Professional Documents
Culture Documents
Business Environment
Business Environment
An Introduction
An Overview
Business Environment
External Internal
Macro Structure
Micro Culture
Resources
Components of the External Environment
Economic
Demographic
Sociocultural
Industry
Environment
Competitive
Environment
Political/
Legal Global
Technological
Macro Environment:
PEST (PESTEL / PESTLE)
Framework
Politico-legal Factors
Economic Factors
Socio Cultural Factors
Technological Factors
Politico-legal Factors
This is the most important influence on
the regulation of any business.
How stable is the political environment?
Influence the Government Policy / Law on
your business
Government’s position on Marketing Ethics
Government’s policy on the economy
Government’s view on culture under religion
Political Factors - Contd.
Political System is responsible for Law Making.
Immediate laws which affect any business in
general are Central Excise, Sales Tax/ VAT,
Corporate Income Tax, Personal Income Tax &
Service Tax
Environmental Protection Law
Controls if any on Marketing Strategies
Like Marketing / Advertising of Cigarettes,
Tobacco, Alcohol etc.
Political Factors - Contd..
Control on Pricing
like sugar, drugs etc.
Government Policies on the Economy
Role of Public Sector
Role of Private Sector
Role of Joint Sector
Economic Factors
Economic System
Economic Structure
Economic Planning
Economic Policies
Economic Regulations
Economic Functioning
Economic Growth & Development
Economic Factors - Contd.
Advantage of Technology
In terms of Economies of Scale
New Discoveries & Innovations
Speed & Cost of Technology Transfer
Rate of Obsolescence
Other Factors
Judicial System
Insurance System
Banking System
Regulatory System
Infra Structure
Communication
Transportation
COMPONENTS OF MICRO
ENVIRONMENT
Customers
Suppliers : of material and funds
Competitors
Publics
Intermediaries
Micro Environment:
Five-Forces Analysis
The five forces are environmental
forces that impact on a company’s
ability to compete in a given market.
The purpose of five-forces analysis is to
diagnose the principal competitive
pressures in a market and assess how
strong and important each one is.
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Threat of New Entrants
Economies of Scale
Bargaining Bargaining
Power of Power of
Suppliers Buyers
Bargaining Power of Buyers
Buyer groups are likely to be powerful if:
Bargaining Bargaining
Power of Power of
Suppliers Buyers
Threat of
Substitute
Products
Threat of Substitute Products
Threat of
Substitute
Products
Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Industry
Environment
Competitive
Environment
Competitor Analysis
Assumptions
What assumptions do our
competitors hold about the future Response
of industry and themselves?
What will our
Current Strategy competitors do in the
Does our current strategy support future?
changes in the competitive Where do we have a
environment? competitive
Future Objectives advantage?
How do our goals compare to our How will this change
competitors’ goals? our relationship with
our competition?
Capabilities
How do our capabilities compare
to our competitors?
Competitor Analysis
Future Objectives What Drives the
How do our goals competitor?
compare to our
competitors’
Where will emphasis
goals? be
placed in the future?
What is the attitude
toward risk?
Competitor Analysis
Future Objectives What is the competitor doing?
How do our goals What can the competitor do?
compare to our
Where Current
competitors’ goals?Strategy
will emphasis be
placed inHow
the future?
are we currently
What is the attitude
competing?
toward risk?
Does this strategy
support changes in the
competitive structure?
Competitor Analysis
Future Objectives What does the competitor believe
How do our goals about itself and the industry?
compare to our
Where Current
competitors’ goals?Strategy
will emphasis be
placed in the future?
How are we currently
What is the attitude
competing?
toward risk? Assumptions
Does thisDo
strategy
we assume the future
support changes in the
will be volatile?
competition
What structure?
assumptions do our
competitors hold about the
industry and themselves?
Are we assuming stable
competitive conditions?
Competitor Analysis
Future Objectives What are the competitor’s
How do our goals capabilities?
compare to our
Where Current
competitors’ goals?Strategy
will emphasis be
placed in the future?
How are we currently
What is the attitude
competing?
toward risk? Assumptions
Does this
Dostrategy
we assume the future
supportwill
changes in the
be volatile?
competition
Whatstructure?
assumptions do our
competitorsCapabilities
hold about the
industry and themselves?
What are my competitors’
Are we operating under
strengths and weaknesses?
a status quo?
How do our capabilities
compare to our
competitors?
Competitor Analysis
Future Objectives Response
How do our goals What will our competitors
compare to our do in the future?
Where Current
competitors’ goals?Strategy
will emphasis be Where do we have a
placed in the future? competitive advantage?
How are we currently
What is the attitude
competing? How will this change our
toward risk? Assumptions relationship with our
Does this
Dostrategy
we assume the future competition?
supportwill
changes in the
be volatile?
competition
Whatstructure?
assumptions do our
competitorsCapabilities
hold about the
industry and themselves?
What are my competitors’
Are we operating
strengths under
and weaknesses?
a status quo?
How do our capabilities
compare to our
competitors?
Internal Environment