Environment anlaysis

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Environment anlaysis

  1. 1. International Business Environment Ms. Kavita Shetty Faculty DYPDBM
  2. 2. The Company’s Microenvironment Forces close to the company that affect its ability to serve its customers - the company, market channel firms, customer markets, competitors and public, that combine to make up the firm’s value delivery system.
  3. 3. Taking the views of top management, finance, research and development (R&D), purchasing, manufacturing and accounting into consideration The Company * Entities providing resources needed by the company to produce goods and services * Needs to watch supply availability, shortage or delays, labor strikes, price trends etc. Suppliers
  4. 4. Firms that help the company to promote, sell and distribute its goods to final buyer  Resellers  Physical distribution firms  Marketing-service agencies  Financial intermediaries Marketing Intermediaries
  5. 5. * Study the changing trends in the market * Create products as per customer requirements and satisfy their needs and wants according to their purchasing power Customers
  6. 6. * Provide greater customer value and satisfaction than competitors. * To gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers Competitors * Brand Competition * Industry Competition * Form Competition / Substitute Competition * Generic Competition Forms of Competition
  7. 7. Represents any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. Publics General Public – the general population of the country who carry an image of the company that affects their buying decisions Local Public – represent the local population For Example: Neighborhood residents & community organizations Internal Public – people associated with the company’s internally For Example: Workers, Managers, Volunteers and the Board of Directors
  8. 8. Consists of all the conditions and forces that affect an organization's strategic options and define its competitive situation Operating Environment Industry Environme nt Remote Environme nt The three interactive segments of the external environment External Environment
  9. 9. The Company’s Macroenvironment Forces close to the company that affect its ability to serve its customers - the company, market channel firms, customer markets, competitors and public, that combine to make up the firm’s value delivery system.
  10. 10. Environmental Variables Internal Environment Structure Culture Resources Task Environment Socio-Cultural Forces Economic Forces Political-legal Forces Technological Forces Suppliers Employees Labor Unions Competitors Trade Associations Communities Creditors Customers Social Interest Groups Government Shareholders
  11. 11. Contd… Political Environment
  12. 12. Economic Environment
  13. 13. Social Environment
  14. 14. Technological Environment • Factors related to materials and machines used for manufacturing goods and services • Cost of Technology • Rate of Change of Technology • Receptivity to new Technology • Technological Innovations
  15. 15. Industry Level Analysis
  16. 16. Porter’s Industry Analysis / Five Forces Model INDUSTRY COMPETITORS RIVALRY AMONG EXISTING FIRMS POTENTIAL ENTRANTS SUPPLIER S BUYERS SUBSTITUTE S Bargainin g Power of Suppliers Bargainin g Power of Powers Threat of Substitute Products or Services Threats from New Entrants
  17. 17. Barriers to Entry • Economies of Scale • Product Differentiation • Capital requirements • Cost disadvantages independent of size • Access to Distribution Channels • Government Policies Threat of New Entrants
  18. 18. • Number and size • Exit barriers to the loyalty of the old players to the industry despite low returns Intensity of Rivals
  19. 19. 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 down prices The Bargaining Power of Buyers
  20. 20. • 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. 21. • When the product offered 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 its costly for a buyer to switch from one supplier to another • To raise prices, the supplier can use the threat of vertically integrating forward into the industry and competing directly with buying company The Bargaining Power of Suppliers
  22. 22. Example : Intel – world’s largest manufacturer of microprocessors – manufacturers of personal computers are dependent on the single largest supplier of computer chips Threat of Substitute Products Coffee – Tea – Soft drinks • The buyer companies cannot use the threat of vertically integrating backward and supplying their own needs as a means to reduce input prices
  23. 23. Elements of a Game: • Players: rival companies • Actions: choices available • Information • Strategies: guidelines that tell the decision maker which action to choose at each point of the game • Outcomes: results such as price wars • Payoffs : potential benefits • Equilibria: stable result which need not always be beneficial Game Theory
  24. 24. Analyzing the game through the other player’s eyes Assessing another Player’s likely behavior • Fishbowl • Red team / blue team • Future mapping Techniques
  25. 25. Two variables in addition to five factors • Import Competition • Multimarket contact Concept of Complementarity
  26. 26. Risk that politics in the host country generate in a way which makes it difficult for the organization to profitably carry on its business Political Risks
  27. 27. Threats generated by Political Risks
  28. 28. 31 Unwelcome Regulations  Mandatory local equity and management  Profit Re-investment  Limitation on Employment  Price Controls  Import Restrictions  Restriction of Intellectual Property Rights  Complex and Costly Incorporation norms  Weak Law Enforcement  Corrupt Bureaucracies and Justice Systems
  29. 29. YOUR ????????? PLEASE
  30. 30. THANK YOU

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