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Why environmental

analysis and diagnosis?

Prime influencers of strategy

change

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Few negative consequences

Faceproblem at

singurplant

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Bhubaneshwar vendors protest Reliance Freshoutlets

The agitation was targeted against Reliance Fresh selling freshvegetables 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.

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NIRMAfaced a problem at

Bhavnagar Kalatalav plant.

FRENCH FRIES CONTROVERSY

OF

Mc DONALDS

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When a company ceases to adjust theenvironment to its strategy or does notreact to the demands of theenvironment by changing its strategy,the result is lessened achievement of

corporate objectives.

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Managers need to search theenvironment to

1) Determine what factors in theenvironment present threats

2) Determine what factors in theenvironment present opportunities

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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

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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

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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

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Government competition with private sector

Threats to one firm may offer opportunity to another .

Government sector

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Examples:Electronic ItemsPrinting IndustryIndustrial RobotsPetroleum Industries

Affects the product or service life cycle.

Innovate and take a risk seems to be a critical component.

Technological sector

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Analyzing the Environment

Sectors in general environment helps thestrategists to determine nature functions andrelationships.

E.g.

social trends and values (smoking)

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Techniques for EnvironmentAnalysis

Verbal information

Written Information

Information System

Spying

Forecasting

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Description of EnvironmentalAnalysis

It is critical for strategists to develop an effectivenetwork of human sources to provide inputs forenvironmental analysis. These should be wellinformed. Knowledgeable sources inside theorganization & outside the organization.

Those who learn MIS/SIS approach must learn how to

get their findings more quickly & more easily to thisinformal network if they are to have any impact at all.

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The Role of the strategists inAnalysis & Diagnosis

Strategists

Analysis

VerbalSearch

DocumentarySearch

Formalforecast &Studies

MIS/SIS

Diagnosis &Decisionmaking

Top Managers Regularly Rarely Rarely Rarely Performs

CorporatePlanners

Regularly Occasionally Occasionally Rarely Advises asrequested

Board of

Directors

Occasiona

lly

Rarely Rarely Rarely Occasionally

advises

consultants Rarely Occasionally Rarely NA Occasionallyhired to advise

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Enter intoDiagnosis of the Environment

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Diagnosis of the Environment

Factors emerge to affect a diagnosis of theEnvironment

1) Factors about Strategists

2) Factors about Strategist's Job

3) Factors about group of Strategists

4) Factors in Strategists Environment

STRATEGIC MANAGEMENT

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Factors about Strategists

(that is StrategistsCharacteristics)

More relevant Experience

Higher the Aspiration level

The perceptual mode

The Psychological mood

Others

STRATEGIC MANAGEMENT

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Factor about Strategists Job

Time Pressure and Stress

Resource availability

Discretion

STRATEGIC MANAGEMENT

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Factors about Group of Strategists

Team Spirit

Cohesiveness

Power plays

STRATEGIC MANAGEMENT

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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

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Reference

Lawrence R Gauch, William F Glueck, Business

Policy & Strategic Management, 5th edition, New

York

STRATEGIC MANAGEMENT

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THANK YOU

STRATEGIC MANAGEMENT