EXTERNAL ENVIRONMENT

What company might chose to

do?????

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 ECONOMIC

INDUSTRY ENV
SOCIOUCUTURE
New Entry
DEMOGRAPHIC
Power Of
Supplier
Power of Buyer
Substitute

POLITICAL Competitor GLOBAL

Environment

TECHNOLOGICAL 2
 General Env. is composed of elements in the
broader society that influence an industry and
the firm within it.

Demographic :
1. Population Size : India + China = @35%
World Population
2. Age structure
3. Income distribution: Standard, Purchase Power
4. Geographic distribution: Relocation of business
firm on basis of degree of support by govt.
Ex.. Asian paints moving from MUMBAI TO
TALOJA etc….
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Economic Segment : Nature and direction
of economy in which firm competes
1. Interest Rate
2. Personal Saving Rate
3. Business Saving Rate
4. Gross Domestic Product

Political Segment :
1. Taxation Law
2. Educational Policies
3. Labor training laws etc

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Socioculture Segment : Concerned with society
attitudes and cultural values.
1. Woman in Workforce : Number of female worker
indication of workforce diversity.
Japan 44% of woman workforce
1. Shifts in worker
2. Attitude towards work

Technology Segment : Includes institutions and

activity involved with creating new knowledge and
product,process and material
1. Product Innovation
2. R&D
3. New Communication Tech
4. Application knowledge
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Global Segment :
1. Political Event
2. Global Market
3. Different culture etc.

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Industry Environment :
FIVE FORCES MODEL OF COMPETITION
1. Threat of New Entry :
Technology, Capital Requirement
2. Bargaining Power of suppliers :
Substitute product not available
Suppliers are credible threat to integrate
foreword into the buyers industry.
3. Bargaining Power of Buyers :
May switch to another product,company at little
cost Backward Integration : Reliance, Asian
Paints. Etc
4. Threat Of substitute Products : Diesel to Bio-
Diesel, PET BOTTLES TO GLASS BOTTLES
5. Rivalry among competition : Price,Quality and
innovation
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Competitor Analysis :
Competitor intelligence : Gathering of data abt. competitors
objective, strategies, assumption & capabilities.
Component :
Future Objective :
How do our goals compare with competitor goals ?
Where will emphasis be placed in future ?
What is attitude towards risk?
Current Strategy :
How we are currently Competing ?
Does strategy support changes?
Assumptions :
Do we assume future will be volatile?
What assumption our competitor holds?
Capabilities :
Strength and weakness
Compare with competitor 8
RESPONSE :
What will our competitor will do in future?
Where do we have advantage over our competitor?
How will this change our relationship with competitor?

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THANK YOU

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