Module 2 PPT.pptx.......................

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1. School of Business Course Code: MBDS6003 Course Name: Strategic Management Module 2:Environment Analysis Name of the Faculty: Dr. M C Rashid Program Name: MBA

2. School of Business Course Code: MBDS6003 Course Name: Strategic Management Topics to be Covered Name of the Faculty: M C Rashid Program Name: MBA Introduction External environment analysis PESTEL Analysis McKinsey's 7s Framework Porter’s Five Forces Model Internal environment analysis T he Resource-Based Model of Above-Average Returns VRIO Framework Value Chain Framework

3. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: M C Rashid Program Name: MBA Introduction Strategic analysis is basically concerned with the relationship between a business and its environment. The environment in which business operates has a greater influence on their successes or failures. There is a strong linkage between the changing environment, the strategic response of the business to such changes and the performance. It is therefore important to understand the forces of external environment the way they influence this linkage. The external environment which is dynamic and holds both opportunities and threats for the organizations.

4. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: M C Rashid Program Name: MBA PESTEL FRAMEWORK Political Factors Economical Factors Socio-cultural factors Technological factors Legal Factors

5. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Political Factors Government stability Political values and beliefs shaping policies Regulations towards trade and global business Taxation policies Priorities ill social sector

6. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Economic Factors GDP trends Interest rates/savings rate Money supply Inflation rate, 4.91% Une m ployment, 7.9% Disposable income Business cycles Trade deficit/surplus

7. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Socio-Cultural Factors 1. Population demographics ethnic composition aging of population regional changes in population growth and decline 2. Social mobility 3. Lifestyle changes 4. Attitudes to work and leisure 5. Education - spread or erosion of educational standard 6. Health and fitness awareness 7 Multiple income families

8. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Technological Factors Bio Technology Process innovation Digital revolution Government spending on research Government and industry foc us on technological effort New discoveries/development Speed of technology transfer Rates of obsolescence

9. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Legal Factors Monopolies legislation/ Anti trust regulation Employment law H ealth and safety Product safety

10. Scanning the Natural Environment The natural environment includes physical resources, wildlife, and climate that are an inherent part of existence on Earth. Until the 20th century, the natural environment was generally perceived by business people to be a given—something to exploit, not conserve. It was viewed as a free resource, something to be taken or fought over, like arable land, diamond mines, deep water harbors, or fresh water. Once they were controlled by a person or entity, these resources were considered assets and thus valued as part of the general economic system—a resource to be bought, sold, or sometimes shared.

11. Operating Environment The operating environment includes factors in the immediate competitive situation regarding the procurement of resources, profitability for the company from their products and services et c. The operating environment consists of factors like competitive position, customer profile, reputation among suppliers and creditors, and an accessible labor market.

12. Competitive Position By assessing its competitor's position in the market, a firm can improve or formulate strategies to optimize its environmental opportunities. The firm must develop competitor profiles to forecast their short-term as well as their long-term growth and profit potential.

13. Customer Profile In the present competitive world customers are considered to be kings, because they are the ones who generate profits for the manufacturer. Make them loyal towards firms Monitor customer's psychology ( values, desires, goals, interest, lifestyles) and cater to their requirements The construction of the customer profile includes information pertaining to geographic, demographic, psychographic and buyer behavior.

14. Suppliers and Creditors A business firm should maintain dependable relationships with its suppliers and creditors for its long-term survival. A firm relies on its suppliers for financial support, services, materials and equipment. In addition, it should request its suppliers and creditors for quick delivery, liberal credit terms, or broken lot orders.

15. Personnel: Nature of Labor Market A firm must possess the ability to retain its capable employees in order to achieve success. A suitable strategy must be formulated to make experienced and knowledgeable employees dedicate themselves to the organization. This strategy can involve incentives, promotions, training, transfers as per employees' requests etc. The personnel department must take care in recruiting people that meet industry specifications .

16. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA MCKINSEY'S 7s FRAMEWORK

17. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA PORTER’S FIVE FORCES FRAMEWORK Threat of New Entrants The rivalry among competitors in the industry Threat of Substitutes Products The bargaining power of suppliers The bargaining power of buyers

18. Threat of New Entrants The willingness and ability of firms to enter a particular industry depends on the barriers to entry. There are six such barriers economies of scale, product differentiation, capital requirements, cost disadvantages independent of size, access to distribution channels, and government policy. These influence the decision to enter a new industry.

19. Bargaining Power of Suppliers The bargaining power of suppliers determines the company's profitability when the suppliers are able to force the price that the buyer must pay for the product. Suppliers are powerful under the following circumstances: When the product that they sell has few substitutes and is important to the purchasing company or buyer. When no single industry is a major customer for the suppliers. When products in the industry are differentiated to such an extent that they are not easily substitutable and it is costly for a buyer to switch from one supplier to another. Credible threat of forward i ntegration by suppliers

20. Bargaining Power of Buyers Porter says that buyers are powerful under the following circumstances: When the suppliers are many and the buyers are a few and large When the buyers purchase in large quantities. When the supplier's industry depends on the buyers for a large percentage of its total orders When the buyers can switch orders between supply companies at a low cost. thereby playing companies off against each other to force the prices When it is economically feasible for the buyers to purchase the input from several companies at a time. When the buyers can use the threat to provide for their own needs through vertical integration as a device for forcing down prices

21. Threat of Substitutes Substitute products can match the needs of the customer in the same way as the original product. Coffee, tea and soft drinks, all serve the consumer's need for refreshment. Due to the existence of substitutes such as tea and soft drinks, the prices charged by companies in the coffee industry are restricted. If coffee prices are hiked, customers have the option of switching over to tea or soft drinks, which are its substitutes. A close substitute is a potential threat to the company's product. The existence of a substitute limits the price which can be charged for a product and therefore the profitability of the company.

22. R ivalry among existing competitors Rivalry in an industry occurs when one or more firms make an effort to increase their market share. This can lead to price wars, advertising battles, launches of new products and increased customer services and warranties. Some firms gain the upper hand through intense rivalry, while their competitors suffer a fall in market share. The intensity of rivalry depends upon many factors. Rivalry is usually intense when there are many competitors of similar size. Slowdowns in industrial growth also make firms keen to grab each other's market share. A lack of differentiation among the products of the players in the industry. The absence of switching costs can also lead to an unstable marketplace.

23. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA INTERNAL ANALYSIS May create opportunity May bring threats To help control or neutralize A nalysis of an organization's capabilities is important for strategy making Internal analysis helps us understand the organizational capability which influence the evolution of successful strategies. C hanging strategic capability better to fit a changing environment S tretching and exploiting the organizations capability to create opportunities

24. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Resource B ased View (RBV): Types of Resources There are three types of resources – assets, capabilities and competencies , which have been identified under Resource Based View of the firm (RBV). Strategic thinkers explaining the RBV suggest that the organizations are collections of tangible and intangible assets combined with capabilities to use those assets. These help organizations develop understanding these three types of resources and help us to know how a firm’s internal strength and weaknesses affect its ability to compete.

25. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Assets The factors of production used by firms in providing its customers with valuable goods and services are called assets . These assets are of two types- tangible assets and intangible assets. Any physical means a firm uses to provide value to its customers form its tangible assets. Similarly, intangible assets are equally valuable for firms but their physical presence cannot be felt or seen. For example, a brand name is a very important resource for any organization even though it is intangible.

26. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Capabilities Capabilities refer to a corporation’s ability to exploit its resources. They consist of business processes and routines that manage the interaction among resources to turn inputs into outputs. For example, a company’s marketing capability can be based on the interaction among its marketing specialists, distribution channels, and salespeople. A capability is functionally based and is resident in a particular function. Thus, there are marketing capabilities, manufacturing capabilities, and human resource management capabilities.

27. School of Business Course Code: Course Name: Strategic Management Competencies A competency is a cross-functional integration and coordination of capabilities. For example, a competency in new product development in one division of a corporation may be the consequence of integrating information systems capabilities, marketing capabilities, R&D capabilities, and production capabilities within the division. For example, a core competency of Avon Products is its expertise in door-to-door selling. FedEx has a core competency in its application of information technology to all its operations. Innovation is thought to be a core competence at Apple Honda carefully extended its expertise in small motor manufacturing from motorcycles to boat engines, generators, and lawnmowers.

28. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA VRIO Framework: The four criteria of sustainable competitive advantage V: Valuable: Does the resource or capability create or add value to the company? R: Rare: Is the resource or capability not possessed by many other companies? I: Inimitable: Is it difficult for other companies to imitate or replicate the resource or capability? O: Organized: Is the resource or capability organized and managed effectively?

29. VIRO Patanjali ITC Amul OLA Valuable Cost control brand, natural products (PP) Diversified value Diversified revenue stream High quality with low price, Low cost ride, available everywhere, incentive, free ride, discount , promo coupon Rare Source from farmer, R&D, Ayurvedic Manuscript Manpower hiring, best global talent, fast execution Economy of scope Driver due diligence Product innovation Imitability Association with yoga Strong Customer network, E- Chaupal Strong Supply chain Pricing and app algorithm, partner network, 10 Lakh drivers Organization Unique distribution channel Expert planning and execution Large distribution network Rating system

30. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA THE VALUE CHAIN FRAMEWORK This is the other framework most commonly used to guide analysis of any firm’s strengths and weaknesses. In this framework, any business is seen as a number of linked activities, each producing value for the customer. By creating additional value, the firm may charge more or is able to deliver same value at a lower cost, either of this leading to a higher profit margin. This ultimately adds to the organization’s financial performance.

31. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Primary Activities Inbound Logistics Operations Outbound Logistics Marketing and Sales Services

32. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA S upport A ctivities Firm Infrastructure Procurement Technology Development Human Resource Management

33. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA Outsourcing Outsourcing is the practice of hiring an outside company to perform tasks that were previously done in-house. Housekeeping Food and beverage Food and beverage IT services Call center services

34. Assessing a firm's internal performance Assessing a firm's internal performance involves evaluating its operations, processes, and activities to determine how effectively it is achieving its goals and objectives. Quantitative and qualitative assessment methods are two distinct approaches that provide different types of insights into a firm's performance. Let's explore both methods

35. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA QUANTITATIVE ASSESSMENT Quantitative assessment involves using numerical data and metrics to measure various aspects of a firm's performance. These metrics are often objective and can be easily quantified. Common quantitative assessment methods include:

36. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA QUALITATIVE ASSESSMENT Qualitative assessment involves gathering non-numerical data and insights to evaluate aspects of a firm's performance that are not easily quantified. Qualitative methods provide a deeper understanding of factors such as customer experiences, employee satisfaction, and organizational culture.

37. School of Business Course Code: MBDS6003 Course Name: Strategic Management Name of the Faculty: Dr. M C Rashid Program Name: MBA References Strategic Management and Business Policy: Globalization, Innovation, and Sustainability, Thomas L. Wheelen , J. David Hunger, Alan N. Hoffman, and Charles E. Bamford, 15th Edition, Pearson Education, 2018. Strategic Management, Hitt Michael A, Ireland R. Duane, Hoskisson Robert E., 12th Edition, Cengage Learning, 2016