LECTURE 3

BUSINESS CONTEXT ANALYSIS

By
Dr. Nisha Palagolla
18th August 2023

[email protected]
LEARNING OUTCOMES
On successful completion of this lesson, the learner will be able to:

LO1: Define a business and business context.

LO2: Understand the major elements of a business and how
businesses work.
LO3: Understand the types of business contexts and their
impact on business.
LO4: Discuss different tools and techniques for business context
analysis

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WHAT IS A BUSINESS?

Ø An individual or group of people have agreed a

common goal and are actively working towards
achieving this goal by supplying products or services
to customers.

Ø A legally recognized organization designed to provide

goods, services or both to consumers, businesses and
governmental entities.

Ø A form of activity carried out with the purpose of 3

earning profits for the benefits of the stakeholders.
BUSINESS OBJECTIVES

Contemporary
business organizations
can not only focus on
profit.

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WHAT IS BUSINESS
CONTEXT/ENVIRONMENT?
Ø Business environment refers to any kind of internal or external
factors and forces which have an effect on the functioning of
the business in a positive or negative way.

Ø Businesses do not function in an isolated vacuum.

Ø The extent to which a business thrives depends on the manner

in which it interacts with its environment.

Ø Businesses can not remain passive to the environment.

Ø To be successful, need to recognize different elements of the

environment, respect, adapt to or have to manage and influence
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them.
TYPES OF BUSINESS ENVIRONMENTS

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IMPORTANT CHARACTERISTICS

BUSINESS BUSINESS CONTEXT

Ø An open system Ø Inseparable part of business
Ø Change is constant Ø Dynamic
Ø Risk element Ø Uncertain
Ø Shared goals Ø Multifaceted
Ø Hierarchy of staff Ø Interrelatedness
Ø Competition Ø Complex
Ø Environmental impact Ø Relativity
Ø Short-term and long-term impact
Ø Positive and negative impact
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Including but not limited to
BUSINESS AS A SYSTEM

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MAJOR ELEMENTS OF A BUSINESS

Ø Vision
Ø Mission
Ø Values
Ø Goals & Objectives
Ø Strategies Strategic
Ø Structure Plan
Ø Culture
Ø Processes
Ø Resources
Ø Success indicators
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ORGANIZATIONAL VISION

Ø A desired long term direction.

Ø An inspirational statement on where the organization
will be heading/achieving in the future.

Be a center of excellence in higher education with

national and international standing
University of Peradeniya

To be the trusted partner of first choice

Litro Gas
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ORGANIZATIONAL MISION

Ø A short statement of why an organization exists, what

its overall goal is and what the organization’s current
involvements in order to support its vision.

To deliver best-in-class products and services exceeding

customer/society expectations by consistently offering and
managing: value for money, customer relationships, cost effective
and efficient processes and cost efficient logistics.
Litro Gas
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ORGANIZATIONAL VALUES
Ø Organizational values are the guiding principles that
provide an identity for the organization with purpose
and direction to support its mission and vision.

Ø Trust
Ø Openness
Ø Teamwork
Ø Honesty
Ø Integrity
Ø Respect
Ø Professionalism 12
ORGANIZATIONAL GOALS &
OBJECTIVES

Ø Goals are desired long-term business outcomes.

Ø Objectives are SMART short-term targets.
Ø An organization may be having multiple goals to
support the mission.
Ø An organization may be having multiple objectives to
achieve a particular goal.
Ø All goals and objectives are strategically focused to
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support organizational mission and vision.

EXAMPLE: GOALS & OBJECTIVES
GOAL 1: Enhance quality of undergraduate programs
complying with international standards.

OBJECTIVES:
1.1 Upgrade undergraduate study programs meeting international quality standards.
1.2 Student Centered Learning.
1.3 Increase the quality and relevance of the existing postgraduate study programs.
1.4 Best performed AL qualified students attracted and enrolled to the University.
1.5 Motivate students to perform to the best of their abilities in all aspects of
University life.
1.6 High quality staff in all categories attracted, recruited and retained by the
University.
1.7 To develop student competencies needed to bridge the gap between employer
expectations and undergraduate skills.
1.8 Increase the employability of undergraduates.
1.9 Increase the enrolment of local and foreign students. 14

Source: University of Peradeniya

BUSINESS STRATEGIES

Ø Corporate level
Ø Business level
Ø Functional level
Ø Operational level

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STRATEGIC BUSINESS UNITS (SBUs)

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HOW STRATEGIES DEVELOP?

Vision

Mission

Goals

Objectives

Strategies 17
AN EXAMPLE

GOAL 1: Enhance quality of undergraduate programs

complying with international standards.

OBJECTIVE 1: Upgrade program specifications to meet

international quality standards.

STRATEGY 1: Curriculum development and revision.

ACTION PROGRAM 1: Establish curriculum development

committees in all faculties.

KPI: Number of workshops 18

ORGANIZATIONAL STRUCTURE
It is the way the pieces of an organization fits together.

Ø Centralized organizations: formal line hierarchy of staff &

functions.
Ø Decentralized organizations: activities are delegated away
from a central control.
Ø Divisionalized organizations: structuring the organization
into separate divisions.
Ø Matrix organizations: project based organizations
Ø Adhocratic organizations: adapting quickly to new demands
and operate fluidly (flat).
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Including but not limited to
CENTRALIZED ORGANIZATIONS

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DIVISIONALIZED ORGANIZATIONS

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DECENTRALIZED ORGANIZATIONS

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MATRIX ORGANIZATIONS

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ADHOCRATIC ORGANIZATIONS

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ORGANIZATIONAL PROCESSES
To understand how organizations work, it is necessary to consider
the various processes that take place within the structural
framework:

Ø Planning
Ø Organizing
Ø Staffing
Ø Leading
Ø Controlling 25
ORGANIZATIONAL CULTURE

Ø Organizational culture is more simply the personality of an

organization.
Ø It is difficult to define.
Ø It is a multidimensional phenomenon.
Ø It is relatively stable over a short period of time.
Ø It takes time to establish.
Ø It takes time to change.
Ø It makes a significant influence on employee behavior.
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TYPES OF CULTURE

Ø Power culture: Political

Ø Task culture: Work oriented
Ø Achievement culture: Result oriented
Ø Support culture: Mutuality & trust

Including but not limited to

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HOW BUSINESSES FUNCTION?

Strategy
STRATEGY
STRUCTURE
CULTURE &
PROCESSES are to be Processes ORGANIZATION Structure

tightly connected for the

effective functioning of any
business organization. Culture
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ENVIRONMENT - STRATEGY – STRUCTURE FIT

Higher Firm Performance 29

ENVIRONMENTAL ANALYSIS
Ø Business context analysis or environment analysis refers to the
studying and assessing of internal and external organizational
factors in a business environment.

Ø Business context analysis helps:

Ø Identifying the strategic position

Ø Choosing strategic options

Ø Implementing planned changes

You should apply models & tools to analyze the environment of an organization
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STRATEGIC POSITION ANALYSIS

Ø SWOT Analysis
Ø Value Chain Analysis
Ø BCG Matrix
Ø Porter’s 5 Forces Analysis

Including but not limited to

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STRATEGIC POSITION
SWOT Analysis:

Strengths Weaknesses Opportunities Threats

Stable financial Lack of expertise in New technology Changing consumer
performance some areas available in the preferences
market
Established brand/s Rigid management Underserved Larger competitors
markets

Years of experience Office politics Opportunity for Cost of technology

in the industry niche marketing

Location and no. of Centralized structure Favorable research Natural disasters

branches findings affected suppliers
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 STRATEGIC POSITION

Value Chain Analysis:

A systematic analysis of
how internal activities
interact with each other.
It helps to identify
sources of competitive
advantage. A company
can be competitive by
performing strategically
better than its
competitors.
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STRATEGIC POSITION

BCG Matrix:

A systematic
reviewing of an
organization’s product
portfolio helps with
long-term strategic
planning by
understanding its
current strategic
position in terms of
market growth and
market share. 34
STRATEGIC POSITION

Porter’s 5 Forces Analysis:

There are five forces that

determine the competitive
position of an organization
in the market.
It helps to identify the
strength of an organization's
current competitive
position.
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STRATEGIC OPTIONS & CHANGE ANALYSIS

Ø Ansoff matrix
Ø Porter’s Generic strategies model
Ø TOWS matrix
Ø Force- field analysis

Including but not limited to

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STRATEGIC OPTIONS

Product/Market
expansion options

Ansoff Matrix is a
marketing planning
model that helps a
business determine its
product and market
growth strategy.
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STRATEGIC OPTIONS

Options for
competitive advantage

The Generic
Strategies model can
be used to determine
the direction (strategy)
of your organization.

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STRATEGIC OPTIONS

Company growth
options

The TOWS Matrix is

a relatively simple tool
for generating strategic
options.
It is sometimes called
situational assessment
or situational analysis. 39
FORCE FIELD ANALYSIS

Driving forces Proposed Restraining

change forces

You should identify:

Ø Key factors that

support for the
proposed change.

Ø Key factors that resist

proposed change.

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RECOMMENDED READING

Ø Dhillon, B.S., Engineering Design: A Modern Approach,

Richard D. Irwin, Inc., Chicago, 1996.
Ø Dhillon, B.S., Creativity for Engineers, World Scientific
Publishing Co. Pte. Ltd., Singapore, 2006.
Ø Maggie Macnab, Design by Nature: Using Universal Forms and
Principles in Design, USA, 2012.
Ø Robin Lowe and Sue Marriott, Enterprise: Entrepreneurship
and Innovation, Elsevier Ltd., 2006.
Ø Edited by James C. Barrood, Entrepreneurship and Innovation:
Global Insights from 24 Leaders, Rothman Institute of
Entrepreneurship, 2010. 41
Q&A
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