BUSINESS STRATEGY - I

Course Code: 602 Prof. Sudip Bhattacharya Visiting Faculty

E-Mail: sudipsam67@yahoo.co.in / 9433089728

Part -2

ANALYZING BUSINESS ENVIRONMENT

ENVIRONMENTAL SCANNING (ES)

The environment is the aggregate of conditions, events & influences that affect an orgns way of doing things. Factors can be external as well as internal to orgn. ES is a crucial function of strategic planning. As more rapid changes are taking place in environment, a strategist has to do ES continuously to ensure fit with strategic intent. It is exploratory in nature.

EXTERNAL ENV. COMPONENTS - I Political Environment Government Stability Government Attitude Economic Model Central State Co-alignment Subsidies & Protection Licensing & Quotas

EXTERNAL ENV. COMPONENTS - II Economic Environment GDP, Fiscal deficit Savings & Investment Inflation & Interest Rates Monsoon & Food stock reserves Economic Cycles Capital Market Forex Reserves Currency Stability Infra-Structural Investments
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EXTERNAL ENV. COMPONENTS - III Social & Cultural Environment Population Religious Composition Literacy Levels Inter-state immigration & Mobility Income Distribution Middle Class Customs, Beliefs, Rituals & Practices Language Barriers Social Values & Attitude Age Distribution
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EXTERNAL ENV. COMPONENTS - IV Technological Environment Manufacturing Processes Flexible Production Systems Obsolescence Rate Patent Laws Research & Development Backward Integration Entry Barriers Nature of Competition Enterprise Resource Planning (ERP)
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EXTERNAL ENV. COMPONENTS - V

Legal Environment Corruption Transparency International 89th Transparency RTI Act, 2005 Speedy Trials & Pending Cases
International Environment Emerging Markets Forex Markets War & Terrorism FII & FDI Inflows Mergers & Acquisition Trends & Preferences
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ECONOMIC LIBERALISATION - I New Industrial Policy (NIP) Liberalising industrial licensing. FERA Liberalisation. MRTP Liberalisation. Curtailment of PSUs. Encouraging Foreign Direct Investment. Economic Reforms Fiscal & Monetary Reforms. Banking Sector Reforms. Capital Market Reforms.
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ECONOMIC LIBERALISATION - II New Trade Policy (NTP) Lowering import tariffs Abolition of import licenses Encouraging exports Rupee Convertibility Structural Adjustments Phasing out subsidies Dismantling price controls PSU Disinvestments Exit Policy- VRS
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DISCONTINUITY - I
Destabilization due to entrepreneurial freedom Cocoon of protection disappears Diversification spree Existing notions of size shaken Industry structures change radically Economic Darwinism - Survival of the fittest MNC Onslaught Enhancing stakes Power Equation JVs Technological Alliances Take-over threat, M&As Hyper Competition MNCs - Globalization Cheap Imports Access to technology Challenges on technology front Competencies become technology based Investment in R&D become inescapable

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DISCONTINUITY - II
Buyers exacting demands Shortage to surplus Price competition Life-style changes Stress on quality Consumerism Compulsion to find export markets Identifying competitive advantage Technological gap Global presence Depreciating Currency Exports Corporate vulnerability It is no longer business as usual Capital inadequacy Lack of product clout and brand power One product syndrome Loss of monopoly

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FIVE FORCES MODEL - PORTER

Threat of New Entrants

Bargaining power of Suppliers

Competition from Existing Players

Bargaining Bargaining power of power of Suppliers Customers

Threat of Substitutes
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PORTERS FIVE FORCES ANALYSIS - I Competition from existing players Introducing new product range. Cutting prices of existing product range. Offering better packages for existing product range. Enhancing dealer networks. Stronger market promotion, including advertising. Backward or forward integration. Upgrading technologies.
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PORTERS FIVE FORCES ANALYSIS - II Threat of New Entrants Economies of scale Brand power Product differentiation Resource profile Locational advantages Distribution channels High switching costs Licensing & Quotas
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PORTERS FIVE FORCES ANALYSIS - III Bargaining power of Customers Price elasticity of the product Nature of usage consumption or production Customer spread Customer age profile Repeat purchase After sales support Business margins

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PORTERS FIVE FORCES ANALYSIS - IV Bargaining power of Suppliers Reduction in credit Advances against order Longer processing period Low scope for vertical integration

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PORTERS FIVE FORCES ANALYSIS - V Threat of Substitutes Source of latent competition timing Substitute offering a price advantage and/or performance improvement

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