“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

rahulkjain16@yahoo.co.in 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 rahulkjain16@yahoo.co.in Provide all the references