that in some way

refers to all external

affect business
factors, influences,
decisions, plans, and
or situations
operations.

Dynamic and
Business
Continuously
environment (BE)
Evolving

determined by its
business
Success of an
environment, and
organisation
even more from its
relationship with it

Determine
opportunities and
threats
Strategy and close and
Business continuous Give direction for
Environment interaction between growth
organisation and BE
Continuous Learning
helps in following
way Meeting Competition

Image Building

be aware of, assess,

and respond to the present in its
many opportunities environment
and threats

be able to handle
To flourish business must and adapt to them

continuously
evaluate its
environment and
modify its
operations in order
to thrive and expand.
 Small Area
Related to
Immediate Periphery

Regulary
Influence
DIrectly

Suppliers

Consumers
Micro Environment Consist of
Competitors The factors in the
micro environment
Marketing often relate an
For example a trend
Intermediaries organization to the
of eco friendly
macro issues
products
influencing the way a
firm reacts in the
marketplace.
Specific to the business

Employees

Customer base

Ways of raising
finance
Issues to be
addressed
Suppliers and link
with them

Local community

Direct competition
 Demographic
Environment

Socio-Cultural

Economic
Elements of Macro
Environment
Political - Legal

Technological
 Age

Gender
The knowledge of
Income
Characteristics of a these factors are of
population great importance for
education
the organisation
Job Position

Region

businesses.
Important to both
economists.

Demographic Young Population

India Because of this

many multinationals
Huge Population size
are interested in
India

Effecting market size

Demorgaphic trends
Represent
opportunities and
Issues for business
threat
organisations
Identifying changing
trends is a challenge
 Social Traditions

Values

Beliefs The knowledge of

Complex group of these factors are of
factors Ethical Standards great importance for
the organisation
State of Society

extent of social
stratification

Example - Family
Values, Respect for
elders

Socio-Cultural
Environment
difficult for a
business to change
core beliefs of a these core values
behaviour and the
Different from particular society
belief system of
Demographics tend to be businesses have to
that population.
persistent. adjust to social
norms and beliefs to
operate successfully

Mission

Objectives
Affects in the area of
Products

Decisions related to Markets Menu Adaptation

Strategies Marketing strategies

McDonald Example
Store design
Advertising
Strategies: In India, CSR Activities
advertisements that
focus on family-
oriented and cultural
values resonate
more, therefore
companies need
 Around Business

Regional

Include Conditions at National Level

Overall Economic
Meaning
Situation
Global

Demand

Conditions in Market For Resources Supply

Cost

Size
Determines of market
Strength

Economic
Envrionment GDP

Per Capita Income

Indicators Inflation

Purchasing Power

Interest Rates

over the business

strategies.

Higher interest rates

Direct bearing harm businesses
A business needs to with high debt and
find out the effect may impact business
of economic factors like real estate by
on business limiting loan access.
 Type of government
Powerful influence
and Legal
on Business
Envrionment

1. Political Development

Degree of politicisation of
2.
business and economic issues

3. Political Morality

4. State of Law and order

5. Political Stability

Elements 6. ideology and practice

Effective regulatory bodies

ensure fair competition and
Effectiveness and purposefulness of
7. protect consumer rights,
governmental agencies
creating a healthy business
Political-Legal environment.
Environment
Example: High government
Govenment intervention in economy intervention might mean more
8.
and industry regulations and controls for
businesses.

Example: Nationwide tax policies

Partly General and affect all businesses, but a specific
Partly Specific legal ruling might only impact one
particular industry

changes in
regulations and the
Must consider Impact of On their Operations
impact of taxes and
duties

country where there

Operate in is a sound legal
system.
Businesses
Protecting
consumers

Competition

Need to Understand Laws Intellectual Property

Company law

Labor Laws
 Communication

Do things
Changed the way People
The rise of e-commerce
platforms has changed how
Ways of doing
retail businesses operate,
Business
allowing them to reach a
global market.

reduce paperwork
With the use of technology schedule payments
Organisations are able to more efficiently
conduct businesses more Examples
effectively and efficiently coordinate
Technology inventories
efficiently and
effectively

Reduce the cost

Has helped to Shrink time and distance

Create competitive
advantage

Example: The rise of social media has led

requires significant alterations in businesses to integrate digital marketing
operational and marketing strategies. strategies into their traditional marketing
Technological plans.
Environment
Interlinked Technology Drives Business Innovation -
Technology and
Business Needs Influence Technological
Business Inter-dependent Development:

Smartphones have created a market for apps and

mobile services, while reducing the demand for
Leading to many new business opportunities traditional mobile phones and cameras.
as well as making obsolete the existing
business products and services. Online streaming services have challenged the
traditional cable TV industry.

AI
New technological
tools businesses are Machine learning They are also acting
adopting threat to exisiting
robotic process businesses
automation
 P Political

E Economics

S Socio-Cultural

framework for T Technological

analysis of macro
L Legal
environmental
factors Tourism

affect industries Such as Farming

Insurance
E Environmental
how companies it is both creating
Climate change operate new markets and
awareness is growing diminishing or
and affecting the products they destroying existing
offer ones.

Past PEST
PESTLE
P Political

E Economics

S Socio-Cultural
Indentify Influence of On an organisation
T Technological

L Legal

E Environmental

of scanning the
environmental
PESTLE providing a way
influences that have
affected organisation

Simple to understand

Quick to implement

encourages For Proactive and

in its decision
management structured thinking making.
 dominant
commercial trend

greater earnings

less expensive
resources.
enables a business to enter new markets
to achieve greater
economies of scale
Internationalization
of Business extend the lifespan
of its products

strategic- complex due to

management process extra variables.

International
strategy planning
Requires
Scanning the
external
environment
 Example: A multinational corporation
like Unilever, which owns and operates
conglomerate of all linked by common
numerous brands and subsidiaries across
multiple units ownership.
different continents, all under one
umbrella of ownership.

Example: A global tech company might

such as money,
use its patents and technological
credit, information,
draw on a common know-how across different countries,
3 characteristics patents, trade
pool of resources thereby spreading the R&D costs and
names and control
maximizing the benefits from its
systems.
innovations.

Despite operating in
different regions, all Example - A global automobile
respond to some
units of a global manufacturer may have a strategy
common strategy
business respond to focused on sustainability,
a unified strategy
 Expensive and
Challenging

Thorough and
Approach
structured

Developing
internationally Opportunities
in the light of
Evaluate Global
Threats internal capabilities

Scope of Firm's
Describe
global operations
Steps
global business
Create
objectives.

Gloabl business
Corporate
Develop
strategies for
Whole organisation
 Internationalisation
is simple because of
technology
Technological
development Easier to implement
global strategy
Worldwide
communication Linking corporate
HQs with their
global operations

Base of the Answer People

Material
Improved
Improved mobility
Transportation
Finished item

Money

Political Views
Why do businesses
go global? Need to grow

Rapid shrinking of Fast communication, speedier

time and distance transportation, easy flow of funds

Domestic markets are no longer adequate

Competition in domestic markets

Other reasons Reliable or cheap source of raw material

To Reduce transportation cost

Rise of service sector

Collapse of Inetrnational Trade barriers

Economic
Form strategic
Countering
alliances Technological
threats
 Indentifying
significant
Anticipating components of the
global environment
Monitoring on a large scale
Multinational
environmental Understanding
analysis
Free
Governments
Interventionist

Evaluate present
and future impact

critical factors in a
in-depth evaluation specific geographical
International area.
Environment - Regional
Assessment environmental
Goods
analysis
discovering market
For Services
opportunities
Innovation

deeper look at the

important
environmental
Country factors.
environmental
analysis Legal
Dimensions for
Study of Political planning to
successful
Cultural
 Tool for understanding the
competitive environment

Helps in focusing on rather than bulk of

important things information

Threat from New entrant

Bargaining power of Customer

Introduction state of competition in an
Basic structure industry is a composite of Bargaining power of Supplier
competitive pressures
Rivalry among Current players

Threat from Substitute

Diagnosing the
competitive pressures
Helps in
Porter’s Five Forces
Assessing the strength and
Model
importance of each pressure

specific competitive associated with each

Identify
pressures of the five forces

Fierce

Strength of Pressure Strong

How to use it ? Evaluate (how strong the
pressures are) Moderate

Weak

whether the
collective strength Conducive to earn
Determine
of the five attractive profits.
competitive forces
 other firms are
Profitability tends blocked from
to be higher entering the
industry.

Increase supply
New productaion
capacity
New entrants can Lower Price
New entrants and
reduce industry
Profitability
profitability Reduce the market
share of the existing
firm

Existing firms can

try raise barriers to
entry
Threat of New
Entrants
Economic forces
that slow down or
meaning
impede entry by
other firms

Capital requirements

Barriers to entry Economies of scale

Product
differentiation

Can be as follows Switching cost

Brand identity

Access to
distribution channel

Possibility of
Aggresive retaliation
 other firms are
Profitability tends blocked from
to be higher entering the
industry.

Increase supply
New productaion
capacity
New entrants can Lower Price
New entrants and
reduce industry
Profitability
profitability Reduce the market
share of the existing
firm

Existing firms can

try raise barriers to
entry
Threat of New
Entrants
Economic forces
that slow down or
meaning
impede entry by
other firms

Capital requirements

Barriers to entry Economies of scale

Product
differentiation

Can be as follows Switching cost

Brand identity

Access to
distribution channel

Possibility of
Aggresive retaliation
 Business sell
products

Understanding A product can either

Product and Industry a good or service Tangible, Intangible
- Product
Market

Quality
Price is determined
by
Marketing

Has a price Targeted group

Business are working

Have Certain
on reducing cost as Because of competition
Characteristics
per market price

Cumulative an important
Features that deliver
experience from component of
satisfaction
purchase to end is product feature

Around which all

Center of the
strategic activities
business
revolve

Pivotal for business Production

Driving force behind Quality

all business Enables
activities Marketing

Logistics
 Important for
strategic choice

Sales
Relationship between for a product
Time

"S" shaped curve

lack of awareness on
Slow sales growth the part of
customers

Competition is
Introduction
negligible

Price is high

Market is limited

demand expands diagnose a portfolio in order to establish

rapidly, of products (or the stage at which
businesses) each of them exists.
Product Life Cycle prices fall,
Rapid market expansion may be a
Growth
acceptance. competition Business in feasible alternative
increases, Advantage of PLC Introductory and for businesses in the
growth phases introductory and
and market expands growth stages In this way, a
balanced portfolio
A product passes Depending on the
slowdown in the Mature businesses may be used of businesses may
Stages of Product through 4 successive diagnosis,
growth rate as sources of cash for be built up by
stages appropriate Mature Business
investment in other businesses exercising a
strategic choice can
competition gets which need resources. strategic choice
be made.
tough based on the PLC
combination of strategies concept.
Maturity Market - Stabilises like selective harvesting,
Declining Business retrenchment, etc. may be
due to stiff adopted for declining
Profits - down
Competition businesses

organizations have
to work to maintain
stability.

New Product
Sales and Profit Fall down sharply
replaces the existing
Decline
Diversification
Strategies
Retrenchment

Same stage wise

Product Life cycle analysis can be used
for businesses
 which explains the
efficiency increase
akin to a learning
gained by workers
curve
through repetitive
productive work.

as a firm
accumulates
experience in terms
of a cumulative
Based on
unit costs decline volume of production
Phenomenon
we learn as we grow

larger firms in an industry About the charts and

thereby gaining a
would tend to have lower unit More Resources for Audit
Implication competitive cost
costs as compared to those
advantage.
for smaller companies,
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Economies of Scale
Experience Curve
results from variety of factors
Product redesign
- -
Technological
improvements Neeraj Arora
~
Business
They gain experience
organisation grow -
-
Advantage over
Experience provide
- competition
Features -
Experience is key
barrier to entry
-
Stronger experience
Large Organisation Possess
effects
- -

G
considered a barrier for new firms
contemplating entry in an industry
Relevant for
different areas of SM
used to build market share and discourage
competition
D
Understanding Product/Industry

Product +

3
o -

o
- Product ete cur
-
- - VCA
m
O

·
Industry/Environment Analyses

3
mod
·
Porter 5 Forces

·
Attracticness of Indusing

Curv -
·
experience
· value Creation o &

⑧ Marker & Custome

· Market

·
custome

Customer
·
Benamou
 Activities
Support
Procurement refers to the activities involved in acquiring the
Promoument
- resources an organization needs.

It refers to how the resources and raw materials for a product or service are
sourced and how suppliers are found.

is not about the actual resources or materials themselves, but rather about the
processes and activities involved in procuring these resources

It is closely related to inbound logistics and operations

Technology Development

Technology development refers to all the software, equipment, hardware,

procedures, and technical expertise that are used in the transformation of raw
materials into finished products or services.

Related to
May be

·
Product

· Process

· Particular Resource
 Human Resource
Management
·
Important Area

· Transcends all Primary Activities

Includes Reanching training

Managing
·
, , ,
- -

Developing , Rewarding
-
-

the Human Resour

Infrastructure
O Planning
· Activities Related to
· Finance

ergal
·

Accounting
·

·
Quarry Assurance
Information Myr
.
·

·
Grcial Support to Primary Activities

·
Infrastructure also includes culture
of organisation
Value creation is the process by which a business enhances the perceived worth of its product
or service, making it more desirable to consumers. This perceived worth often exceeds the
price that the business charges. As a result, consumers may perceive the product or service
as offering greater benefits or satisfaction compared to what they actually pay for it
Customer

· who buys Product Servic

or

· Provide Revenue - essential for existence

Marketing
·
Compare
Business for customers

[pricing
Customer
·
& Consumer - Practically

Synonymous

used
interchangeably
-

·
Thin Distinction
Consumers are the end-users of the product or service.
Customer: A customer is an individual or entity that purchases the product or service. This does not necessarily
mean they are the end-user. For instance, a parent who buys a toy is the customer, but the child who plays
with the toy is the consumer.

· Business-Routnely Research

characristics consumer
-
of thur

- to FINETUNE their Marketing

strange
evels
Adjust Inventory
-

Albe
Demographics
Frequently Cargorised
·
-
on

income ele to duwlob

age ,

custome Profile .

a perfect
 ⑮ mer
Mausi. -

Essential marketing component of strategic business plan

E
Identifying target customers, determining their wants and defining how product will meet
those wants 30
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-

-
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Customer analysis includes &

O the administration of customer surveys,

-

the study of consumer data,

-
6

the evaluation of market positioning strategies, &

development of customer profiles, and > O

=
-

- - O

the selection of the best market segmentation techniques. -

~
-

creditors. -
-
Understanding consumer needs involves information from various parties like buyers, sellers, and

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Exam entation
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·
Senior

·
Donbf Solving
 competitors

an application of
“competitive
intelligence”
 Issues to be considered
STRATEGIC
for strategic analysis
ANALYSIS

Consideration to Strategy evolves

Meaning Why?
be kept in Mind over a period of Balance Risk
time.

Industry &
Strategy
competitive Matching Internal
analysis of a Formulation.
conditions Identification of
firm's external Series of Decisions Potential with
Potential
environment Over Time External
Imbalances
and its internal Opportunities
resources and Company’s own
Otherwise competitive
capabilities (Without capabilities,
Strategic resources, Influenced by Workable Match Assess their
Analysis), Wrong internal Experience Over Perfection consequences
Strategy
strengths &
weaknesses &
market position
Managers Potential imbalances
No Competitive Needs constant responsible for are created because
Advantage review and revision strategic decisions of internal and
must balance external factors.
opportunities,
influences &
constraints.
Risk

Strategy Identification
& Selection
External risks- Internal risks-

After Undertaking the

occur because of above mentioned
occur due to forces within the
inconsistencies analysis, following
firm or are directly steps are taken
between strategies interacting with org.
& forces in the
environment
Short Time - Long - Time - Identify strategic Implement the
Organizational Inconsistencies with Select strategy Review strategies
alternatives operating plan
capacity is unable to the strategy are
Short-Time - Errors Long-Time - Changes
cope up with developed on
in interpreting the in the environment
strategic demands. account of changes
environment cause lead to obsolescence
strategic failure of strategy. in internal capacities
and preferences.

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