Situation & Environmental Analysis

Chapter 2
Situation & Environmental

Analysis
Components of a
Situation Analysis...
Internal environment
Customer environment
External environment
COPYRIGHT © 2002 Thomson Learning, Inc. Al

Important advise in
conducting a situational
analysis
Analysis is not a panacea/Magic potion:
Situational analysis is necessary but insufficient
prerequisite for strategic planning process;
requires intuition and judgement of managers to
use information resulted from situational analysis
while taking decisions (infect empower managers
with information so that they may take informed
decision)
Data and information are not the same
The benefit must outweigh the cost

The Internal Environment
It involves the critical analysis of the
organization’s internal environment with
respect to its objectives, strategy,
performance, allocation of resources,
structural characteristics, and political and
power struggles. The framework involves
following key aspects;
Review current objectives, strategy &
performance
Evaluate the availability of resources
Understand the strengths & weaknesses of
your organizational culture & structure
(contd)
Key questions while reviewing current objectives,
strategy & performance
What are current marketing objective and goals?
Are they consistent with overall organizational strategy
and objectives?
How are current marketing strategy is performing in
terms of sales volume, market share, profitability etc ?
How does our performance compare to that of other
firms in the industry?
How can we continually improves the performance of the
organization?

(Contd)
Key questions for evaluating

availability of resources
What is the state of our current
organizational resources?
Are these resources are likely to
change for better or for the worse in
the near future?

(contd)
key questions for Understanding the strengths &
weaknesses of organizational culture & structure
What is the positive and negative aspects of the
current and anticipated culture?
Does the firm emphasize long term or short term
planning horizon?
Currently, are there any positive or negative
issues with respect to motivating our employees,
especially those in customer-contact position ?

Issues in the Customer
Environment
Identify current & potential customers
Understand needs of current &
potential customers
Determine basic features of the firm’s
& competitor’s products that meet
customers needs
Anticipate changes in customers
needs

The 5-W Model for
Customer Analysis...
Who are our current & potential customers?
What do customers do with our products?
Where do customers purchase our products?
When do customers purchase our products?
Why (& how) do customers select our products?
Why do potential customers not purchase our
products?

External Environment
Competitive Forces:
– Who are our current & future competitors?
– Brand competition-what products are similar in
features & benefits to the same customers?
– Product competition-who competes in the same
product class (different features, benefits & price)?
– Generic competition-what very different products solve
the same problem or needs?
– Total budget competition-what competes for limited
financial resources of the same customer

Systematic Criteria for
competitive analysis
Identify all current and potential brands, products,
generic, and total budget competitors
Assess each key competitors by determining its size,
growth, profitability, objectives, strategies and target
market
Assess competitors strengths and weakness, including
competencies of competitors e.g distribution, R & D etc
Focus on analysis on each competitors marketing
strategies (Marketing mix components)
Estimate competitors response environmental changes

Other Issues for
Consideration in
Evaluating the External
Environment
Economic growth and stability
Political trends
Legal and regulatory factors
Changes in technology
Cultural trends

External Environmental
Factors-Economic
Growth & Stability
Inflation
Employment & income levels
Interest rates
Taxes
Trade restrictions
Tariffs
Consumer confidence
Business cycles
External Environment-
Political Trends
Issues mostly beyond a firm’s direct
control
Some firms protest or lobby…others hire
specialists to do so for them
– Tobacco industry
– Automotive industry
– Drug companies
– Health care providers

Other External
Environment
Considerations
Legal and regulatory factors
– laws & regulations may influence marketing
decisions & activities
Changes in technology
– improvements in the way we accomplish
tasks & processes
Cultural trends
– demographic trends
– lifestyle trends
– changes in cultural values
Important Variables of
Societal Environment

Collecting
Environmental Data &
Information
Internal data sources-company sales
records & research ( for example,
intranets)
Government sources-census data,
small business administration, etc.
Periodicals and books
Commercial, fee based sources-
A.C. Nielsen
Problems That Can
Occur During Data
Collection
Incomplete or inaccurate definition of the
marketing problem
Ambiguity about the usefulness or relevance of
the data collected
Severe information overload
Expensive & time consuming data collection
Finding ways to organize the data collected

Situation & Environmental Analysis

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Situation & Environmental Analysis

Uploaded by

Copyright:

Available Formats

Chapter 2