MBA ZG611/MM ZG611/POM ZG611/QM ZG611
Strategic Management and Business Policy
BITS Pilani
Pilani | Dubai | Goa | Hyderabad
Ambuj Gupta, Nirankush Dutta, Parag Rastogi, R. Raghunathan, Rahul Kaurav
BITS Pilani
Pilani Campus
Topic 3
Environmental Analysis and Industry Analysis
Contents
1. Environmental Scanning
2. Analyzing General Environment
3. Analyzing Task Environment
4. Industry Analysis
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Environmental Scanning
• What is Environmental Scanning
– the monitoring, evaluation, and dissemination of information
relevant to the organizational development of strategy
• Why is environmental Scanning Used?
– Organizations use it as a tool to avoid surprises and work on
making its business long-term
• How is environmental scanning done?
– What tools can organizations use
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External Environmental Variables
• Natural environment
– Form an ecological system
– Includes physical resources, wildlife, and climate that are an inherent part of existence on Earth
• Societal environment
– Form a social system
– Includes general forces that do not directly touch on the short-run activities of the organization,
but that can influence its long-term decisions. Factors like economic, technological, political-legal,
sociocultural
• Task environment
– Forms a system that directly impacts the organization.
– Includes factors like government, local communities, suppliers, competitors, customers, creditors,
employees/labor unions, special-interest groups, and trade associations
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Analyzing General Environment
The general environment includes broad external factors that affect all businesses in an industry but are not
directly linked to the company’s daily operations. These factors create opportunities and threats over the long
term. (STEEP Analysis).
• Sociocultural Factors: Changing consumer preferences, demographics (e.g., increasing health
consciousness driving demand for organic food).
• Technological Factors: Innovations, automation, AI (e.g., the rise of AI impacting customer service in all
sectors).
• Economic Factors: Inflation, interest rates, economic growth (e.g., a global recession affecting all
industries).
• Environmental/Ecological Factors: Climate change, sustainability concerns (e.g., stricter carbon emission
regulations for industries).
• Political-Legal Factors: Government policies, trade regulations (e.g., data privacy laws like GDPR affecting
tech firms).
• Example: The shift toward renewable energy impacts all car manufacturers, but it does not directly dictate
M&M’s daily business decisions.
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Table 4-1: STEEP Analysis: Monitoring Trends in the
Societal and Natural Environments
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Demographic trends in India
SOURCES: Developed from Pew Research Center analysis of census bureau population projections (September 3, 2015),
([Link]
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Source : Times of
India
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Current Sociocultural Trends
• Increasing environmental awareness
• Growing health consciousness
• Expanding seniors market
• Impact of millennials
• Changing pace and location of life
• Changing household composition
• Increasing diversity of workforce and markets
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Technological Breakthroughs
• Portable information devices and electronic
networking
• Alternative energy sources
• Smart equipment
• Much better quality automobiles
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Categories of Risk
• Climate change
• Regulatory
• Supply chain
• Product and technology
• Litigation
• Reputational
• Physical
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Table 4-3: Some Important Variables in
International Societal Environments
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4-13Section 3 of UGC Act, 1956
Who Killed the Electric Car?
[Link]
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Tesla Story
• Why it matters? Environment scanning is a continuous
process.
• [Link]
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STEEP Analysis
• Tesla’s Success in the EV Market
– Social: Growing consumer awareness about climate change and
sustainability.
– Technological: Advances in battery technology and AI for autonomous
driving.
– Economic: Government subsidies for electric vehicles (EVs) and rising
fuel costs.
– Environmental: Regulations on carbon emissions and push for
renewable energy.
– Political: Favorable policies in countries like the U.S., China, and Europe
to promote EV adoption.
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Analyzing Task Environment
• The task environment consists of specific external forces that have a direct and immediate impact on
an organization’s operations. These factors influence the company's ability to compete and function
effectively. Why it matters? Helps in strategic decision-making, risk management, and identifying
opportunities.
• Customers: Changing consumer demands (e.g., M&M customers demanding longer battery life).
• Competitors: Rival firms impacting market share (e.g., Tata and BMW launching electric vehicles to
compete with M&M).
• Suppliers: Availability of key resources (e.g., chip shortages affecting M&M's production).
• Regulators: Industry-specific laws and compliance requirements (e.g., Government EV tax incentives
affecting sales).
• Distributors: Channels that deliver the product to customers (e.g., Company using a direct-to-consumer
sales model).
• Example: If M&M faces supply chain disruptions due to a semiconductor shortage, it directly affects
production and sales.
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Figure 4-1: Scanning the External Task
Environment
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How to Scan the Task Environment?
• Market Research: Customer surveys, industry reports,
and feedback mechanisms.
• Competitor Analysis: SWOT analysis, benchmarking, and
industry trends.
• Supply Chain Monitoring: Supplier evaluations, pricing
trends, and risk assessments.
• Regulatory Tracking: Compliance audits, legal updates,
and policy monitoring.
• Distributor & Partner Insights: Performance metrics,
collaboration effectiveness, and new channel opportunities.
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Rise of Q-Commerce/Blinkit
General Environment Factors:
• Economic: Rising disposable incomes in urban India drive demand for convenience shopping.
• Technological: Smartphone adoption and digital payments enable instant ordering.
• Political-Legal: Government regulations on gig workers affect Blinkit’s delivery workforce
(Insurance).
• Sociocultural: Increasing preference for instant deliveries in metros and Tier 1 cities.
• Environmental: Traffic congestion and sustainability concerns push for eco-friendly delivery
options.
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Rise of Q-Commerce/Blinkit
Task Environment Factors:
• Customers: Urban millennials and Gen Z demanding ultra-fast deliveries.
• Competitors: Zepto and Swiggy Instamart launching aggressive discount campaigns.
• Suppliers: FMCG brands supplying inventory for fulfillment centers.
• Regulators: Compliance with FSSAI (Food Safety) and labour laws for delivery riders.
• Distributors: Dark Stores/Last-mile delivery network ensuring 10-minute delivery promises.
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Industry Analysis
– An Industry is a group of firms that produces similar products or
services
– An in-depth examination of key factors within a corporation’s
task environment
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McDonald
• [Link]
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
McDonald
• Competitors: Other slow-service diners
• Suppliers: Food vendors providing equipment, buns,
patties, and shakes.
• Customers: Families and busy workers looking for quick
meals.
• Regulators: Health department regulations on food
safety.
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A Startup wants to enter ride-sharing market
• General Environment
• Task Environment
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A startup wants to enter the ride-sharing market
General Environment (STEEP):
– Social: Urbanization and increasing smartphone penetration.
– Technological: Availability of GPS and mobile payment
systems.
– Economic: Rising disposable incomes but price-sensitive
consumers.
– Environmental: Traffic congestion and pollution concerns.
– Political: Regulatory hurdles
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
A startup wants to enter the ride-sharing market
• Task Environment:
– Competitors: Ola, Uber, Blu and local taxi services.
– Suppliers: Vehicle manufacturers, fuel providers, drivers.
– Buyers: Price-conscious urban commuters.
– Substitutes: Public transport, walking, cycling.
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We are not ready
• Why it matters? Environmental impact can be at times
can be overwhelming - more than what we can plan for.
• [Link]
we_re_not_ready?spm=5aebb161.2ef5001f.0.0.14b0517
15bwm4E
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