier. Fast Casual.
7. Ramaswamy, K., & Ozcan, K. (2020). Competitive Strategies for Fast Food Chains: Lessons from Taco Bell. Journal of Business Research.
8. Research and Markets. (2023). Global Fast-Casual Restaurant Market Report 2023.
9. SCIP. (2023). Competitive Intelligence: Overview and Best Practices.
10. Smith, R. (2021). The Role of Sustainability in Consumer Choices: A Case Study of Chipotle. Journal of Consumer Policy.
This analysis serves to contextualize Chipotle within its competitive landscape, emphasizing the dynamic strategies necessary for leveraging external market conditions effectively.