*

*

*Helps organization to identify Opportunities

and Threats

*To consolidate and strengthen organization’s

position

*Provides the strategists of which sectors have a

favourable impact on the organization

*Organization knows where its stands with

respect to its environment

*Helps in formulating appropriate strategy

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*

*“Surroundings, external objects, influences or

circumstances under which someone or

something exits”

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*

*Socio-cultural factors

*Demographic characteristics

*Social attitudes

*Educational level, awareness and consciousness

of rights

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*

*Environmental Factors

*Weather change

*Climatic change

*Demand related factors

*Supplier related factors

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*

*Political factors

*Political system

*Political structure, its stability

*Government policy and its intervention

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*

*Legal Factors

*Policies related to licensing , monopolies

*Policies related to export and import

*Policies related to distribution and pricing

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*27-11-2010 8

*

*Dividing the environment into different

sectors.

*Analysing the impact of each sector on the

organization.

*Subdividing each environmental sector into sub

factor.

*Impact of each sub sector on organization in

form of a statement.

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*

+Help to determine the key threats and

opportunities.

+Good tool to qualify the factors related to

company’s strategy.

+Can consider many factors for each special

case.

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*

- It doesn’t show the interaction between the

factors.

- It can’t reflect the dynamic environment.

- It’s a subjective analysis tool.

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Micro Environment

Marketing Intermediaries

Suppliers

Market Types

Market Demand

Competition Financial

Institutions

Regulatory Provisions

Industrial relation climate

Availability of skilled

workers

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*

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*

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*

Trends

Probability

of

Occurrences

Impact on strategies

S1 S2 S3

T1

T2

.

.

+2 Extremely favorable impact

+1 Moderately favorable impact

0 No impact

-1 Moderately unfavorable impact

-2 Extremely unfavorable impact

Degree of quality

of impact on each

trend on different

strategies

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*

Firm Internal Environment

Relevant Environment

Micro Environment

Macro Environment

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*

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*

•Sales of Passenger Cars in India is likely to grow at an

average of 14.9% each year to touch the 2.1 million mark

by 2011 (Source: Frost n Sullivan)

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*

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S.

No.

Environmental Factors Opportunity

/Threat

Reasons/Remarks

1. Macro-Economic Factors

-Per capita Income

-Loans Availability

- Interest Rates

↑

↓

↑

Rising PCI means more

affordability. (Sixth Pay

Commission)

Banks are not sceptical in giving

loans.

People can’t pay easy

instalments

2. Social/ Demographics

Factors

-Urbanization

( 28% to 40% by 2020 )

Middle Class Increasing

-Penetration Levels

-Labor (JV’s)

-Growing Working Class

(Ex. BPO)

-Improving Public Transport

↑

↑

↑

↑

↓

Demand for Passenger cars

Sales are increasing at a YOY of

over 60 % in the long run.

LOW (10 per 1000)

India has one of the cheapest

labour available hence many

foreign companies are eyeing to

merge with Indian players.

Resulted in more no of cabs.

With an advent of projects like

Delhi Metro .

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S.

No

.

Environmental Factors

Opportunity

/Threat

Reasons/Remarks

3. Policy

-Import Duty

-Excise Duties

-FDI

-Regulatory Issues like

Acts, Safety Standards etc.

↑

↑

↑

↓

Currently import duty is

100%.

Excise duty has been

reduced from 16 %to 14%.

100 % FDI is allowed .

MVA 1988 and MVR 1989

which promotes use capital

intensive technology

4. Technology

-Emission Standards

-Hybrid Cars

-Fuels

-IT (CAD/CAM, Design and

Automation)

↓

↑

↑

↑

Bharat III resulting in

dependence on other

countries for technology

Excise duty has been

reduced from 24 % to 12 %.

With upcoming Bio- fuels

,LPG & CNG.

India has one of the

cheapest IT Resources.

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S.

No.

Environmental Factors Opportunity

/Threat Reasons/Remarks

5. Industrial Factors

-Raw material price

↓

Steel Prices have touched

Rs 5000 since May 2010

6. Business Environment

-ROCE

-Expansion Plans of Incumbent

players

↓

↓

With players like Hyundai and

TATA having ROCE of 9% and

32%.

In future has huge capacity

plans which will give the

incumbent companies a cost

advantage.

*

*Presented By,

>Deval Naik

>Ashley T

>Tushar Sharma

>Rohit Kulkarni

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