The document discusses analyzing a business's environment. It describes scanning the microenvironment, macroenvironment, and internal environment. The microenvironment includes suppliers, customers, and other local stakeholders. The macroenvironment includes political, economic, sociocultural, and technological forces outside a business's control. The internal environment includes internal factors like employees, resources, and structure. Environmental analysis informs strategic planning by identifying opportunities and threats from trends.

1. BUSINESS ENVIRONMENT Dr.K.S.CHANDRASEKHAR NAIR UNIVERSITY OF KERALA, TRIVANDRUM, INDIA email: kscnair@gmail.com

2. MODULE 1

5. Environmental Forces Firm/ Organization : Structure Culture Competencies Resources Industry Trade Association Government Union/ employees Competitors Creditors Suppliers Customers Communities Stockholders Sociocultural Forces Political/Legal Forces Technological Forces Economic Forces Macroenvironment

6. Environmental Forces Indicators ECONOMIC TECHNOLOGICAL GDP trends Interest rates Money supply Inflation rates Unemployment levels Wage/price controls Devaluation/revaluation Energy availability & cost Disposable & discretionary income Total federal spending for R&D Total industry spending for R&D Focus of technological efforts Patent protection New products New technologies New developments in technology transfer from lab to marketplace Productivity improvements through automation

7. Environmental Forces Indicators POLITICAL-LEGAL SOCIOCULTURAL Antitrust regulations Environmental protection laws Tax laws Special incentives Foreign trade regulations Attitudes toward foreign companies Laws on hiring and promotion Stability of government Lifestyle changes Career expectations Consumer activism Rate of family formation Growth rate of population Age distribution of population Regional shifts in population Life expectancies Birth rates

17. Environmental Analysis Informs All Other Analyses Environmental Analysis Economic, Sociocultural, Technological, Political-Legal Factors Interest Group Analysis Market/Buyer Analysis Competitor Analysis Supplier Analysis Governmental Analysis Resource Analysis Select STRATEGIC FACTORS ie Opportunities Threats

18. Tool: Matrix for Tracking Environmental Forces Env. Forces Communities Creditors Customers Employees Stockholders Suppliers Etc. Economic 1. 2. 1. 2. Stake- holders 1. 2. 1. 2. Technological Political-Legal Sociocultural Note how each force or set of forces affects each stakeholder group...

19. Tool: Force Field Analysis Organization Can be done for an organization or an industry. Each arrow is a force, with the lengths indicating relative strength.

20. SWOT Analysis—What to Look for in Sizing Up a Company’s Strength's , Weaknesses, Opportunities , and Threats Potential Internal Strengths CORE COMPETENCIES IN KEY AREAS ADEQUATE FINANCIAL RESOURCES WELL THOUGHT OF BY BUYERS AN ACKNOWLEDGED MARKET LEADER WELL-CONCEIVED FUNCTIONAL AREA STRATEGIES ACCESS TO ECONOMIES OF SCALE INSULATED (AT LEAST SOMEWHAT) FROM STRONG COMPETITIVE PRESSURES PROPRIETARY TECHNOLOGY COST ADVANTAGES

21. Potential Internal Strengths BETTER ADVERTISING CAMPAIGNS PRODUCT INNOVATION SKILLS PROVEN MANAGEMENT AHEAD ON EXPERIENCE CURVE BETTER MANUFACTURING CAPABILITY SUPERIOR TECHNOLOGICAL SKILLS OTHER?

22. Potential Internal Weaknesses NO CLEAR STRATEGIC DIRECTION OBSOLETE FACILITIES SUB-PAR PROFITABILITY BECAUSE… LACK OF MANAGERIAL DEPTH AND TALENT MISSING SOME KEY SKILLS OR COMPETENCIES POOR TRACK RECORD IN IMPLEMENTING STRATEGY PLAGUED WITH INTERNAL OPERATING PROBLEMS FALLING BEHIND IN R&D TOO NARROW A PRODUCT LINE

23. Potential Internal Weaknesses WEAK MARKET IMAGE WEAK MARKET IMAGE WEAK DISTRIBUTION NETWORK BELOW-AVERAGE MARKETING SKILLS UNABLE TO FINANCE NEEDED CHANGES IN STRATEGY HIGHER OVERALL UNIT COSTS RELATIVE TO KEY COMPETITORS OTHER?

24. Potential External Opportunities SERVE ADDITIONAL CUSTOMER GROUPS ENTER NEW MARKETS OR SEGMENTS EXPAND PRODUCT LINE TO MEET BROADER RANGE OF CUSTOMER NEEDS DIVERSIFY INTO RELATED PRODUCTS VERTICAL INTEGRATION (FORWARD OR BACKWARD) FALLING TRADE BARRIERS IN ATTRACTIVE FOREIGN MARKETS COMPLACENCY AMONG RIVAL FIRMS FASTER MARKET GROWTH OTHER?

25. Potential External Threats ENTRY OF LOWER-COST FOREIGN COMPETITORS RISING SALES OF SUBSTITUTE PRODUCTS SLOWER MARKET GROWTH ADVERSE SHIFTS IN FOREIGN EXCHANGE RATES AND TRADE POLICIES OF FOREIGN GOVERNMENTS COSTLY REGULATORY REQUIREMENTS VULNERABILITY TO RECESSION AND BUSINESS CYCLES GROWING BARGAINING POWER OF CUSTOMERS OR SUPPLIERS CHANGING BUYER NEEDS AND TASTES ADVERSE DEMOGRAPHIC CHANGES OTHER?

26. Tool: Industry Scenarios A tool for exploring the impact of major shifts in the underlying context: 1. Examine possible shifts in environmental forces. 2. Identify uncertainties in each of the forces. 3. Identify causal factors behind the uncertainties. 4. Make range of assumptions about each causal factor. 5. Combine assumption into internally consistent scenarios. 6. Analyze the industry situation under each scenario. 7. Determine sources of competitive advantage under each scenario. 8. Predict competitor’s behavior under each scenario.

28. Tool: Porter’s Five Forces Model (adjusted) Threat from Substitutes Suppliers’ Power Threat from New Entrants Buyers’ Power Rivalry of Firms Power of other Stakeholders

48. MODULE 2

49. Indicators of an economy and its position in India Gross Domestic Product Gross Domestic Saving Net National Product Gross Domestic Capital Formation Life Expectancy at birth Literacy Rate Birth rate Death Rate Population

50. Agricultural Production Finished Steel Electricity Wholesale Price Index Consumer Price Index Export Import Securities Market Foreign Direct Investment

51. Gross Domestic Product Gross Domestic Product is the gross value-added by all the enterprises within the domestic territory f a country Gross Domestic Product represents the money value of all goods and services produced in the domestic territory of a country during a year.

52. Net National Product & Gross National Product Net National Product is the total value of final goods and services produced in an economy during a year (GNP) minus consumption of fixed capital. Gross National Product is the total value of all goods and services produced by the nationals of a country within the country or outside the country.

53. GNP= GDP plus or minus net factor income abroad. Net National product at factor cost (NNPFc) and National Income are one and the same.

54. 703,080 MEXICO 875,817 SPAIN 905,629 CANADA 1,503562 ITALY 1,676,846 CHINA 1,858,731 FRANCE 2,016,393 UK 2,488974 GERMANY 4,749,910 JAPAN 12,150931 US GNP (MILLION $) COUNTRY

55. 1,620,454 ITALY 1,724,647 FRANCE 1,736,377 UK 2,391,569 GERMANY 3,290,800 INDIA 3,817,221 JAPAN 7334254 CHINA 11,605185 US GDP(PPP) country

60. SHARE OF SERVICE SECTOR IN INDIA’S GDP (in Rs. Crore) 92733 43.69 97045 (45.35) 102142 (45.34) 108974 (45.62) 423200 (49.15) 463980 (50.08) 498572 (49.91) 537642 (51.24) 569005 (51.16) SERVICESECTOR 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 YEAR

62. Capital Formation Capital formation is also called capital accumulation. Acquiring assets is called capital formation. Capital accumulation is that part of current production which is not consumed, but set aside for use in further production. Capital formation is the surplus of production over consumption in an accounting year.

63. Gross Domestic Capital Formation Gross Domestic Capital Formation is the sum of gross fixed capital formation and change in stocks in the domestic territory of a country in an accounting year. Gross domestic Fixed Capital Formation consists of acquisition of new assets and net purchase of second-hand assets.

64. Economic Growth Economic Growth is calculated on the basis of the increase in Gross National Product indicating the values of goods and services produced in the economy during a year estimated at current or constant prices.

82. GDP statistics

83. Annual rate of inflation (%)

84. Availability of qualified engineer

85. Availability of qualified labor

86. Indian foreign exchange reserve –a steady rise

87. Literacy Rates in India state with high Lit. rate Kerala : 90.99 Mizoram: 88.5 Delhi : 81.82

88. Total Foreign Investment

89. Incidence of Poverty in India States with low pov.rate Goa: 4.4 Punjab: 6.2