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Environmental analysis

 Process of examining the


organization’s environment to
determine:
 Strengths
 Weaknesses
 Opportunities
 Threats

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Environmental structure
 General environment
 Social, economic, political, legal, technical
 Operating environment
 International, supplier, labor, competition,
customer
 Internal environment
 Organizational, marketing, financial,
personnel, production

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Establish organizational
direction
 Establishing an organizational
direction for the company involves
determining two indicators:
 Organizational mission – the reason
why the organization exists
 Objectives – measurable targets to
track the growth of the business

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Key objective areas
 Market standing
 Innovation
 Productivity
 Resource levels
 Profitability
 Manager performance and development
 Worker performance and attitude
 Social responsibility
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Types of objectives
 Profitability  R&D
 Growth  Diversification
 Market share  Efficiency
 Social responsibility  Financial stability
 Employee welfare  Resource
 Product Quality conservation
 Service  Mgt & labor
development
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Strategy formulation
 What are the purpose(s) and objective(s)
of the organization?
 Where is the organization presently
going?
 What critical environmental factors does
the organization currently face?
 What can be done to achieve
organizational objectives more
effectively in the future?

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Growth-share matrix
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Stars Question Marks
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Market Growth Rate (percent)

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12

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Cash Cows Dogs
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10.0 5.0 2.0 1.0 0.5 0.1


Relative Market Share 7
Formulating business
strategies
 Structural analysis of competitive
forces
 Threat of new entrants
 Bargaining power of suppliers
 Bargaining power of buyers
 Threat of substitute products
 Rivalry among existing competitors
 Strategic alternatives
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Formulating functional
strategies
 Operations strategy

 Financial strategy

 Marketing strategy

 Human resource strategy


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