ENVIRONMENTAL

APPRAISAL

Submitted By:
Deepti Singh 09Em-011
Geetika Tiwari 09Em-014
Vineeta Chaudhary 09EM-044
 Concept of Environment

1. The Environment is defined as the aggregate of conditions, events, and

influences that affect an organizations way of doing things.
2. Environmental factors can be external as well as internal to the
organization.
3. Environment factors are beyond the control of individual industrial
enterprise & their managements.
4. Environmental scanning is very important component of strategic
planning. A manager has to continuously scan the environment to
ensure alignment of the strategies with the radically changing
environment.

5.
6.
 Characteristics Of Environment

1. Environment is complex

2.Environment is dynamic

3.Environment is multi faced.

4.Environment has a far – reaching impact.


 External & Internal Environment

§ The External environment includes all factors outside, the

control of organization which provide opportunities or
pose threats to the organization.


§ The Internal Environment provides strength or weakness

within the control of organization.
§
§

 Components of External Environment

Customers
Supplier Interest / Pressure groups

Political

Organ
Competition izati Society
on

Community
Economy

Religion
Technology Govt .
Regulatio
ns
 Methods & Techniques used for
Environment Appraisal

PESTEL

Porter’s five forces model

Porter’s diamond model

ETOP
 PESTEL FRAMEWORK

Ø Political – Government Stability, Government Attitude,

Economic Model, Central – State Co-alignment, Subsidies
& Protection, Licensing & Quotas.
Ø Economic – GDP, Fiscal Deficit, Savings & Investment,
Inflation & Interest Rates, Monsoon & Food Grains
Reserves, Economic Cycles, Capital Market & Forex
Reserves, Currency Stability, Infra-Structural Investments,
FDI Inflows.
Ø Social – Population Diversity, Religious Sentiments,
Literacy Levels, Income & Age Distribution, Language
Barriers, Social Values.

 PESTEL FRAMEWORK

Technological – Innovation, Obsolescence Rate,

Patents, Research & Development, ERP,
Technological Convergence.
Environmental – Global Warming & CSR, Product
Design, Environmentally Preferable Purchasing,
Extended Producer Responsibility, Waste Disposal &
Emissions, Non-Fossil & Alternative Fuels, Carbon
Credits, Pollution Control Laws.
Legal – Monopolies Legislation, Employment Laws,
Product Safety & Health Hazards, Direct & Indirect
Taxes, Patent Laws, Consumer Protection Laws.

FIVE FORCES MODEL - PORTER
9

Threat of New Entrants

Bargaining
Bargaining Competition from Bargaining
power of
power of Existing Players power of
Suppliers
Suppliers Customers

Threat of Substitutes
 Competition from Existing Players

 Cars dominate the passenger vehicle market by 79%. Maruti Suzuki

has 52% share in passenger
 In utility vehicles Mahindra holds 42% share.

In commercial vehicle, Tata Motors more than 60% share. Tata

Motors is also the world's fifth largest medium & heavy commercial
vehicle manufacturer.
 With only a few firms holding a large market share, the market is less
competitive (closer to a monopoly).
 The industry is characterized by many rivals, none of which has a
 significant market share. These fragmented markets are said to
 be competitive. If rivalry among firms in an industry is low, the
 industry is considered to be disciplined

DIAMOND MODEL - PORTER
 Environmental Threat And Opportunity Profile (ETOP)
(ETOP
TATA MOTORS

Environmental Opportunities and Threat

sectors
Social ↑ Indigenous Products,Low cost

Political ↑ Favours from Government in terms of Tax and

Land.

Economic → Plant and machinery in excellent condition; captive

sources for parts and components available.

Regulatory ↓ Low safety Standards

Market → Despite buying Jaguar and Land rover brands,

TATA hasn’t got a foothold in its luxury car segment
in Indian Market.
Alliance with Fiat./Joint Ventures
 Environmental Threat And Opportunity Profile (ETOP)
(ETOP
TATA MOTORS

Environmental Opportunities and Threat

sectors ↓ Rising price of Aluminium ,Plastic and Steel
Supplier
Technology → Greener Alternative, Fuel Efficient Super Milo
Buses, lack of expertise with respect to
international market.
 ORGANISATIONAL APPRAISAL

Ø Organizational appraisal is basically study of internal

environment of an organization.


Ø The dynamics of internal environment of an organization can be

understood in terms of the organizational resources &
behavior, strength & weaknesses, synergistic effects and the
distinctive competencies.
Ø Distinctive competence - Any advantage a company has over its
competitor - it can do something which they cannot or can do
better - opportunity for an organization to capitalize - low cost,
Superior Quality, R&D skills etc.
Ø
Ø

 METHODS & TECHNIQUES USED FOR
ORGANIZATIONAL APPRAISAL …

Financial Analysis - Ratio Analysis, ABC

Key factor rating - Rating of different factors through different
questions
Value chain analysis
BCG, GE Matrix
Competitive Advantage Profile
Strategic Advantage profile

 Strategic Advantage Profile (SAP)
(SAP
(BERGER PAINTS)
Capability factor Competitive
16 strengths or weaknesses
Finance → Leader in profits and operating margin(ROI 40%),
Net worth 204 Cr of the industry, Berger 41 Cr.
Cash rich, Nerolac 58 Cr
Marketing → Market leader 35% share, brand since more than 20
yrs , widest product range

Operations ↑ Strong inventory controlstrong in inventory control

(28 days) of sales (industry avg. 51 days,
service level - high

Personnel → High caliber HR- MBAs more

General Management ↑ High profile corporate image, Enviable track record in

breaking away the position of MNCs in the Indian paint
Industry
.
 SWOT is a function of SAP & ETOP

 Effectiveness of HR, Level of commitments, loyalties (all

quantitative and qualitative) to compete with the rival firms
within industry are counted as Strength.
 Firm’s weaknesses are internal deficiencies in term of above.
The deficiencies are regarded as organizational constraints
and disadvantages to compete and fight with rival firms.
When a firm analyzes its internal capabilities as stated above
the process is known as SAP (Strategic Advantage
Profile).
 On the other hand , analysis of external environment to find out
opportunities and threats are known as ETOP Analysis
(Environmental Threats and Opportunities Profile).

 Thus we can say SWOT is a function of SAP & ETOP.

SWOT
 SWOT ANALYSIS - FRAMEWORK

Opportunities
Nullify weaknesses which
prevents you from Leverage strengths to make
exploiting opportunities use of opportunities

Weaknesses Threats Strengths

Minimize weaknesses which Utilize strengths to

prevents you from counter threats
countering threats
 SOURCES OF STRENGTH
Strong brand identity – Eg. Tata.
High quality products – Eg. Sony, Toyota, Honda.
Economies of scale – Eg. Reliance.
Strong after sales & service network – Eg. Caterpillar

 SOURCES OF WEAKNESSES
 Outdated technology – Eg. Hindustan Motors.
 Single product syndrome – Eg. Procter & Gamble.
 Narrow business scope – Eg. Nirma.
 Excessive diversification – Eg. Tatas

 SOURCES OF OPPORTUNITIES
Delicensing of Industries – Eg. Telecom, Banking.
Life style changes – Eg. Retailing.
Growing population – Eg. Middle-class buying power.
Collaborations & Joint Ventures – Bharti & WalMart

 SOURCES OF THREAT
 Terrorist attacks – Eg. 11/9, 26/11.
 Import relaxation – Eg. Dumping from China.
 Economic recession – Eg. (2008).
 Natural disaster – Eg. Tsunami, Earth Quake.
 Lack of Corporate Governance – Eg. Satyam.
