Introduction
A general environmental analysis for H&R Block, which is a renowned firm providing tax reporting services to a wide number of clients. The analysis involves all external factors affecting the company and its marketing plan. Marketers to identify trends or other outside forces that affect the products success or failure use this technique. Marketer have an obligation to look at the political situation, economy, cultural, competitive scenario, social conditions, legal and ecological factors which are affecting a given environmental analysis.
In the social cultural segment society’s attitudes, cultural values, work force mix, quality of life, women in the workplace, diversity of the workforce, attitudes on quality of work life, environmental concerns, shifts in work or career preferences and shift in product and service preferences are considered . Economic segment will consider inflation rates, interest rates, surplus or trade deficits, budget deficits or surpluses, personal saving rate, business saving rate and the gross domestic product. Since it is a tax reporting firm, it plays an important role in the individual’s capacity to calculate their income tax. The tax which is payable on their level of income.
The political or legal segment will involve taxation laws which may have a strong impact on the level of economic activity going on in the country. Competitive forces such as competitors’ objectives, strategies, assumptions, capabilities, also future objectives, and current strategies of the competitor.
Industrial Environment analysis
Industrial Environmental analysis is type of business function done by most of the business owners as well as other external individuals to help them assess the existing business environment. It is to help businesses understand a wide range of economic pieces in the market place and to help in the understanding of how the various pieces interact to for any competitive advantage. There is a basic standard for conducting Industrial Environmental Analysis. Facts about the business may include elements such as the number of existing competitors or availability of any other substitute goods . In the case of H&R Block, the competitive scenario may include other companies offering similar or same services to the customer; such as providing tax filing services.
Industry analysis feature such as review of economic and also political substructure of the company’s business environment. This will include examining the business cycle to help individuals understand whether there is growth in the business while the political review reflects the quantity of taxation and regulation by the government .
Considerations may be appropriate when choosing the type of model to be used to conduct the analysis. Porters’ model is one of the renowned models that involve a five-force review model created out of Companies competition.
A period for conducting this analysis is quite relevant and a company will require several industrial analyses throughout its lifetime. There is always a constant flux in economic markets due to significant shifts of political policy and large businesses may require analysis in every quarter .
Expert insight from management consultants, small business administrators and public accounting service firms may provide a lot of information regarding to small firms regarding various types of industry analysis.
Competitive Analysis
Porter’s five forces model is a framework drawn upon industrial organization economies to do industrial analysis and business strategy and involves five forces used to determine the attractiveness of the market . These forces or as microenvironment and include the following;
- Rivalry among competing firms is one of the forces used in porter’s model of competitive analyses. If rivalry is intensive in the industry it encourages businesses to engage in price wars, increased advertising expenses, investment in innovations, new products, and intensive promotion . In the case of H&R Block it includes various types of firms offering similar tax filing services as well as other CPA firms, Liberty Tax and Jackson Hewitt to name a few.
- The bargaining power of suppliers is when market inputs where suppliers of raw materials, labor, components and services is used as a source of power over the firm with few substitutes. In the case of H&R Block, a much customized type of service is being provided which is not widely available and therefore their power in this context is significantly higher than those who are demanding such services.
- Bargaining power of the consumer, described as a market output as consumers have the ability to put pressure to the firm that affects consumer price and change sensitivity. These is expressed in the firm concentration to buyer concentration, degree of dependency to existing distribution channels, bargaining level in high fixed cost industries, buyer cost switching in response to firm cost switching, information availability to the buyer. For H&R Block this would particularly mean the power of the customers using the tax services and to what extent they avail them.
- Potential development of substitute product may increase the tendency of consumers to switch to close alternatives entirely different products. Other changes include; buyers propensity to substitutes, relative performance of substitute prices, cost switching by buyers, perceived product level differentiation, number of available substitute products in the market, ease of substitution, substandard products and depreciation of the quality. In the case of a service based company like H&R Block, it would mean offering online services and allowing the customers to file their tax information from the comforts of their home and anywhere they like.
- Potential entry of new competitors in the market especially where profitable markets attract new firms will eventually decrease profitability for all the firms in the industry. Unless incumbents block this entry of new firms, abnormal profit tends towards zero. Therefore for survival tactics firms must put barriers to entry, economies of product differentiation, brand equity, switching costs, capital requirements, access to distribution, customer loyalty to established brands, absolute costs and industrial profitability. They need to be wary of any potential entrants in this industry which may cut down the market share that is currently being enjoyed by H&R Block.
Internal competition
Internal organizations involve resource, capabilities and core competences. Resources are what a firm has to work with includes assets, people and the value of its brand name and resources representing inputs of a firm in production process such as skills of employees, capital equipment, brand names, finances and talented managers.
Capabilities are what a firm does representing the capacity to deploy resources that have been integrated for achieving a desired end state. Importance of the capabilities is achieved when there is a unique combination to create core competencies that have strategic values to lead to a competitive advantage.
Core competencies serve as a source of competitive advantage over the firms rivals core competencies distinguishing a firm competitiveness and distinctiveness .
SWOT analysis
This is a simple framework for generating strategic analysis from situation analysis. It frequently appears in market plans where it appears in business unit level or corporate level. SWOT (strengths, weaknesses, opportunities and threats) is useful when very limited time is available to address complex strategic situations. SWOT may serve as an interpretive filter to reduce information to manageable quantity on key issues. SWOT analysis classifies internal aspects of a company as strengths or weaknesses and external factors as threats or opportunities. The strengths would serve as foundation for establishing a competitive advantage. By understanding, SWOT a firm will be able to better its strengths, correct its weaknesses, concentrate on opportunities and discourage devastating threats.
The primary strength of H&R Block lies in providing customized tax filing services to their customers. Customers have the option of either filing them online or from the office. There is also lots of tax filing advice and tips available online. A weakness of H&R Block would be the lack of personal touch to their website. In the opportunities part, H&R Block has the scope of expanding their operation; for instance, they can also start providing professional financial advice to name a few. Apart from this, the primary threat of H&R Block lies in the increase in the number of companies who may be providing tax filing and other related services to the same customer base.
References
- Aswathappa, K. Human Resource and Personnel Management. New Delhi: Tata McGraw-Hill Education, 2007.
- Griffin, Ricky W. Management. Mason: Cengage Learning, 2011.
- Schermerhorn, John R. Management. New York: John Wiley & Sons, 2010.
- Wang, Weijun, et al., Integration and Innovation Orient to E-Society Volume 1. New York: Springer, 2007.
