service marketing

1. PGPM Sem III(Class of 2013)
Business Strategy I (2012-2013)
Enviornmental Scanning Part I
Macroenviornment,Industry Analysis,Firm Analysis,CSF
Shreeniwas V Bidwai
Adjunct Professor

2. Understanding the Factors that Determine a
Company‟s Situation
• Diagnosing a company‟s situation has two facets
– Assessing the company‟s external or
macro-environment
• Industry and competitive conditions
• Forces acting to reshape this environment
– Assessing the company‟s internal or
micro-environment
• Market position and competitiveness
• Competencies, capabilities, resource strengths
and weaknesses, and competitiveness

3. From Thinking Strategically about the
Company‟s Situation to Choosing a Strategy

4. Thinking Strategically about a Company‟s
Macro-environment
• A company‟s macro-environment includes all relevant factors and
influences outside its boundaries
Diagnosing a company‟s external situation involves assessing strategically
important factors that have a bearing on the decisions a company‟s makes
about its
– Direction
– Objectives
– Strategy
– Business model
Requires that company managers scan the external environment to
– Identify potentially important external developments
– Assess their impact and influence
– Adapt a company‟s direction and strategy as needed

5. The Components of a Company’s Macro-environment

6. Which are the factors and forces in a
company’s macro environment having
the biggest strategy-shaping impact?

7. The company‟s immediate industry and
competitive environment

8. What is COMPETITIVE STRATEGY ?
„Competitive Strategy‟ encompasses:-
• Dealing exclusively with a company‟s business approach and actions to
compete successfully
• Specific efforts to please customers
• Offensive and defensive moves to counter maneuvers of rivals.
• Responses to prevailing market conditions
• Initiatives to strengthen market position.

9. “Competitive strategy is about being
different. It means deliberately choosing
to perform activities differently or to
perform different activities than rivals to
deliver a unique mix of value.”
• Michael Porter, Harvard Business School

10. PORTERS‟ GENERIC STRATEGY
APPROACH
Overall cost leadership strategy through cost
minimization
Focus
Differentiation

11. CSF(CRITICAL SUCCESS FACTORS)
• Continuous upgrading of • Brand Equity.
existing models and
introduction of new models. • Large range of models.
• Suzuki technology. • Timely market feedback as a
result of continuous
• High productivity research.
• World class manufacturing • Quality Program ‘Kaizen’.
and Quality.
• Hire Purchase Scheme.
• Economies of scale.
• Design Expertise –
• Strong dealer network. Introduction of new car
• Extensive service network models to meet the changing
all over the country with preference of the buyers.
utmost customer • Planned relationship
satisfaction.
marketing to upgrade product
• Excellent advertising and purchases.
mass communication efforts.

12. STRATEGIC ANALYSIS
Porter’s five forces Model
for
Indian Passenger Car
Industry

13. INDUSTRY LEVEL ANALYSIS
• Porter‟s Industry Analysis: Five Forces Model
The effective formulation of strategy needs a clear understanding of
competition. Competition in an industry is determined not only by existing
competitors but also by other market forces such as customers, suppliers,
potential entrants, and the existence of substitute products.
Understanding the level of competition is important because the level of profits
depends to a large extent upon the level of competition.
The strategist‟s goal then is to position the firm in such a way that it is not
vulnerable to the attacks of competitors. The position should give the firm
enough space to defend itself confidently.

14. Porter's Five Forces Model
Potential
entrants
Threat of
new entrants
Bargaining power Industry competitors Bargaining power
of suppliers of buyers
Suppliers Buyers
Rivalry among
existing firms
Threat of
substitutes
Substitute
products
Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)

15. STRATEGIC ANALYSIS
PESTEL ANALYSIS

16. OLITICAL
CONOMICAL
OCI
AL
ECHNOLOGIC
AL
NVIRONMENT
AL
EGAL

17. Macro – environmental influences – the PESTEL framework
1.What environmental factors are affecting the organization?
2.Which of these are the most important at the present time?In next2/3 Years?
• Political • Economic Factors
 Business cycles
 Government stability
 GNP trends
 Taxation policy
 Interest rates
 Foreign trade regulations
 Money supply
 Social welfare policies
 Inflation
 Unemployment
• Sociocultural factors  Disposable income
 Population demographics
 Income distribution • Technological
 Social mobility  Government spending on research
 Lifestyle changes  Government and industry focus on
 Attitudes to work and leisure technological effort
 Consumerism  New discoveries / development
 Levels of education  Speed of technology transfer
 Rates of obsolescence

18. Macro – environmental influences – the PESTEL framework
1. What environmental factors are affecting the organization?
2. Which of these are the most important at the present time? In
the next few years?
• Environmental • Legal
 Monopolies legislation
 Environmental protection
laws  Employment law
 Waste disposal  Healthy and safety
 Energy consumption  Product safety

19. Macro – environmental influences – the
PESTEL framework
• There are many factors in the macro-environment that
will effect the decisions of the managers of any
organization.
• Tax changes, new laws, trade barriers, demographic
change and government policy changes are all examples
of macro change
• It is particularly important that PESTEL is used to look
at the future impact of environmental factors, which may
be different from their past impact.

20. POLITICAL
• Many developed countries have offered a mix of credits and
tax subsidies as incentives for consumers to trade in old cars
for newer and more fuel efficient and eco friendly cars.
• Deregulation of petrol prices has happened.
• There is proposal to levy additional excise duty of Rs 80,000
for diesel cars.
• Additional duties on passenger cars in the offing in coming
Budget for 2012-13.

21. ECONOMIC
• Demographic Dividend -growing no. of young citizens with
higher disposable incomes.
• Rapidly growing Indian Automotive markets.
• Demand for export of small cars from India to developed
countries.
• Raw Material cost is the key cost constituent in four wheeler
industry.
• Inflation, Fluctuations in Fuel Prices & Interest Rates hike
by RBI.

22. SOCIAL
• The rising awareness of social status and changing
customer preference.
• Some of the 50 million existing users of 2 wheeler
will up grade to 4 wheelers.

23. TECHNOLOGY
• Need for more R&D efforts to develop efficient compact and
mid compact car engines and hybrid cars.
• Tata Nano (1 lakh car) is a successful example for
indigenous design with technological innovation.
• Honda – Civic is the only imported car in India deploying
hybrid technology. This may be followed by others.
• Cars which can use alternate fuels like Diesel, CNG, LPG,
Ethanol blended petrol are being manufactured in India
now.

24. ENVIRONMENT
• Environment - Indian and global emerging markets for
various models of cars particularly small cars.
• Reduction in CO2 emission.
• All players will be under pressure to introduce Euro-IV
and Euro-V compliant features in all their cars. In
addition ELV regulations will have to be imposed by
Govt. of India on the auto industry.

25. LEGAL
• All players would be under pressure to give more attention to
safety and environmental features and compliance(emission
norms) of laws and regulations enacted time to time (eg.
Bharat IV)

26. Macro – environmental influences – the
PESTEL framework
• There are many factors in the macro-environment that
will effect the decisions of the managers of any
organization.
• Tax changes, new laws, trade barriers, demographic
change and government policy changes are all examples
of macro change
• It is particularly important that PESTEL is used to look
at the future impact of environmental factors, which may
be different from their past impact.

27. Thank you