Environment Analysis [Compatibility Mode]

8/13/2019 Environment Analysis [Compatibility Mode]

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ENVIORNMENTAL ANALYSIS

Environment consists of atomsan mo ecu es, agg omera on othings in motion, alive of men

,social laws, social ideas, normsof action, forces and resistances C ester I Barna .

Environment is the totality of forces and institutions that areexternal and potentially relevantto the firm - Kotler


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Two Categories of Environment :

(A)Direct Action Environment

a. Suppliers

b. Customersc. Labour Union

d. Competitors

e. Government laws and agencies

a. Interest Group

.

c. Economy.

e. International agencies


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Some Observation about

. cons s s o o a y o orces, w c areexternal and beyond the control of management.

2. Environment forces may differ fromcountry to country.

3. Various environment forces areinterrelated.

4. Business environment is complex.

5. Macro environment is dynamic and ever-chan in .

6. Environment must take into account notonly the current adaptations, but also futureada tations.


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Why Environment Analysis

. o en y ma or proopportunities.

. .c. To keep trace of changes.

. o e p n pr or t sat on o

major objectives.e. o ar cu a e an separa e

individual biases from realities.


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Analysis of EnvironmentalCom onents

Com etitive Environment

Political Environment

Demographic Environment

Socio Cultural Environment


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A. Economic Environment

-

Per Capita Income

Income levels and growth patterns

Changes expected in future pattern of

expenditure.

- Industrial Condition

Is it a rowth industr ?

Do the needs of the customer undergo

changes?

Degree of stability and demand for industrial

products; stability depends on

- availabilit of substitutes

- durability

- necessities

- life cycle of product


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- Network of Supplies of inputs,

A. Natural Resources

Finite Infinite

Forest Water, air

Non renewal energy

Oil, Coal, Minerals

Natural resources is a major consideration in

determining location of a firm.

B. Capital

C. Labour like natural resources, sources

o c eap a our s a ma or ac or n

deciding about location.

. anager a ompetenc es.


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B. Technological Environment

Technology is important because

it affects the efficiency with whichthe products is produced.

of pervasive influence, not onlythrough existing products, but through

.

the gap between basic development

reducing.

ec no og ca eve opmen pace as

been different in different places-necessity for planned phasing out of

.


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C. Competitive Environment

Different /Cost Strategy

Entry Strategy

Market share analysis and

cr ca mass

Growth Strategy

ro ta ty

Cost of Entry/Exit Aggressive of competitive

behaviour

a ure o ro uc - ura e

product or less durable


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D. Political Environment

- o t ca turmo an nsta ty

- Strength of the Party in power

- Commercial/linguistic problem

- Changing Business Laws

Confiscation of propertyExpropriation with compensation

Restriction in market share

Employment police

Locally shared ownership

Repatriation of money

Unilateral revision of contracts

- overnmen s ore gn po cy

- Governments influences on pricing,employment, production, competition and

- Regulatory Role of Government- Industries (Dev. & Regulation) Act

-

- Import and Export Control Act

- F E R A


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Protective Laws

To protect against unfaircompetition

To protect workers from

exploitation

To rotect consumers

To practice commitment

Governments role in providing

fiscal and monetar assistance.

Governments role in participatingdirectly in projects (as Public

sector and Joint Sector).


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E. Demographic Environment

ncrease n popu a on

Aging pattern

Geographical shift in

population

Literac of o ulation


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F. Socio Cultural Environment

oc o u tura actors ow t ey a ect

Attitudes Priorities forproducts

Values Quality

Desires Price + Social

Expectation Attitudes towardswork

Degrees of intelligence and Attitudes towardseducation Authority Structure

Traditions climate

Social Institutions Expectation from

Class Structure Social Responsibility

Social rou ressure and Social Welfaredynamic Activities


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Relative Importance of Different

and Keegen this factor is most

important

ar et anCompetitive

forces

25% Socio- 15%

economic/

Government

forces

15% Suppliers/ 10%

Indian Study

Economic/Regulatory Most important

condition competition Next important


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FactorsFactors influencinginfluencing thethe extentextent ofof

EnvironmentalEnvironmental

Scanning FactorsScanning Factors

Requires MoreRequires More

ScanningScanning

Requires LessRequires Less

ScanningScanning

Nature of BusinessNature of Business To diversify To diversify To remain in sameTo remain in same

businessbusiness

Age of enterpriseAge of enterprise New with less experiencedNew with less experienced Old with moreOld with more

Size of organizationSize of organization Large organizationLarge organization Small OrganizationSmall Organization

Nature of organizationNature of organization CompetitiveCompetitive MonopolisticMonopolistic

Geographical DimensionGeographical Dimension Multinational (BecauseMultinational (Because

they have to considerthey have to considerinternational forces also)international forces also)

NationalNational

Volatility of EnvironmentVolatility of Environment More VolatileMore Volatile LessLess

anager a tt tu e ynam canager a tt tu e ynam c

typetype

ynam c rgan zat onynam c rgan zat on essess

Managerial CaliberManagerial Caliber

Skilled managersSkilled managers

Skilled ManagersSkilled Managers LessLess


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Strategies for coping withStrategies for coping with

,,

maintenance, carrying sufficient inventory ofmaintenance, carrying sufficient inventory of

outputoutput

LevellingLevelling price incentive for services at lowprice incentive for services at low

demand times, such as STD calls at night, lowdemand times, such as STD calls at night, low

AnticipationAnticipation

RationingRationing

DominatingDominating through contracts withthrough contracts with

environment forcesenvironment forces

ChangingChanging when adaptation is not possiblewhen adaptation is not possible

change your own product.change your own product.


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Techniques for EnvironmentalTechniques for Environmental

Search and AnalysisSearch and Analysis

1.1. Information gatheringInformation gathering Verbal information (Radio, TV,Verbal information (Radio, TV,

Discussions)Discussions)

Spying for gathering trade secretsSpying for gathering trade secrets

ForecastingForecasting

.. actor st ng tec n quesactor st ng tec n quesFavourable and unfavourables factors areFavourable and unfavourables factors arelisted and impact is assessed intuitively,listed and impact is assessed intuitively,

II.II. Time series AnalysisTime series Analysis NonNon linearlinearprojectionprojection

III.III. Causal modellingCausal modelling correlation andcorrelation andstatistical techniquesstatistical techniques Economic modelsEconomic models

IV.IV. Jury of OpinionJury of Opinion

V.V. Sales force compositeSales force composite

VI.VI. Customer expectation methodCustomer expectation method

VII.VII. DelphiDelphi

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Environment Analysis [Compatibility Mode]