External environmental scanning and industry analysis [Autosaved].pptx

strategic management

1. External environmental scanning and industry analysis

2. Environmental Analysis Process by which strategists monitor the economic, governmental/legal, market/competitive, supplier/technological, geographic and social setting to determine opportunities and threats to the firms.

3. Strategic Management and Environmental Analysis Strategic management involves 3 levels of analysis Organisation’s macro environment/general environment Industry in which the organisation operates Organisation itself

4. Need for environmental analysis External environment analysis provides opportunities and threats Internal environment provides for strengths and weaknesses.

5. External environmental factors (STEPIN) Social and cultural factors (S) Technological factors (T) Economic factors (E) Political/governmental factors (P) International factors (I) Natural factors(N)

6. Social and cultural factors (S) Attitude of people to work Attitude to wealth Family Marriage Religion Education Ethics Human relations Social responsibilities

7. Technological factors (T) Efficiency of infrastructure including roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc. Industrial productivity New manufacturing processes New products and services of competitors New products and services of supply chain partners Any new technology Cost and accessibility of electrical power.

8. Economic factors (E) Growth strategy Economic system Economic planning Industry Agriculture Infrastructure Financial and fiscal sectors Removal of regional imbalances Price and distribution controls Economic reforms Population Per capita and national income

9. Facets of Indian Economic Environment Industrial policy Industrial licensing Foreign investment Foreign technology agreements Public sector Monopolies and restrictive trade practices Foreign trade Privatisation Small scale industries Financial sector Infrastructure Income levels Five-year plans Agricultural sector Consumers

10. Economic factors that require scanning GDP per capita Economic growth Unemployment rate Inflation rate Consumer and investor confidence Inventory levels Currency exchange rates Merchandise trade balance Financial and political health of trading partners Balance of payments Future trends

11. Political factors (P) Political climate-amount of government activity Political stability and risk Government debt Budget deficit or surplus Corporate and personal tax rates Payroll taxes Import tariffs and quotas Export restrictions Restrictions on international financial flows

12. Legal factors Minimum wage laws Environmental protection laws Worker safety laws Labour laws Copyright and patent laws Anti-monopoly laws Sunday closing laws Municipal licenses Laws that favour business investment

13. Natural factors (N) Ecological factors Climatic conditions Availability of water

14. Industry analysis Michael Porter’s five forces for industry analysis Rivalry among competitors Bargaining power of buyers Bargaining power of suppliers Threat of potential entrants Threat of substitutes

15. Michael Porter’s approach to industry analysis The business while analysing the environment should be concerned more with the intensity of competition determined by various potential entrants, suppliers, industry competitors, rivalry among existing firms, buyers, substitutes, etc. Strategists can identify opportunities and threats in each of these competitive forces and rate their strength as high, medium or low force.