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“To be prepared is half the victory.”
- Miguel Cervantes
Environmental Analysis
By- Rahul Jain
Our Goals
Learn to keep your eyes open for new ideas
To be able to do Environmental Analysis
Goodknight Hotmail Ceasefire
Sony Levis Barbie
DisneyLand Wal-Mart Tommy Hillfiger
Some have focused on certain links
For product features: Sony Walkman, Apple Computer, Barbie Doll, Hotmail, Disneyland, Harry Potter
For information collection process: Internet based Ebay, Amazon, Google
For buying process: Amazon, Dell, widely distributed and well displayed products
For payment process: Visa and Master Cards
For delivery process: DHL’s jumbo boxes, couriers
Sources of New Opportunities Customer-route: When customer
dissatisfaction is high; appropriate also
when investment in technology
development/application not yet made
Product-route: Appropriate when product
or process developed and attractive
application required
Sources of New Opportunities Industry and market changes
Growing healthcare awareness (and concern to lengthen
life) created bottled water, HQ packaging, fitness, yoga..
…
When industry grows quickly, established firms
concentrate on defending what they have B&W TV manufacturers in India, HMV
Neglected but fast-growing segments offer excellent
opportunities (Budget hotels/ Retailing)
Sources of New Opportunities
Demographic changes Managing old age creating many
opportunities
Growing higher education needs and State’s
helplessness
Growing security concerns in offices, homes
Interest in comfort, travel and leisure
Sources of New Opportunities
New Applications of existing products
/technology (Chat)
Technology integration (call taxi,
mobile)
Do you agree that basically we are….
And
Any product/service that helps us
achieve these needs have potential
• Lazy
• Pleasure seeking
• Comfort seeking
Market Attractiveness Identify areas of high customer
dissatisfaction
Assess market size
Assess challenges in accessing
customers
Assess competitive attractiveness
Scanning the Environment
International Environment
Domestic Environment
Macro Environment
Sectoral Analysis
SWOT Analysis
Scanning the Environment
International Environment International developments affect all businesses
World is a Global Economic village
Integrated economies
Increased susceptibility to external happenings
Internationalization, Digitization, Outsourcing
One has to understand the impact of these factors
See more opportunities than threats.
Scanning the Environment Political Environment
Stable & conducive political climate Government policies Extensive institutional framework
Technological Environment Level of technology Rate of change in technology
Socio-Cultural Environment Customs, Norms and Traditions of the society Its crucial for the operations of MNCs
Scanning the Environment
Legal Environment Laws of the country Labor laws and Legal redressal system Copyright acts & Trademark infringement
Economic Environment
Scanning the Environment
Sectoral Analysis Study the sector or Industry conditions Study the industry attractiveness Constraints or thrust on technology, manpower & raw material
SWOT Analysis Helps understand own skills & abilities Knowledge & experience Helps in understanding the competition
Factors for Industry attractiveness
Market growth rate
Market size
Demand variability
Industry profitability
Industry rivalry
Global opportunities
Macro-environmental factors
Industry Attractiveness- Porter 5 Forces
The five forces are environmental forces that impact on a company’s ability to compete in a given market.
The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is.
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Threat of Substitute Products
Threat of Substitute Products
Threat of New
Entrants
Threat of
New EntrantsThreat of
New Entrants
Rivalry Among Competing Firms in
Industry
Rivalry Among Competing Firms in
Industry
Bargaining Power of Buyers
Bargaining Power of Buyers
Bargaining Power of Suppliers
Bargaining Power of Suppliers
Porter’s Five Forces
Model of Competition
Porter’s Five Forces
Model of Competition
Market and Submarket Analysis
Dimensions of a Market Analysis
Emerging submarkets
Actual and potential market and submarket size
Market and submarket growth
Market and submarket profitability
Trends and developments
Key success factors
Overall Attractiveness Determine technical feasibility
Estimate financial viability
Team quality is critical
Assess entrepreneurial resources (ASK)
Assess fit with personal preferences and
aspirations
What & how big are the gaps in capabilities
Internal Analysis
Performance Analysis - Profitability, Sales
Shareholder value analysis
Customer satisfaction
Product quality & Brand associations
New products & Product portfolio analysis
Employee capability and performance
Relative cost
Can the gaps be filled? How? Implications for success
Remember, EXECUTION is key to success Iteratively balance the venture tripod (mkt,
tech, fin) and entrepreneur (your team’s) at every stage
Detached passion Prepare a dynamic Business Plan
Finalizing a Product/Service Combine opportunities provided by the environment with
your strengths
In terms of knowledge, skills, experience, etc
Analyze the industry forces
Now, finalize the product/service
The proposed product/service must be compatible with:
The capability
Resources Available
Need of society
Exercise Select a company, What business are they in?
Who are the direct and indirect competitors?
What kind of Opportunities they have tapped? All of you have to mail the PPT at
[email protected] Provide all the references
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Exercise-
Make a one minute speech on the key learnings of the class and of the relevant readings in your register.
Do the Case study of Airlines- 5Forces and make a PPT
All of you have to mail the PPT at [email protected] Provide all the references
