ch2 Market_Environment

8/7/2019 ch2 Market_Environment

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Market

Environment


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Market Structures

Monopoly

one player controls the market

( product & supply )

no close substitutes entry cost is high

Oligopoly

few player control

entry barriers are high

strategy of one effects the other

sell branded pdts. ( airline industry)


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Monopolistic Competition

many players operate

differentiate pdts. / services

majority of industries

Pure Competition many players

homogenous / similar pdts.

Negligible Entry Barriers


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Analyze Starbucks foray in India


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Market Environment

Internal Controllable

Changes can be made

Eg. Infrastructure, marketing mix, personnel etc.

External

Beyond Mgt. control

Eg. Socio cultural, geographic etc.

Micro Operating Environment Macro General Environment

SWOT

Analysis


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Internal Environment

1. Value System Values set by the founders = foundation

Values shared by the organization

Values- respect, trust, honesty

1. Business Mission & Vision

Vision - picture of the company in the future

ICICI : wanted to become the no. 1 player

Mission - brief description of a companys fundamental

purpose. A mission statement answers the question

Why do we exist?


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3. Management Structure

Degree of professionalism

Composition of Board of Directors

Share holding pattern


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6. Marketing Capability

7 P of marketing

7. Financial Capabilities

Factors related to availability, usage, mgt.

of funds

8. Technical Capabilities

9. Physical Assets and Facilities


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External Environment

Micro Environment

factors in a companys immediate environment

that affect the performance of the company


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2.Competitors

st. vary depending on factors? market structure ( monopoly, oligopoly,

monopolist)


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3. Intermediaries

Firms that aid the company in promoting,

selling distributing goods to the finalcustomer

Marketing Service Agencies help in targeting the right customers

creativity, quality, service, price of service

provider

Other intermediaries

Accounting , auditing intermediaries, HR

consultancies


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4.Public group having actual / potential

interest in / achieving co. objectives

Financial publics influence Co. ability to

obtain funds

Media , Govt.

General public at large Internal members of the org.

5. Financiers


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Affect all players in the industry

Enables co. to anticipate changes

Complex interdependent factors

Macro Environment


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1. Demographic study of characteristics of human

population

demography, educational levels, st. of

living


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2. Political

Uncontrollable by the company

Influences level of investment

Decision on liberalization of the

economy

3. Economic

GDP, inflation, std of living


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4. Social Cultural

attitudes, beliefs , norms, values, life

styles

5. Technology

Dependent on the relative ease of theusers

Brick & mortar to Brick and Click to Click

only


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6. Natural

7. Legal & Policy framework


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Environmental Scanning

Scanning

Assessment

and

Control

Forecasting

Monitoring


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Environment may be

Stimulant ConstraintBusiness


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Goals Understand current & potential envi. Changes

Inputs to strategic decision making

Facilitate and foster strategic decision making

Benefits Development of strategies and long term

goals

Plan of actions

Determine impact of socio economic

Analysis of competitors strategies


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Scanning general survey

Aim: alter org. before the change is crystallized Identify possible changes

Identify changes that are already in progress

Sources scattered data

Exploratory by nature


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Monitoring focused systematic approach

in-depth analysis of trends identified

tracking & describing envi. trends


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Forecasting

Plausible projection of the direction ,

scope and intensity of the environmental

change

Assessment

Determine the impact of the trends


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1. Out side In approach

Macro

Long term perspective

Scenario analysis

1. Inside Out approach

Micro

Short term perspective

Impact of current scenario on co. industry

Approaches


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Threat of new entrants

Economies of scale

The high or low cost of entry

Ease of access to distribution channels Will competitors retaliate?

Government action

How important is differentiation?


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The power of buyers

High where there a few, large players in a

market e.g. the large grocery chains.

If there are a large number of undifferentiated,small suppliers

The cost of switching between suppliers is low

e.g. from one fleet supplier of trucks to another


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The power of suppliers

The switching costs are high e.g. Switching from one

software supplier to another.

Power is high where the brand is powerful e.g.Cadillac, Pizza Hut, Microsoft.

There is a possibility of the supplier integrating

forward

Customers are fragmented (not in clusters)


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ch2 Market_Environment

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