Environmental Scanning

1. BE: LECTURE 2

2. ENVIRONMENT SCANNING

6. PROCESS
1. Identification of key environmental variables : involves identification of
key environmental variables which have an impact on the organisation's
business and industry.
• These environmental variables comprises both micro and macro
environment of business.
• The organisation requires to identify those variables which are relevant and
also the variables which are general in nature.
• The key environmental variables can be customer related, competition or
market related, technology related, regulatory framework related etc.

7. 2. Identification of sources of information for environmental Scanning
Internal sources such as company files and documents, data base generated by
management information systems, company employees, and so on.
• Secondary sources of information such as government publications,
newspapers, journals, magazines, trade and industry associations newsletters,
annual reports of competing firms, etc.
• Mass media such as radio, television, internet.
• Formal studies conducted by external agencies such as marketing research
agencies, consultants and educational institutions.

8. 3. Approaches of environmental scanning : The organisation may adopt either
systematic approach or ad-hoc approach or processed form approach or
combination of these approaches in varying degrees depending upon the need
of situation.
4. Techniques of environmental scanning : There are quantitative as well as
qualitative techniques. There are formal and systematic techniques such as
Scenario writing, simulation, structured and unstructured expert opinion and a
number of other forecasting techniques (some of the techniques are based on
intuition and judgment of the strategist to predict what the future is likely to
be). Any of these techniques may be selected depending upon the need and cost
involved.

9. 5. Factors affecting environmental scanning : There are several factors which
affect environmental scanning. These factors are events, trends, issues and
expectations of different groups which have interest in the organisation or its
stakeholders.
• Events are important and specific occurrences taking place in different
environmental sectors.
• Trends are the general tendencies or courses along which events take place.
• Issues are the current concerns of various sections of the society which arise in
response to events and trends.
• Expectations are the demands which are made by various interest groups in
response to their concern for the issues which have emerged.

18. ETOP analysis (Env. threat and opportunity profile) is the process by which
organisations monitor their relevant environment to identify opportunities and
threats affecting their business for the purpose of taking strategic decisions.

30. 1. SWOT ANALYSIS OF COLD-DRINKS

31. An Overview of Coca-Cola
• The market leader in the soft drinks industry, Coca-Cola is one of the most renowned
brands across the world. Be it your home, office, shops, hotels, bars or restaurants, Coca-
Cola is everywhere!
• 94% of the world’s population recognizes the brand instantly by its red and white
Coca-Cola logo as per Business Insider. More than 10,000 soft drinks from Coca-Cola
are consumed every second of every day on average.
• Coca-Cola was established in 1886 in Atlanta by John Pemberton. Within a few years,
Coca-Cola became the most recognized, renowned, and widely distributed brand in the
world. Currently, James Quincey is the CEO of this mega corporation.

32. SWOT Analysis of Coca Cola
Coca-Cola Strengths – Internal Strategic Factors
• Strong brand identity – It is a highly popular brand with a unique brand identity.
Its soft drinks are the most-selling drinks in history.
• High brand valuation – According to Interbrand annual report, Coca Cola is
ranked 6th best global brand in 2021 with a brand value of $57 Billion. Other top
ranking companies on the list are Apple followed by Amazon, Microsoft, Google
and Samsung.
• Extended global reach – It is sold in more than 200 countries with 1.9 billion
servings per day of Company products. It has introduced more than 500 new
products globally. Some of these are variations of Coca-Cola beverage, like Coco
Cola Vanilla and Cherry.
• Greatest brand association and customer loyalty –considered one of US’s most
emotionally-connected brands. This valuable brand is associated with ‘happiness’
and has strong customer loyalty..

33. • Dominant market share – Coca-Cola has the largest market share. Coke, Sprite, Diet Coke,
Fanta, Limca, and Maaza are the highest growth drivers for Coca-Cola.
• Unparalleled distribution system – Coca-Cola has the most efficient and most extensive
distribution network in the world. The company has nearly 225 bottling partners and about 900
bottling plants globally.
• Acquisitions –Coca-Cola has a long list of strategic and profitable acquisitions including Costa
coffee chain, Fairlife (Milk Products), Fuze Tea and many more.
• Repositioning portfolio -Coca-Cola Company has repositioned and reduced the numbers of its
global brands from 400 to 200 brands in 5 major categories such as :
• Coca Cola
• Sparkling Flavors
• Nutrition, Juice, Dairy & Plant
• Hydration, Sports,
• Tea & Coffee

34. Coca-Cola Weaknesses – Internal Strategic Factors
• Aggressive competition with Pepsi – Pepsi is the biggest rival of Coca-Cola. Had it not
been Pepsi, Coca-Cola would have been the clear market leader in the beverage.
• Product diversification – Coca-Cola has low product diversification. Where Pepsi has
launched many snacks items like cheetos, doritos. Coca-Cola is lagging in this segment.
• Health concerns –Carbonated drinks are one of the major sources of sugar intake. It
results into grave health issues – obesity and diabetes. Many health experts have
prohibited the use of these soft drinks.
• Overdependence on Third-Party Technology Providers – Coca Cola’s operations rely
heavily on the technological expertise of third-parties. The company signed another five-
year deal with Microsoft to supply business software.
• Environmentally Destructive Packaging – In the 2020 report, Coca Cola was named as
one of the four world’s largest consumer brands that are contributing immensely
to global warming and carbon emissions by using throwaway plastic bottles.

35. Coca-Cola Opportunities – External Strategic Factors
• Introduce new products and diversify its segments – Coca-Cola has the opportunity to
introduce new offerings in health and food segments just like Pepsi.
• Increase presence in developing nations – Many regions with hot climate have the
highest consumption for cold drinks. Thus, increasing presence in such emerging
markets can be excellent – African countries are a good example.
• Bring advanced supply chain system – Coca Cola’s business is entirely dependent upon
logistics and supply chain. Transportation costs and fuel prices are always on the rise.
Thus, coming up with some advanced and improved systems for distribution can be an
opportunity.
• Packaged drinking water – Coca-Cola owns several packaged drinking water brands
like Kinley. There is a great potential for expansion in this segment for Coca-Cola. There
is an opportunity to expand and bring more healthy drinks in the market to avoid
people’s criticism.

36. Coca-Cola Threats – External Strategic Factors
• Water usage controversy – Many social and environmental groups have claimed
that the company has a vast consumption of water in water-scarce regions.
Besides, people have alleged that Coca-Cola is polluting water and mixing
pesticides in water to clear contaminants.
• Pollution Lawsuit – Coke and three other companies are being sued by a California
environmental group for contributing to plastic pollution. In the lawsuit, Coca-Cola
is singled out for misleading the public about the recyclability of its single-use plastic
bottles.
• Direct and indirect competition – Although direct competition from Pepsi is clear
in the market, however, there are many other companies which are indirectly
competing with Coca-Cola. Starbucks, Costa Coffee, Tropicana, Lipton juices,
and Nescafe, are the indirect competitors of Coca-Cola which can threaten its market
position.

37. • Economic Uncertainty – In 2020, Coca Cola’s revenues declined drastically as
restaurants, theaters, and other venues that contribute about half of its revenue
remained closed due to the global crisis.
• Increasing Health-Consciousness – Consumers are increasingly adopting healthy
lifestyles and avoid products with unhealthy ingredients. The increase in health-
consciousness can reduce Coca Cola’s sales and profits as customers migrate to
healthier options offered by competitors.
• Coca-Cola Recalls Sodas and Juices over Possible Contamination – According
to Food Safety News, Coca-Cola announced a recall of its Minute Maid and Coke
products over possible contamination issues. According to reports, the brands that
have been recalled include Maid Berry Punch, Strawberry Lemonade, and Fruit
Punch.

39. 2. ENV. SCANNING OF PHARMACEUTICAL
INDUSTRIES

40. Political Factors:
For any business to flourish, it is essential to have a stable political condition. Here are
some political conditions which can impact the pharmaceutical industry :
• Most countries maintain frameworks that include guidelines about safety standards,
certifications, etcetera. They also mark the banned drugs, which may cause health
hazards. If a pharmaceutical company fails to follow those regulations, its business may
suffer severely.
• Governments of some countries subsidize the pharmaceutical companies to keep the
essential drugs within the commoners' reach. It helps the companies to survive in the
competitive market.

41. Economic Factors:
The economy directly impacts the businesses. The pharmaceutical industry is also affected
when the economic conditions of a country get affected.
• As the economic conditions of the countries are developing with time, the household
income of people is also increasing. It may allow them some essential drugs. They may
have the urge to buy costlier drugs, which were previously out of reach for many
people. Eg shifting from basic calcium to CAL MAG D, nutrilite.
• The researchers are constantly working on drug modification, resulting in more beneficial
and potential drug production. As people are buying those drugs, the pharmaceutical
industry is also flourishing. (generation of more money in economy)
• The average healthcare spending of the families is increasing. If there are aged people in
a family, there are more chances of high healthcare expenses. It also includes the cost of
medicines. It is also giving the pharmaceutical companies to earn better profit even after
following Government guidelines about pricing.

42. Social Factors:
Here are some sociological conditions which can impact the growth of the pharmaceutical
industry:
• The lifestyle people follow is incredibly fast yet stagnant. As a result, more people are
moving towards obesity. Thus, facing health conditions like diabetes, thyroid,
hypertension. The patients need continuous medication to deal with this. Hence the sales
of the pharmaceutical companies are also increasing.
• As the healthcare system has improved all over the country, the number of the aging
population is also growing. Hence, there is a need for more medicines for them than for
the younger ones. It creates a greater demand in pharmaceutical companies resulting in
their expansion.
• Many people are concentrating on having a healthy lifestyle while doing exercises,
eating healthy. It may result in a decrease in the demand for drugs in the future

43. Technological Factors:
The pharmaceutical industry is greatly dependent on technological innovations. The
PESTEL analysis pharmaceutical industry can show how the technical conditions can affect
the business :
• The pharmaceutical industry is greatly dependent on technology. The research and
biotechnological innovations have resulted in the production of drugs that are good in
quality and have low production costs. It will allow more people to get access to
medicines that they previously could not afford.
• The drugs require proper storage conditions. Technology has made it easier to preserve
medicines and transport them without getting harmed due to unpleasant conditions.
• Technology has provided pharmaceutical companies with the chance to reach more
companies through campaigns. They can also deliver the medicine at the door, which
has increased the reach of the companies. It can also increase the revenue of
pharmaceutical companies. Eg. NETMEDS

44. Environmental Factors:
Environment is a significant concern, and the impact of waste materials on the environment has
worried the environmentalists. Here are some ecological issues which may affect the pharmaceutical
industry:
• As the production of drugs is related to a large carbon footprint, many countries are coming up
with regulations to decrease the effect on the environment. As abiding by these regulations may
be costly for the new companies, they may fail to establish their business.
• The production of drugs results in the creation of different biotechnological pollutants. They may
be hazardous for people's health. The company needs to take care of this waste to maintain the
safety of the people.
• Like other companies, pharmaceutical companies may take up some corporate responsibilities
towards the environment. They can donate money or campaign for some environmental causes,
which can help them create a better image.

45. Legal Factors:
A nation's legal conditions do not have much direct impact on the pharmaceutical
industry. However, there can be some indirect issues that may affect the growth of the
pharmaceutical business.
• As pharmaceutical products are one of the essential ones, the government always uses
laws to control the fraud regarding the expiration dates and manufacturing of the
batch of drugs. If a company fails to adhere to the set guidelines, it may have to face legal
proceedings.
• Pharmaceutical companies should maintain strict legal guidelines while formulating the
framework for their business and researches. They ensure the safety of the products. It
helps them to avoid legal issues. Thus, allowing them to stay away from the high
expenses of proceedings.

47. 3. SWOT ANALYSIS OF STEEL INDUSTRY

48. Strengths of Tata Steel: A company’s strengths are the internal factors that provide it
with an advantage in establishing a larger client base and high profitability. Let’s look at
how Tata Steel compares to its peers in terms of competitive strength –
• Integrated operations in India: The entire process of extraction from mines and
ores to producing finished steel material is integrated in India though it’s a technical
part, they have that equipment support. The integrated operations save tons of your
time and price and also maintain the specified quality.
• Market Position: Tata Steel is one of among foremost important steel
manufacturers on the planet and thus the world’s second-most geographically-
diversified steel producer. It has a strong presence in Asia-pacific and Europe.
• Product Portfolio: Tata Steel features a wide selection of products starting from flat
steel products, agricultural implements, construction products, and many more. A
diversified product portfolio ensures revenue due to different markets around the
world.

49. • Trust of TATA: Tata is one among the foremost trusted and popular brands not
only in India but also everywhere on the planet because of their quality. The
association of the name provides immense brand equity to the corporation at the
same time.
• Global footprint: Tata Steel has a presence in over 50 countries with operations
in over 26 countries which increase its penetration and share.
• Capability : Every year this Company raises over 14 million tonnes of ores from
its captive collieries, iron ore mines, and quarries. A fast-changing environment
is the main adaptability of the company. Operations in 26 countries and a billboard
presence in over 50 countries.

50. Weakness of Tata Steel: Weaknesses are qualities of a business or brand that
need to be improved. The following are some of Tata Steel major flaws:
• Over-dependence on Europe: Though it’s an Indian brand, over 50 per cent
of Tata Steel’s business comes from Europe and thus any economic
slowdown within Europe affects Tata Steel’s revenues.
• Functional Issues: Operational efficiency is not as good as international
leaders. Slightly lagging on the technological front.

51. Opportunity for Tata Steel: Opportunities are potential areas that give a
firm the opportunity to improve its outcomes, increase sales, and profit. Tata
Steel has the following opportunities:
• Adapt newer technologies: Tata Steel lags behind its competitors within
the technology front and has a chance to adopt newer technologies
• Increasing demand for steel in India: The steel market in India is
predicted to grow within the next 4 years thanks to the expansion within
the housing industry and manufacturing facilities in India. This will
certainly benefit Tata Steel.
• Global Expansion: Growth in the manufacturing, construction and
automotive industry within the future will drive the expansion within
the industry and Tata Steel is set to benefit from it.

52. Threats to Tata Steel: Threats are external factors that may have an impact on a
company’s growth. The following are some of Tata Steel threats:
• Intense competition: JSW Steel, Essar Steel, and Arcelor Mittal, etc are still the
main competitors of Tata Steel. This reduces its market share worldwide according
to the previous experience.
• Decreasing global steel prices: Excess production in China meant that it
supplied steel cheaper to the planet

53. Conclusion
• Tata Steel is a well-known name in the industrial goods and chemicals industry.
Some of the key concerns include functional difficulties, overdependence, and
break up with Europe.
• Based on the information presented above, Tata Steel should concentrate on
meeting demand inside India and expanding their services to additional nations, all
while upgrading and adapting to current technology for better results.
• It has a global reach that goes beyond its limits, not just in its native nation but
also geographically. The brand’s marketing strategy, which includes control over
manufacturing and distribution, has a strong presence both online and offline.
• To advertise and educate their clients about newer items and forthcoming deals,
they employ several digital marketing channels such as SEO, Emailing, and
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