Environmental

SUBMITTED BY:DEEPTI SINGH 09EM-011

GEETIKA TIWARI 09EM-014VINEETA CHAUDHARY 09EM-044

ENVIRONMENTALAPPRAISAL

Concept of Environment

1. The Environment is defined as the aggregate of conditions, events,

and influences that affect an organizations way of doing things.

2. Environmental factors can be external as well as internal to the

organization.

3. Environment factors are beyond the control of individual industrial

enterprise & their managements.

4. Environmental scanning is very important component of strategic

planning. A manager has to continuously scan the environment to

ensure alignment of the strategies with the radically changing

environment.

Characteristics Of Environment

1. Environment is complex

2. Environment is dynamic

3. Environment is multi faced.

4. Environment has a far – reaching impact.

External & Internal Environment

The External environment includes all factors

outside, the control of organization which provide

opportunities or pose threats to the organization.

The Internal Environment provides strength or

weakness within the control of organization.

Components of External Environment

Organization

Supplier

Competition

Economy

Technology Govt. Regulations

Religion

Community

Society

Political

Interest/ Pressure groupsCustomers

Methods & Techniques used for Environment Appraisal

PESTEL

Porter’s five forces model

Porter’s diamond model

ETOP

PESTEL FRAMEWORK

Political – Government Stability, Government Attitude, Economic Model, Central – State Co-alignment, Subsidies & Protection, Licensing & Quotas.

Economic – GDP, Fiscal Deficit, Savings & Investment, Inflation & Interest Rates, Monsoon & Food Grains Reserves, Economic Cycles, Capital Market & Forex Reserves, Currency Stability, Infra-Structural Investments, FDI Inflows.

Social – Population Diversity, Religious Sentiments, Literacy Levels, Income & Age Distribution, Language Barriers, Social Values.

PESTEL FRAMEWORK

Technological – Innovation, Obsolescence Rate, Patents, Research & Development, ERP, Technological Convergence.

Environmental – Global Warming & CSR, Product Design, Environmentally Preferable Purchasing, Extended Producer Responsibility, Waste Disposal & Emissions, Non-Fossil & Alternative Fuels, Carbon Credits, Pollution Control Laws.

Legal – Monopolies Legislation, Employment Laws, Product Safety & Health Hazards, Direct & Indirect Taxes, Patent Laws, Consumer Protection Laws.

FIVE FORCES MODEL - PORTER

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Threat of New Entrants

Threat of Substitutes

Bargaining power of Suppliers

Bargaining power of Suppliers

Bargaining power of Customers

Competition from Existing

Players

Competition from Existing Players

Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in passenger

In utility vehicles Mahindra holds 42% share.

In commercial vehicle, Tata Motors more than 60% share. Tata Motors is also the world's fifth largest medium & heavy commercial vehicle manufacturer.

With only a few firms holding a large market share, the market is less competitive (closer to a monopoly).

The industry is characterized by many rivals, none of which has a significant market share. These fragmented markets are said to be competitive. If rivalry among firms in an industry is low, the industry is considered to be disciplined

DIAMOND MODEL - PORTER

Environmental sectors

Opportunities and Threat

Social ↑ Indigenous Products,Low cost

Political ↑ Favours from Government in terms of Tax and Land.

Economic → Plant and machinery in excellent condition; captive sources for parts and components available.

Regulatory ↓ Low safety Standards

Market → Despite buying Jaguar and Land rover brands, TATA hasn’t got a foothold in its luxury car segment in Indian Market.Alliance with Fiat./Joint Ventures

Environmental Threat And Opportunity Profile (ETOP)TATA MOTORS

Environmental sectors

Opportunities and Threat

Supplier↓ Rising price of Aluminium ,Plastic and

Steel

Technology → Greener Alternative, Fuel Efficient Super Milo Buses, lack of expertise with respect to international market.

Environmental Threat And Opportunity Profile (ETOP)TATA MOTORS

ORGANISATIONAL APPRAISAL

Organizational appraisal is basically study of internal

environment of an organization.

The dynamics of internal environment of an organization

can be understood in terms of the organizational resources

& behavior, strength & weaknesses, synergistic effects and

the distinctive competencies.

Distinctive competence - Any advantage a company has over

its competitor - it can do something which they cannot or

can do better - opportunity for an organization to capitalize

- low cost, Superior Quality, R&D skills etc.

METHODS & TECHNIQUES USED FOR ORGANIZATIONAL APPRAISAL …

Financial Analysis - Ratio Analysis, ABCKey factor rating - Rating of different factors through different questionsValue chain analysisBCG, GE Matrix Competitive Advantage ProfileStrategic Advantage profile

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Strategic Advantage Profile (SAP)(BERGER PAINTS)

Capability factor Competitive strengths or weaknesses

Finance → Leader in profits and operating margin(ROI 40%),Net worth 204 Cr of the industry, Berger 41 Cr.Cash rich, Nerolac 58 Cr

Marketing → Market leader 35% share, brand since more than 20 yrs , widest product range

Operations ↑ Strong inventory controlstrong in inventory control (28 days) of sales (industry avg. 51 days, service level - high

Personnel → High caliber HR- MBAs more

General Management

↑ High profile corporate image, Enviable track record in breaking away the position of MNCs in the Indian paint Industry.

SWOT is a function of SAP & ETOP

Effectiveness of HR, Level of commitments, loyalties (all quantitative and qualitative) to compete with the rival firms within industry are counted as Strength.

Firm’s weaknesses are internal deficiencies in term of above. The deficiencies are regarded as organizational constraints and disadvantages to compete and fight with rival firms. When a firm analyzes its internal capabilities as stated above the process is known as SAP (Strategic Advantage Profile).

On the other hand , analysis of external environment to find out opportunities and threats are known as ETOP Analysis (Environmental Threats and Opportunities Profile).

Thus we can say SWOT is a function of SAP & ETOP.

ETOP

Opportunities

Threat

SWOT

SWOT ANALYSIS - FRAMEWORK

StrengthsWeaknesses

Op

port

un

itie

sT

hre

ats

Utilize strengths to counter threats

Minimize weaknesses whichprevents you from countering threats

Nullify weaknesses which prevents you from exploiting opportunities

Leverage strengths to make use of opportunities

SOURCES OF STRENGTHStrong brand identity – Eg. Tata.High quality products – Eg. Sony, Toyota,

Honda.Economies of scale – Eg. Reliance.Strong after sales & service network – Eg.

Caterpillar

Outdated technology – Eg. Hindustan Motors.Single product syndrome – Eg. Procter & Gamble.Narrow business scope – Eg. Nirma.Excessive diversification – Eg. Tatas

SOURCES OF WEAKNESSES

SOURCES OF OPPORTUNITIESDelicensing of Industries – Eg. Telecom,

Banking.Life style changes – Eg. Retailing.Growing population – Eg. Middle-class buying power.Collaborations & Joint Ventures – Bharti & WalMart

Terrorist attacks – Eg. 11/9, 26/11.Import relaxation – Eg. Dumping from China.Economic recession – Eg. (2008).Natural disaster – Eg. Tsunami, Earth Quake.Lack of Corporate Governance – Eg. Satyam.

SOURCES OF THREAT