To be prepared is half the victory.

- Miguel Cervantes

Environmental Analysis
By- Rahul J ain
Our Goals
Learn to keep your eyes open for new
ideas
To be able to do Environmental Analysis
Goodknight Hotmail Ceasefire

Sony Levis Barbie

DisneyLand Wal-Mart Tommy Hillfiger
Some have focused on certain links

For product features: Sony Walkman, Apple
Computer, Barbie Doll, Hotmail, Disneyland,
Harry Potter
For information collection process: Internet
based Ebay, Amazon, Google

For buying process: Amazon, Dell, widely
distributed and well displayed products
For payment process: Visa and Master Cards

For delivery process: DHLs jumbo boxes,
couriers

Sources of New Opportunities
Customer-route: When customer
dissatisfaction is high; appropriate also
when investment in technology
development/application not yet made
Product-route: Appropriate when product
or process developed and attractive
application required
Sources of New Opportunities
Industry and market changes
Growing healthcare awareness (and concern to lengthen
life) created bottled water, HQ packaging, fitness,
yoga..
When industry grows quickly, established firms
concentrate on defending what they have
B&W TV manufacturers in India, HMV
Neglected but fast-growing segments offer excellent
opportunities (Budget hotels/ Retailing)
Sources of New Opportunities

Demographic changes
Managing old age creating many
opportunities
Growing higher education needs and States
helplessness
Growing security concerns in offices, homes
Interest in comfort, travel and leisure
Sources of New Opportunities
New Applications of existing products
/technology (Chat)
Technology integration (call taxi,
mobile)
Do you agree that
basically we are.
And
Any product/service that helps us
achieve these needs have potential
Lazy
Pleasure seeking
Comfort seeking


Market Attractiveness
Identify areas of high customer
dissatisfaction
Assess market size
Assess challenges in accessing
customers
Assess competitive attractiveness
Scanning the Environment
International Environment
Domestic Environment
Macro Environment
Sectoral Analysis
SWOT Analysis
Scanning the Environment
International Environment
International developments affect all businesses
World is a Global Economic village
Integrated economies
Increased susceptibility to external happenings
Internationalization, Digitization, Outsourcing
One has to understand the impact of these factors
See more opportunities than threats.
Scanning the Environment
Political Environment
Stable & conducive political climate
Government policies
Extensive institutional framework

Technological Environment
Level of technology
Rate of change in technology

Socio-Cultural Environment
Customs, Norms and Traditions of the society
Its crucial for the operations of MNCs
Scanning the Environment
Legal Environment
Laws of the country
Labor laws and Legal redressal system
Copyright acts & Trademark infringement

Economic Environment

Scanning the Environment
Sectoral Analysis
Study the sector or Industry conditions
Study the industry attractiveness
Constraints or thrust on technology, manpower & raw material

SWOT Analysis
Helps understand own skills & abilities
Knowledge & experience
Helps in understanding the competition
Factors for Industry attractiveness
Market growth rate
Market size
Demand variability
Industry profitability
Industry rivalry
Global opportunities
Macro-environmental factors
Industry Attractiveness- Porter 5
Forces
The five forces are environmental forces
that impact on a companys ability to
compete in a given market.
The purpose of five-forces analysis is to
diagnose the principal competitive
pressures in a market and assess how
strong and important each one is.

- 20 -
Threat of
Substitute
Products
Thre
at of
New
Entrant
s
Threat of
New Entrants
Rivalry Among
Competing Firms in
Industry
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Porters Five Forces
Model of Competition
Market and Submarket Analysis
Dimensions of a Market Analysis
Emerging submarkets
Actual and potential market and submarket size
Market and submarket growth
Market and submarket profitability
Trends and developments
Key success factors
Overall Attractiveness
Determine technical feasibility
Estimate financial viability
Team quality is critical
Assess entrepreneurial resources (ASK)
Assess fit with personal preferences and
aspirations
What & how big are the gaps in
capabilities
Internal Analysis
Performance Analysis - Profitability, Sales

Shareholder value analysis

Customer satisfaction

Product quality & Brand associations

New products & Product portfolio analysis

Employee capability and performance

Relative cost

Can the gaps be filled? How? Implications
for success
Remember, EXECUTION is key to success
Iteratively balance the venture tripod (mkt,
tech, fin) and entrepreneur (your teams) at
every stage
Detached passion
Prepare a dynamic Business Plan
Finalizing a Product/Service
Combine opportunities provided by the environment with
your strengths
In terms of knowledge, skills, experience, etc
Analyze the industry forces
Now, finalize the product/service
The proposed product/service must be compatible with:
The capability
Resources Available
Need of society
Exercise
Select a company, What business are
they in?
Who are the direct and indirect
competitors?
What kind of Opportunities they have
tapped?
All of you have to mail the PPT at
rahulkjain16@yahoo.co.in
Provide all the references


- 28 -
Exercise-
Make a one minute speech on the key
learnings of the class and of the relevant
readings in your register.
Do the Case study of Airlines- 5Forces
and make a PPT
All of you have to mail the PPT at
rahulkjain16@yahoo.co.in
Provide all the references