Session 3 Analysis and Diagnosis of External Environment
Session 3 Analysis and Diagnosis of External Environment
Session 3 Analysis and Diagnosis of External Environment
External Environment
Session III
Definition of Environmental
Analysis
• Environment Analysis can be viewed as a
process by which corporate planners study
the changes in the environmental factors
and identify opportunities and threats along
with their causes
What is the Environment ?
• Economic Factor
• Government
• Legal
• Market
• Competition
• Suppliers
• Technological advancement
• Demographic
• Geographic
• Social factors
Environmental Diagnosis
• It is setting up an opinion from the environmental
analysis to avail an opportunity or to effectively
handle a threat or to ignore an environmental
change
• It can be viewed as a set of decisions to be made
by the corporate planner on the significance of
environmental opportunities and threats in order to
take further decisions for pro-acting or reacting or
setting aside the environmental change noticed
during the phase of analysis
EAD – Environmental Analysis
and Diagnosis
• Describes the major phase of the strategic
management process for focusing on the
business environment
During EAD Corporate planners
do the following :-
• Identify the current strategy of the firm and the
related assumptions and predictions on the
environment
• Predict the future environment indicating the
tenability of earlier assumptions and predictions
• Assess the significance of difference between
current realities and future predictions about the
environment
• Indicate what changes in strategy would be useful
for future success
EAD and its impact on
Business Success
• Miller and Freisen [1977] identified 10
types of firms –
– Failing types
–&
– Successful types
Failing types
• Liberalization
• Privatization
• Globalization
• Stabilization
Legal factors
• Labour Laws
• Tax Laws
• Trade Laws
• Environment Pollution
Technological Factors
• Systematic usage of scientific or other
organised knowledge to economic activities
• Technology change occurs in three stages
– Invention
– Innovation
– Diffusion
Political factors
• Democracy – power in the hands of the
people
– Security, Dynamicity, Efficiency, Honesty
• Totalitarian – power in the hands of the
state
Social Factors
• Changes in
– Lifestyles
– Social Values
– Education Levels
– Attitude of people
Geographic factors
• Manisha Girotra
• Head of investment banking , UBS
India.
Global marketing: Standardization –
vs- customization: critical balance to
•
strike
Even corporations are creatures of habit and prejudice
• Entry of Procter & Gamble in India
- Pushed for Tide (W) formulation
- This formulation lost to low technology Indian detergents on account
of low sudsing and poor hard water sustenance
- Import content in final formulation pushed up the pricing
- Launched Supersoaker Ariel but withdrew it eventually for dilution
of equity
- Bought the Godrej brands and operations, only to find most of them
hardly of much use
- Launched Rs. 3 shampoo sachets: larger quantity was seen as
sacrosanct
- Finally launched smaller cheaper sachets
Companies successful in their home
markets: strong tendencies to replicate ‘home
country practices’ in the new market
• For E.g.
• Kellogg's in India presumed that they would easily
break the conventional breakfast habits of Indians
• Core principles get sidetracked,
• core practices wrongly get endowed with
transformative powers
• In reality, principles travel farther,
• socio-economic factors dull the edge of
practices
Challenges Indian brands face in
trying to go global
1. Limited knowledge of the target audience
2. ‘Made in India’ tag
3. Arriving at the right product – appealing
to the target market yet profitable
4. Ensuring a robust distribution network
• 5. Managing investment against local
players with deep pockets
Canada: A market of giant banks
• Highly competitive
– The big six control 90% of
the banking assets
• Leading banks enjoy
heritage, reach and trust
• Existing Indian banks like
SBI had limited offerings
– Only remittance,
export/import support, travel
currency etc.
Canadian market: Changing
modes of banking
• 39000 ABMs – one of the largest per capita
deployment in the world
• Increasing prevalence of non-branch banking
– ABM transactions up 32% p.a.
– Internet banking up by 56% p.a.
– Tele-banking up by 47% p.a.
• New-age banks like ING were capturing the
younger market with direct banking
ICICI Bank’s business thrust in
Canada
• To establish itself as a mainstream bank
• To address the needs of locals as much as
those of the Indian Diaspora
• Manage with optimum investment, limited
ground presence
Target
To achieve a business of 500 million
Canadian Dollars in the first year of
operations
How did ICICI manage to swim with
the sharks and not get eaten up?
Systematic shoestring marketing
Step #1
Hi-SAVE
• Simple
• Easy to pronounce and remember
• Instantly connotes product and benefit
Step #4