The Six Segment Analysis is a framework to analyze the general environment of a firm. The framework is frequently used in the analysis of competitive strategy. Six Segment Analysis could help managers to identify potential opportunities and threats. The six segments of the general environment are demographic, sociocultural, political/legal, technological, economic, and global.
Contents
- Composition
- Demographic segment
- Sociocultural segment
- Politicallegal segment
- Technological segment
- Economic segment
- Global segment
- Interaction with other frameworks
- References
In contrast to Michael Porter's Five forces analysis, which focuses on the competitiveness of a specific industry, Six Segment Analysis target on broader macro-environmental trends. Such trends could potentially affect the profitability of the industry as a whole and influence the sustainability of the competitive strategies of a company.
Composition
Below is a sample list of macro-environmental trends classified according to the six segments.
Demographic segment
Sociocultural segment
Political/legal segment
Technological segment
Economic segment
Global segment
Interaction with other frameworks
When management analyzes a firm's strategic position, it is important to obtain a good understanding of the external environment of the company. Typically the external environment analysis consists of general environment, industry environment and competitor environment. Six Segment Analysis provides insights on the threats and opportunities existing in the general environment.
While a very popular framework for the industry environment analysis is the Five forces analysis, strategic group is a substructure of an industry that may play a role in understanding performance differences among firms.
Competitor analysis typically starts with an identification of the market structure and proceed with complex strategic decision making analysis of Game Theory.