The Concentric Circle Model is a strategic framework used to analyze and understand the competitive landscape of a business or organization. Developed by Ashton University, this model provides a visual representation of the relationships between different elements that affect a company’s competitiveness. The model consists of a series of concentric circles, with each circle representing a different level of influence on the organization.
At the center of the model is the internal environment, which includes the company’s mission, vision, values, and culture. This inner circle represents the core of the organization and is the foundation upon which all other elements are built. The internal environment is surrounded by a circle representing the organization’s resources and capabilities, which include its human, financial, and physical assets.
The next circle out represents the organization’s value chain, which includes the series of activities that create value for the company’s customers. This circle is divided into primary and support activities, with primary activities including inbound and outbound logistics, operations, marketing and sales, and service. Support activities include firm infrastructure, human resource management, technology development, and procurement.
The following circle represents the organization’s market and industry, which includes the competitive landscape, market trends, and customer needs. This circle is further divided into two sub-circles: the task environment and the general environment. The task environment includes the company’s suppliers, customers, competitors, and other stakeholders, while the general environment includes broader societal, economic, and technological trends.
The outermost circle represents the macro environment, which includes the broader societal, economic, and technological trends that affect the organization. This circle is divided into six sub-circles: demographic, economic, political, technological, social, and global. Each of these sub-circles has a significant impact on the organization and its competitiveness.
To illustrate the Concentric Circle Model, let’s consider an example from the automotive industry. At the center of the model is the company’s internal environment, which includes its mission to produce high-quality vehicles while minimizing its environmental impact. The next circle out represents the company’s resources and capabilities, which include its manufacturing facilities, supply chain, and research and development team.
The value chain circle includes the company’s primary activities, such as manufacturing and marketing, as well as support activities like human resource management and technology development. The market and industry circle includes the company’s competitors, customers, and suppliers, as well as broader trends in the automotive industry, such as the shift towards electric vehicles.
The macro environment circle includes broader societal trends, such as the growing concern for climate change, economic trends, like fluctuations in oil prices, and technological trends, like advancements in autonomous driving. By analyzing each of these circles and how they interact, the company can develop a comprehensive understanding of its competitive landscape and develop strategies to stay ahead of the competition.
In addition to its ability to provide a comprehensive understanding of the competitive landscape, the Concentric Circle Model also offers several other benefits. For example, it can help companies identify potential threats and opportunities, develop strategies to address them, and allocate resources more effectively.
- Identify the company's internal environment, including its mission, vision, values, and culture.
- Analyze the company's resources and capabilities, including its human, financial, and physical assets.
- Examine the company's value chain, including its primary and support activities.
- Assess the company's market and industry, including its competitors, customers, and suppliers.
- Evaluate the broader societal, economic, and technological trends that affect the company.
By following these steps and analyzing each of the concentric circles, companies can develop a comprehensive understanding of their competitive landscape and make informed decisions about how to allocate resources and develop strategies to stay ahead of the competition.
- Provides a comprehensive understanding of the competitive landscape
- Helps companies identify potential threats and opportunities
- Can inform resource allocation and strategy development
- Can be complex and time-consuming to apply
- Requires significant data and analysis
- May not be suitable for all types of organizations
In conclusion, the Concentric Circle Model is a valuable tool for companies looking to understand their competitive landscape and develop strategies to stay ahead of the competition. By analyzing each of the concentric circles and how they interact, companies can identify areas for improvement, allocate resources more effectively, and make informed decisions about how to compete in their industry.
What is the Concentric Circle Model?
+The Concentric Circle Model is a strategic framework used to analyze and understand the competitive landscape of a business or organization.
How does the Concentric Circle Model work?
+The Concentric Circle Model consists of a series of concentric circles, with each circle representing a different level of influence on the organization. The model helps companies understand the complex relationships between different elements that affect their competitiveness.
What are the benefits of using the Concentric Circle Model?
+The Concentric Circle Model provides a comprehensive understanding of the competitive landscape, helps companies identify potential threats and opportunities, and can inform resource allocation and strategy development.
