EnvironmentalAnalysis

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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
Sony
DisneyLand
Hotmail
Levis
Wal-Mart
Ceasefire
Barbie
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….
• Lazy
• Pleasure seeking
• Comfort seeking
And
Any product/service that helps us
achieve these needs have potential
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
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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.
- 20 -
Porter’s Five Forces
Model of Competition
Bargaining
Power of
Suppliers
Thre
Threat of
atEntrant
of s
New
New
Entrant
Rivalry
s Among
Competing Firms in
Industry
Threat of
Substitute
Products
Bargaining
Power of
Buyers
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
Market and Submarket Analysis
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
- 28 -
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
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