Why environmental analysis and diagnosis ?

Prime influencers of strategy change

Few negative consequences

Face problem at singur plant

 Bhubaneshwar outlets

vendors

protest

Reliance

Fresh

The agitation was targeted against Reliance Fresh selling fresh vegetables and fruits, which traders claimed hurt their livelihood.

Protest over India stores closure

Chief Minister Mayawati ordered the closure of the shops citing reasons of law and order.

 NIRMA faced a problem at

Bhavnagar Kalatalav plant.

FRENCH FRIES CONTROVERSY OF

Mc DONALDS

 When a company ceases to adjust the environment to its strategy or does not react to the demands of the environment by changing its strategy, the result is lessened achievement of corporate objectives.

 Managers need to search the environment to 1) Determine what factors in the environment present threats
2) Determine what factors in the environment present opportunities

Government sector

Influenced by the federal, state and local government.

Government environment include factors like, Political system Defense and foreign policies Legal rules
Political environment bifurcated into Promoting Environment Regulatory environment

Government sector

BUSINESS OPPORTUNITIES:
Government are large purchasers of goods and services.
Government subsidize firms and industries. Government protect home producers against unfair foreign competition.

Government policy changes can lead to increases in opportunities and new business for firms . For Ex: SEZ

Government sector

Business threats
Anti trust laws which limit mergers. Government regulations that significantly affect the strategic options of whole industries. Governmental policies that change economic conditions, tax laws, etc., can create threats to individual business.

Government sector

Government competition with private sector

Threats to one firm may offer opportunity to another .

Technological sector

Examples:
Electronic Items Printing Industry Industrial Robots Petroleum Industries

Affects the product or service life cycle. Innovate and take a risk seems to be a critical component.

Analyzing the Environment

Sectors in general environment helps the strategists to determine nature functions and relationships. E.g. social trends and values (smoking)

Techniques for Environment Analysis

Verbal information
Written Information Information System Spying Forecasting

Description of Environmental Analysis

It is critical for strategists to develop an effective network of human sources to provide inputs for environmental analysis. These should be well informed. Knowledgeable sources inside the organization & outside the organization. Those who learn MIS/SIS approach must learn how to get their findings more quickly & more easily to this informal network if they are to have any impact at all.

The Role of the strategists in Analysis & Diagnosis

Analysis
Strategists
Top Managers Corporate Planners Board of Directors consultants

Verbal Search
Regularly Regularly

Documentary Search
Rarely Occasionally

Formal forecast & Studies

Rarely Occasionally

MIS/ SIS
Rarely Rarely

Diagnosis & Decision making

Performs Advises as requested Occasionally advises Occasionally hired to advise

Occasiona lly Rarely

Rarely

Rarely

Rarely

Occasionally

Rarely

NA

Enter into Diagnosis of the Environment

Diagnosis of the Environment

Factors
emerge to affect a diagnosis of the

Environment
1) 2) 3) 4)

Factors about Strategists Factors about Strategist's Job Factors about group of Strategists Factors in Strategists Environment

STRATEGIC MANAGEMENT

Factors about Strategists

(that is Strategists Characteristics)

More relevant Experience

Higher the Aspiration level

The perceptual mode

The Psychological mood

Others

STRATEGIC MANAGEMENT

Factor about Strategists Job

Time Pressure and Stress

Resource availability

Discretion

STRATEGIC MANAGEMENT

Factors about Group of Strategists

Team Spirit

Cohesiveness

Power plays

STRATEGIC MANAGEMENT

Factors about Strategists Environment

Some key findings: o Sales of the old technology continues to expand. o When sales did decline, it took from 2 to 11 years for

sales .
o New technologies often created new markets &

invade old markets by .

o The commercial introduction of new technology often

was made by .
o An early and rapid commitment to new technology

was .
STRATEGIC MANAGEMENT

Reference
Lawrence R Gauch, William F Glueck, Business

Policy & Strategic Management, 5th edition, New

York

STRATEGIC MANAGEMENT

THANK YOU

STRATEGIC MANAGEMENT