Environmental Analysis Dr. T.K. Vijay Kuma Strategic Management Module ~2
Environmental Analysis
Dr. T.K. Vijay Kumar
Strategic Management
Module ~2
© Dr. T.K. Vijay Kumar
“Things are always Different—
the art is figuring out which differences matter….”
Laszlo Birinyi
“Analysis is the Critical starting point of Strategic thinking.”
~ Kenichi Ohmae
© Dr. T.K. Vijay Kumar
THREE PRIMARY ASPECTS OF STRATEGIC BUSINESS MANAGEMENT
Industry and Competitive Analysis
Strategy and Competitive Advantage
Company Situation and Analysis
© Dr. T.K. Vijay Kumar
Four Basic Elements
Strategic Management Basic model
Strategic management is the process of moving where you are to where you want to be in future – through
sustainable competitive advantages
Options onCompetitive Positioning
Learning points from deviations
© Dr. T.K. Vijay Kumar
Situation AnalysisComponents of Internal & External Envt.
Two Considerations: Company’s External or
Macro-Environment Industry and Competitive conditions
Company’s Internal orMicro-Environment
Competencies, Capabilities, Resources Strengths and Weaknesses, and Competitiveness
© Dr. T.K. Vijay Kumar
Thinking Strategically to Choosing a Strategy
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Scanning the Environment ~ STEEEPL…
Internal, External, Domestic and Global environment,
Macro Environmental Factors Demographic, Socio-Cultural, Economic, Political, Natural,
Technological, Legal, Govt. Policies…..
Environmental Analysis
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Analyzing the Industry & Competitive Environment
1. What are the industry’s strategy-shaping economic features?2. What kinds of competitive forces are industry members
facing, and how strong is each force?3. What forces are driving changes in the industry, and what
impact will these changes have?4. What market positions do industry rivals occupy?5. What strategic moves are rivals likely to make next?6. What are the key factors for future success?7. Does the outlook for the industry present the company with
sufficiently attractive prospects for profitability?
Ref: STEEEPL
© Dr. T.K. Vijay Kumar
External and Internal AnalysesBy studying the firm’s (internal) capabilities & resources, firms identify what they can do (over time)
Unique Resources, Capabilities, and Competencies
(Sustainable Competitive Advantage)
© Dr. T.K. Vijay Kumar
Internal Analysis (Resources, Capabilities)
How do we effectively manage current core competencies while simultaneously developing new ones? (Exploit/ Explore)
How do we assemble bundles of resources, capabilities and core competencies to create value for customers?
How do we learn to change rapidly?
© Dr. T.K. Vijay Kumar
Assessing the firm’s capabilities/strengths & weaknesses in the various areas:
Finance / Marketing/ Human Resources / Operations/ R & D / General Management
Developing the strength-weakness profile Appraising the individual businesses/strategic business units
(SBUs) of the firm Identifying the competitive advantages and core competencies
and developing the competitive advantage profile (CAP) Examining the capability gap (gap between existing
capabilities and the ones needed for pursuing the spotted opportunities)
Internal appraisal (of the firm)
© Dr. T.K. Vijay Kumar
Components of Internal Analysis
Identifying CoreCompetencies
Resources• Tangible• Intangible
Capabilities
CoreCompetencies
Identify sustainable competitiveadvantages
StrategicCompetitiveness
Four Criteriaof Sustainable
Advantage
• Valuable• Rare• Imitation/Substitutes = costly• Organized properly
ValueChain
Analysis
• In/Outsource• decisions
* Value-Add Info.
© Dr. T.K. Vijay Kumar
Discovering CoreCompetencies
Resources• Tangible• Intangible
Tangible • Financial• Physical• Labor
Intangible• Technological• Innovation• Reputation• Organizational activity systems• Knowledge
© Dr. T.K. Vijay Kumar
Discovering CoreCompetencies
CompetitiveCapabilities
Competitive Capabilities describe the firm’s ability to Create, Deploy, Modify, Reconfigure, and Leverage resources.
Valuable capabilities permit resources to be combined in unique ways to create Core Competencies
© Dr. T.K. Vijay Kumar
Environmental Factors specific to the business concerned :~
Industry & Competition / Market/Customer / Technology Supplier Factors / Govt. Policies Spotting the opportunities & threats Checking the attractiveness and probability position of
these opportunities Highlighting those opportunities the pursuit of which will help
the firm bridge its strategic planning gap Developing the opportunities-threats profile (OTP)
Environmental Scanning Techniques
© Dr. T.K. Vijay Kumar
Industry Analysis (Porter’s Model)
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SWOT ~ Analysis of Strengths, Weaknesses, Opportunities, & Threats.
© Dr. T.K. Vijay Kumar © Dr. TK Vijay Kumar
TOWS Matrix
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MC KINSEY’S 7S FRAMEWORK
* Value-Add Info.
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Balanced Score Card Example
* Value-Add Info.
© Dr. T.K. Vijay Kumar
BCG Matrix
BCG Matrix can help understand a frequently made strategy mistake: having a one-size-fits-all-approach to strategy,
* Value-Add Info.
© Dr. T.K. Vijay Kumar
GE Matrix
* Value-Add Info.
© Dr. T.K. Vijay Kumar
Thank U