Scanning the environment

Environmental scanning (External)

 Industry analysis
 Competitive intelligence
 Forecasting
 Synthesis of external factors
 ETOP Study
Internal scanning:
 Organizational analysis;
 resource-based approach;
 value chain analysis;
 Scanning functional resources;
 Strategic audit
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Notable Quotes

“It is not the strongest of the species that survive

(Dynasorous, Mammoth you see), nor the most
intelligent, but the most responsive to change
(Cockroaches would survive a Nuclear mayhem!)”
- Charles Darwin

Note: The italicized phrases are mine, not Darwin’s.

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Environmental Forces

Demographic

Political-Legal Economic

Technological Socio-Cultural

Natural

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Environmental Forces - Economic

 GDP
 Interest rates
 Money supply, FOREX
 Inflation rates
 Unemployment
 Wage / Price Control, Administered Price Regime
(Subsidy, Anti –Dumping)
 Devaluation
 Energy availability, cost (T & D losses, farmer’s
electricity/loan bill waiver)
 Disposable / discretionary income
 PPP (Purchasing Power Parity)

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Environmental Forces -Technological

 Infrastructure (roads, health, internet, banks & telecom)

 Government R & D, Private R & D spending
 Intellectual Property Rights (IPR)
 New Product Development (NPD)
 Productivity improvement through automation

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Population and Demographics

 Size  Household patterns

 Growth rate  Regional characteristics
 Age distribution  Movement
 Ethnic mix
 Educational levels

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Economic Environment

 Purchasing Power
 Income Distribution
 Savings Rate
 Debt
 Credit Availability

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Economic Environment

 Birth & death rate

 DINK (Double income no kids)
 Consumer activism
 Lifestyle changes
 Urbanization

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Social-Cultural Environment

Views of themselves

Views of others

Views of organizations

Views of society

Views of nature

Views of the universe

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Natural Environment

Shortage of
raw materials

Increased
energy costs

Anti-pollution
pressures

Governmental
protections
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Technological Environment

Pace of change

Opportunities
for innovation

Varying R&D
budgets

Increased regulation
of change
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Technological Environment contd…
Technological force
 Internet Biotechnology
 Space Science Superconductivity
bettering quality of lives, cost reduction, productivity/
efficiency increase, technology enabler, lowering of entry
barrier, facilitating knowledge economy and so on
Other than traditional decision makers like CEO’s and
CFO’s emergence of CIO’s and CTO’s
Tech heavy sectors
 Pharma Communication
 Electronics Aeronautics
 Automobile
Not so tech heavy
 Agriculture (Pre & post harvest) Textile
Forestry Majority of manufacturing
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Political-Legal-Governmental Environment

Increase in
business legislation
(Regulation /
Deregulation)

Growth of special
interest groups

Political stability

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Political-Legal- Government Environment contd…

Without exception all are affected by

 Tax and other laws – Mauritius, Macau are tax haven, liberal in outlook
makes a gambling resort of the world
 Bank norms (Disclosures, Confidentiality) – Swiss Banks attracting
investments worldwide
 Patent law regime and changes
 Environment protection laws
Though all are affected but some industries are more prone to political-legal-
governmental forces
 Subsidy dependent (Fertilizer & PSU oil companies in India)
 ITES (BPO, KPO, LPO)
 Military (Ordnance, Nuclear)
 Companies in B2B segment and government sole or major buyer

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Five / (six) Forces Determining Segment Structural
Attractiveness

Other
Stakeholders

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