ENVIRONMENTAL ANALYSIS

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ENVIRONMENTAL ANALYSIS

• SWOT
• INTERNAL ANALYSIS (SW)
• PESTEL FRAMEWORK (OT)
• MCKINSEY 7S FRAMEWORK

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SWOT STEP-1 AN INTERNAL CHECKLIST FOR AN
ORGANISATIONS INTERNAL ANALYSIS.
INTERNAL ANALYSIS GIVES THE INSIGHTS INTO
STRENGTHS AND WEAKNESSES AND PESTEL PROVIDES THE
FRAMEWORK FOR OPPORTUNITIES AND THREATS,
INTERNAL ANALYSIS PESTEL SWOT
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Management - 1

• Does the firm use Strategic Management concepts?
• Are company objectives and goals, measurable and
  well communicated?
• Do managers at all levels plan effectively?
• Do managers delegate authority well?
• Is the organization structure appropriate?

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Management - 2

• Are job descriptions and job specifications
  clear?
• Is employee morale high?
• Are employee turnover and absenteeism low?
• Are organizational rewards and control mechanisms
  effective?

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Marketing - 1

• Are markets segmented effectively?
• Is the positioning well among competitors?
• Has the firms market share been increasing?
• Are present channels of distributions reliable
  and cost-effective?
• Does the firm have effective sales functions?

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Marketing - 2

• Does the firm conduct necessary market research?
• Are product quality and customer service good?
• Are they priced appropriately?
• Is there effective advertising and promotion
  strategy?
• Is the marketing planning in sync with the
  budgeting?
• Do the firms marketing people have adequate
  training?

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Finance - 1

• Where is the firm financially strong and weak as
  indicated by financial ratio analysis?
• Can the firm raise needed short term capital?
• Can the firm raise needed long term capital
  through debt and/or equity?
• Does the firm have sufficient working capital?

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Finance - 2

• Are capital budgeting procedures effective?
• Are dividend pay out policies reasonable?
• Does the firm have good relations with its
  investors and stockholders?
• Are the firms financial managers experienced and
  trained in line with the firms financial
  policies?

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Production

• Are suppliers of raw materials, parts and
  subassemblies reliable and reasonable?
• Are facilities, equipment, machinery and offices
  in good condition?
• Are inventory-control policies and procedures
  effective?
• Are quality-control policies effective?
• Are facilities, resources and markets
  strategically located?
• Does the firm have technological competencies?

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PESTEL FRAMEWORK

• THE FRAMEWORK PRIMARILY INVOLVES THE FOLLOWING
• TWO AREAS
• THE ENVIRONMENTAL FACTORS AFFECTING THE
• ORGANSIATION
• 2. THE IMPORTANT FACTORS RELEVANT IN THE PRESENT
• CONTEXT AND IN THE YEARS TO COME.

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POLITICAL

• GOVERNMENT STABILITY
• POLITICAL VALUES AND BELIEFS SHAPING POLICIES
• REGULATIONS TOWARDS TRADE AND GLOBAL BUSINESS
• TAXATION POLICIES
• PRIORITIES IN SOCIAL SECTOR

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IDENTIFY FEW KEY ACTIVE POLITICAL FORCES AND
HOW THEY ARE SHAPING THE OVERALL ENVIRONMENT IN
THE COUNTRY ?
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ECONOMIC FACTORS

• GNP TRENDS
• INTEREST RATES/ SAVINGS RATES
• MONEY SUPPLY
• INFLATION RATES
• UNEMPLOYMENT
• DISPOSABLE INCOME
• BUSINESS CYCLES
• TRADE DEFICIT/SURPLUS

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SUPPOSE THE FOREX RESERVES REDUCE TO HALF OF THE
PRESENT LEVEL BECAUSE OF FEW DEVELOPMENTS IN THE
OUTSIDE WORLD . DISCUSS THE ENVIRONMENTAL EFFECTS
IT MAY LEAD TO
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SOCIO-CULTURAL FACTORS

• POPULATION DEMOGRAPHICS
• ETHNIC COMPOSITION
• AGING OF POPULATION
• REGIONAL CHANGES IN POPLULATION GROWTH/DECLINE
• SOCIAL MOBILITY
• LIFESTYLE CHANGES
• ATTITUDE TO WORK AND LEISURE
• EDUCATION-SPREAD OR EROSION OF STANDARDS
• HEALTH AND FITNESS AWARENESS
• MULTIPLE INCOME FAMILIES

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THERE HAS BEEN A THRUST ON WOMEN LITERACY.
DISCUSS THE INFLUENCES YOU SEE IN THE SOCIAL
ENVIRONMENT AND THEIR IMPACT ON BUSINESS.
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TECHNOLOGICAL

• BIOTECHNOLOGY
• PROCESS INNOVATION
• DIGITAL REVOLUTION
• GOVERNMENT SPENDING ON RESEARCH
• GOVT AND INDUSTRY FOCUS ON TECHNOLOGICAL EFFORTS
• NEW DISCOVERIES/DEVELOPMENT
• SPEED OF TECHNOLOGY TRANSFER
• RATES OF OBSOLESCENCE

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ENUMERATE FEW OF THE TECHNOLOGICAL ADVANCES IN
THE AGRICULTURE AND DISCUSS ITS ROLE IN TAPPING
BETTER OPPORTUNITIES IN THE OVERSEAS MARKETS
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LEGAL

• MONOPOLIES LEGISLATION/ ANTITRUST REGULATION
• EMPLOYMENT LAW
• HEALTH AND SAFETY
• PRODUCT SAFETY
• FOOD LAWS
• ENVIRONMENTAL LAWS

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LIST OUT THREE MAJOR INDUSTRIES WHICH IN YOUR
VIEWS POSE DANGER TO ENVIRONMENTAL
CONDITIONS.MENTIONING YOUR REASONS SUGGEST HOW
THESE INDUSTRIES MAY CORRECT THE
SITUATIONS. DISCUSS THE LEGISLATION ON
PATENTS IN INDIA AND COMMENT ON ITS IMPACT ON
THE BUSINESS.
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PESTEL-AN INDIAN FRAMEWORK
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PESTLE - Key Economic Variables-1

• Shift to a service economy in India
• Availability of credit
• Level of disposable income
• Propensity of people to spend
• Interest rates
• Inflation rates
• Economies of scale
• Money market rates

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PESTLE Key Economic Variables-2

• Federal government budget deficits
• Gross domestic product trend
• Consumption patterns
• Unemployment trends
• Worker productivity levels
• Value of the Rupee in world markets
• Stock market trends
• Foreign countries economic conditions

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PESTLE - Key Economic Variables-3

• Import/export factors
• Demand shifts for different categories of goods
  and services
• Income differences by region and consumer groups
• Price fluctuations
• Exportation of labor and capital from India
• Monetary policies

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PESTLE Key Economic Variables-4

• Fiscal policies
• Tax rates
• European Economic Community (ECC) policies
• Organization of Petroleum Exporting Countries
  (OPEC) Policies
• Coalitions of Lesser Developed Countries (LDC)
  policies

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 1

• Number of marriages
• Number of divorces
• Number of births
• Number of deaths
• Immigration and emmigration rates
• Life expectancy rates

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 2

• Per capita income
• Location of retailing, manufacturing, and service
  businesses
• Attitudes toward business
• Life-styles
• Traffic congestion
• Inner-city environments

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 3

• Average disposable income
• Trust in government
• Attitudes toward government
• Attitudes toward work
• Buying habits
• Ethical concerns
• Attitudes towards saving

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 4

• Sex roles
• Attitudes toward investing
• Racial equality
• Use of birth control
• Average level of education
• Government regulation
• Attitudes toward retirement

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 5

• Attitudes toward leisure time
• Attitudes toward product quality
• Attitudes toward customer service
• Pollution control
• Attitudes toward foreign people
• Energy conservation
• Social programs

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 6

• Number of religious places
• Social responsibility
• Attitudes toward careers
• Population changes by race, age, sex, and level
  of affluence
• Attitudes toward authority
• Value placed on leisure time

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 7

• Population changes by city, county, state,
  region, and country
• Regional changes in tastes and preferences
• Number of women and minority workers
• Number of high school and college graduates by
  geographic area

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PESTLE Key Social, Cultural, Demographic,
Environmental Variables 8

• Recycling
• Waste management
• Air pollution
• Water pollution
• Ozone depletion
• Endangered species

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MCKINSEY 7 S FRAMEWORK A TOOL TO EVALUATE AND
CONTROL AN ORGANISATION
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7-S FRAME WORK
Supporting organization
Structure
Centralized
The winning formula
Skills
Style
Staff
Strategy
Shared Values
Systems
Single noble purpose
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7-S FRAME WORK
Supporting organization

• The winning formula sets the goals and
• standards for the organizations and
• identifies the key skills required
• The supporting organization provides
• quidance, motivation and monitoring
• to see that the right decisions are made

Structure
The winning formula
Skills
Staff
Style
Strategy
Shared Values
Systems
Single noble purpose
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7-S FRAME WORK STRATEGY
Structure
An integrated set of actions to deliver
a Superior value to a chosen set of Customers
with a cost structure that Allows continuing
excellent returns

• Which customers does the company
• target?

Skills

• Which products/services does it offer?

Staff
Style
Strategy

• How can it serve its customers
• effective?
• How can the company build a
• sustainable advantage over
• competition?

Shared Values

• What are the strategic priorities for the
• company?
• What are the actions required across
• different functional elements.

Systems
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7-S FRAME WORK SHARED VALUES
Structure
Those ideas of what is right and desirable
(in Corporate and/or individual behavior)
which Are typical of the organization and common
To most of its members
Skills

• How do people in the organization
• describe the way in which it is
• distinctive?

Staff
Style
Strategy

• Which things get most and least
• management attention? E.g.,
• - Markets, product lines
• - Organizational units
• - Short versus long term issues

Shared Values

• How do people in the organization describe
• the way we do things around here? E.g.,
• - How decisions are taken
• - How important stake holders are dealt
• with
• - How thing get down
• - What preoccupies senior management

Systems
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7-S FRAME WORK SKILLS
Structure
Capabilities possessed by the organization As a
whole as distinct from those of individuals

• what business activities important to its
• success is the company distinctively
• good at performing?

Skills
Strategy
Staff
Style

• What business activities important to
• its success is the company weak at
• performing?

Shared Values
.

• How are important business activities
• changing?

• What important management activities
• must the company perform much better
• than it does now?
• - Non-business system function e.g.,
• people development, industrial
• relations, etc.
• - Special management challenges e.g.,
• multi-product line management,
• resource deployment

Systems
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7S FRAME WORK THE WINNING DORMULA
Activities the organization Must be really good
at in order To deliver winning value proposition
An integrated set of actions To deliver a
superior Value (benefits minus Price) to a chosen
set Of customers, with a Cost structure
that Allows continuing Excellent returns

Skills
Strategy
Vision
Shared Values
The overriding goal of the organization A clear,
compelling statement of what It aspires to become
that is demanding but Achievable and reflects a
fact-based view Of the future
The commonly held beliefs of the Organization
simple terms that say Whats important around here
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7-S FRAME WORK SYSTEMS
Structure
Skills
Staff
Style
Strategy
The Process and procedures through which things
get done from day to day
Shared Values

• What are the most important management
• processes that top management uses to run an
  organization. .E.g.,
• - Annual strategy reviews
• - Monthly operating reviews
• - Management by walking around
• What are the most important systems in the
• organization? How well are they managed?
• What variables are monitored and controlled
• most closely?
• How relevant, accurate, and reliable is the
  
• information generated?

Systems
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7-S FRAME WORK STYLE
Structure
The way managers collectively behave with
Respect to use of time, attention and
symbolic actions
Skills

• How does top management make
• decisions?
• Consultation versus solitary
• Reliance on data versus experience

Staff
Style
Strategy
Shared Values

• How does management seek to motivate
• employees?
• - Orders
• - Compensation and fringe benefits
• - Internal competition
• - Participation

System

• How does top management view its own principal
  role?
• Monitoring, reviewing
• Making tough decisions directly
• Staying on top of internal operations
• Changing course, setting direction

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7-S FRAME WORK STRUCTURE
Structure
An orderly and predictable system to
determine Who reports to whom and how tasks
are Divided up and integrated

• What is the basis structural form
• of the organization? E.g.,
• Centralized versus decentralized
• Product versus customer group
• Geographical coverage
• . What is the top management
• Structure?
• . What is the approach to
• (corporate) staff? E.g.,
• . Large versus small
• . How are the key functions
• organized? E.g.,
• RD Project based versus on-
• going
• Marketing Centralized versus
• per business unit
• Sales by customer group or
• geographic

Skills
Staff
Style
Strategy
Shared Values
System
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SKILL SUPPORT AT McDONALDS USING ORGANIZATION
DESIGN

• Centralized buying to
• control content

The structure, staff, Systems and style of The
organization has To be carefully Designed to
support Each Macroskill Necessary for success
Structure
Skills Quality control

• Hard-nosed, rigid
• attitude on how to run
• the business

Staff
Style

• Owner operators
• 40 million
• Hamburger University
• Promotion from within
• to build experience

• Inspections
• Franchise expansion based on high grades
• on prior inspections
• Many procedures mechanisms, aimed
• building employee enthusiasm, loyalty
• Procedures for consistent food preparation
• including a 600 page manual

Systems
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7-S FRAME WORK STAFF
Structure
The people in the organization, considered
in Terms of corporate demographics, not
individual personalities
Skills
Staff
Style
Strategy
Shared Values

• What Kind of people does the company employ?
• - Educational background
• - Average age
• - Experience profile
• How fast is the company growing in terms of
• number of employees?
• How well does the company manage to retain
• its employees?
• How well are employees rewarded?
• How well trained are employees?

System