Vignana Jyothi Institute of Management

Hyderabad

Post Graduate Diploma in Management

Batch 2019-2021

PMCI- Business Analysis Activity Guidelines

Introduction

The Business Analysis Programme called Product-Market-Company-Industry (PMCI) analysis forms

an important component of PGDM Programme at VJIM. Under this programme, students undertake
a ten days activity on a company allotted by the institution and prepare a report of minimum 20
pages. The programme carries a weightage of 3 credits.

Objectives:
 Help the student gain a thorough understanding of a company and its operations
 Help student to understand the application of the concepts learned in the classroom
 Sharpen the writing skills of the student

Nature of the activity

 Company to be studied is allotted by the institution to the student.

 Comprehensive study should be done by the student regarding the aspects relating to Product-
Market-Company-Industry using sources like the company website, annual reports of the
company and other online databases.

Indicative/suggested contents of the study will be in the following sequence

1. Product:

Objective: To understand the details of the products offered by the company

 All the products offered by the company – Product line(s)

 Thorough study of at least three product lines, which includes
o History about the product
o Details of the product
o Characteristics
o Usage
o Durability
o Utility
o Composition
o Product extension
o Any other details pertaining to the product
2. Market

Objective: To determine the attractiveness of a market and to understand its evolving

opportunities and threats as they relate to the strengths and weaknesses of the firm

 Market structure
 Market size (Current and future) – Information from the company websites, Annual
Reports, government data and databases like CMIE etc.
 Market growth rate – Study growth drivers like demographic information, sales
growth in this product and complementary products
 Market share
 Market profitability – While different firms in the market will have different
profitability, the average profit potential for a market can be used as a guideline for
knowing how difficult it is to make money in the market.
 Nature of competition
 Geographical markets

3. Company

Objective: Study the company assigned

 History and origin

 Profile
 Location
 Leadership
 Organisation/management structure
 Innovative practices of the company
 Financial health and performance of the company (Latest)
 Movement of stock prices etc.
 HR Practices
 Corporate Social Obligation of the company
 Analysts (At least two) comments on the performance of the company
 SWOT Analysis
SWOT analysis template

Strengths Weaknesses

Opportunities Threats

4. Industry

Objective: To understand the competitive dynamics of an industry. Industry analysis, for an

entrepreneur or a company, is a method that helps it to understand its position relative to other
participants in the industry.

 Significance of the industry

 Porter’s five force model

Introduction and definition

Porter’s Five Forces is a tool for evolving business strategies on the basis of the nature and
level of competition in an industry. The name comes from Harvard professor Michael Porter
and the “Five Forces” concept that he devised for understanding the competition in an
industry and, therefore, its “attractiveness”—the ease with which profits can be made in the
industry.
Put another way, Porter’s Five Forces concept helps understand where “power” lies in a
given situation—the analysis tells you where you are in relation to your competitors, and
ultimately, the chances of your own profitability in your business situation compared with
those of your rivals.

It is used both by new entrepreneurs planning to enter an industry and by established

corporations reviewing their sustainability in a sector.

  Porter’s Five Forces Model | Template

The five forces that influence a company’s performance in an industry or business situations are:

1. The bargaining power of buyers

2. The bargaining power of suppliers
3. The competitive rivalry among the competitors in the industry
4. The threat of substitute products
 5. The threat of new entrants, or barriers to entry into the industry

Five Forces example: Fast-food industry

To understand the impact of Porter’s Five Forces model, let us now look at each of the forces as
though it is acting on a particular industry, say the fast-food industry of burgers, pizzas, and
sandwiches.

 (1) Bargaining power of buyers

The buyers have high bargaining power in a place where there are many fast-food joints, as they can
choose any one of them.

For example, if the queue is too long at one outlet, the buyer can probably go to another outlet just
across the road. The determinant of the high buyers’ bargaining power, in this case, is the high
number of sellers to cater to the buyers. But the high bargaining power of the buyer is a disadvantage
to a fast-food restaurant operating at the place.
 (2) Bargaining power of suppliers

The main suppliers in the fast-food industry are dough, dairy produce, and meat vendors. Their
bargaining power is low since there would be a number of suppliers of these items.

The determinant of the low suppliers’ bargaining power here is the lack of differentiation among the
suppliers’ products (the existence of a number of reliable suppliers). So, this is an advantage for a
fast-food outlet or chain.
 (3) Competitive rivalry among competitors
The industry is chock-a-bloc with competitors—there are big brands such as McDonald’s and KFC,
and medium and smaller brands, including local restaurants and bakeries, selling a variety of snacks
and quick-eats.

The determinant of the high competition is the high number of eateries selling quality products. This
situation is a disadvantage to a fast-food eatery.
 (4) The threat of substitute products

Restaurants and other eateries are quite capable of selling the types of products sold by a fast-food
joint, such as a burger or a sandwich. So, the threat of substitute products is quite high for a fast-food
restaurant.

The determinant of the high threat of substitutes is the lack of differentiation among the products
available (except perhaps in the case of McDonald’s or KFC, whose products are seen as unique)—
obviously a disadvantage for a fast-food outlet.
 (5) The threat of new entrants, or barriers to entry

An entrepreneur requires a complex set of permissions to open a restaurant. In addition, good

infrastructure needs to be built up. Then there is the task of creating unique products to set apart the
restaurant from its competitors, which may include multinational chains.

Any businessperson would baulk at the prospect of entering this business. The determinant of the
low threat of new entrants is the requirement of a number of permissions (tough barriers to entry)
and the established products. Therefore, this is an advantage for a fast-food joint.
 

The competitive scenario

From the analysis above, we infer the following scenario of competitiveness in the fast-food
industry:

 High bargaining power of buyers: A disadvantage for a fast-food outlet

 Low bargaining power of suppliers: An advantage
 High competitive rivalry among competitors: A disadvantage
 High threat of substitute products: A disadvantage
 Low threat of new entrants: An advantage
There are two advantages compared with three disadvantages. Therefore, unless a fast-food eatery is
able to create unique products and develop a reputation for service and hygiene, it will soon go out of
business.

The Porter’s Five Forces analysis indicates a high level of competitiveness and a low level of
attractiveness for the fast-food business.

Porter’s Five Forces, by helping evaluate the competitiveness in an industry, enables companies to
come up with strategies to reduce buyers’ and suppliers’ power, reduce competition and the threat of
substitutes, and stop the entry of newcomers. Changes in any one force will compel companies to
reassess their market situation.
 
Explaining high profits, big losses

The Five Forces model is also useful for understanding why high profit is the rule in some industries,
while huge losses are the norm in some other industries.

For example, in the soft drinks industry, Pepsi and Coca Cola are able to sustain profits, whereas
airlines face a perpetual struggle to come out of the red. Why?

A Five Forces analysis of the two industries would give many reasons.

Just a couple of them here:

(1) while Pepsi and Coca Cola do not face much buyer threat (the millions of customers have little
individual influence on the business), buyer threat to airlines is high (lower fares can take away
customers);

(2) Pepsi and Coca Cola hardly face any threat of substitutes (what can replace them?), while airlines
face a high threat of substitutes (from airlines offering lower fares or a better level of service).

You can yourself find the determinants of each of the five forces in any industry and the impact of
the forces by using the framework below. The model can also be used to look at personal situations
—for example, a career change.
 Limitations of Porter’s Five Force Model

The Five Forces model was conceived by Michael E. Porter of The Institute for Strategy and
Competitiveness based at the Harvard Business School.
Porter, who presented the model in his work Competitive Strategy: Techniques for Analyzing
Industry and Competitors, developed it because he felt that the SWOT (strengths, weaknesses,
opportunities, and threats) analysis was not specific enough for the requirements of industry.
There have been criticisms of the Five Forces model from economists, who put forward examples of
other forces that may affect an industrial scenario, such as government regulations.

Porter implicitly dismissed these criticisms, saying that these were not “forces” as such, but only
aspects that affected them.

Business managers use the Five Forces model mainly to initiate an analysis of competitiveness. They
depend on other frameworks to develop their strategies.

All said, the attractiveness of an industry to a company depends on the type and quality of the
company’s organisational and financial resources. In the corporate jungle, it is the fittest that
survives.

Study Mode:

Self-study (Should seek support from mentors)

Evaluation:

The evaluation of PMCI Analysis will be for 100 marks

Execution:

Each student has been allotted a company and a mentor for completion of the PMCI Analysis. The
mentor will assist the students with the completion of the report and evaluate the same.

Submission of the report:

Report to be submitted by 20th December 2020

Format for Report:

FORMAT FOR THE FINAL PMCI REPORT

 Certificate signed by mentor
 One-page introduction
 PMCI - Product, Market, Company and Industry
 Learning 
 Conclusion
 References

All the references (including all the links and articles referred to)

Note: Never mention Google or Wikipedia as reference. Browse the company website and
databases for information

Font size should be Times New Roman 12pt, Heading 16pt and 1.5 line spacing.

*Any plagiarism shall be viewed seriously and the students have to rework.