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Unit 2 - Strategic Management

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7 views13 pages

Unit 2 - Strategic Management

Uploaded by

aasthaverma992
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Environmental

Analysis
Frameworks
Presentation By,
Mukul Gupta
Faculty of Management
Corporate Trainer, KCMT
Environmental
Analysis
Frameworks
Environmental analysis involves understanding the external and
internal forces that influence an organization's performance. It's a
critical step for strategic decision-making, allowing businesses to
identify opportunities, threats, and competitive advantages.
PESTEL Analysis
PESTEL analysis is a framework for understanding the macro-environment of an organization. It considers six key factors:
Political, Economic, Social, Technological, Environmental, and Legal.

Political Factors Economic Factors Social Factors

These factors include government Economic factors such as interest Social factors encompass
policies, regulations, and political rates, inflation, and economic demographics, cultural trends, and
stability. They can significantly growth can influence consumer consumer preferences, which
impact an organization's operations spending and investment decisions. influence demand for products and
and profitability. services.
Industrial Organization (IO) &
Structure Conduct Performance
(SCP) Approach
The Industrial Organization (IO) approach focuses on the structure of an industry, which
determines the conduct of firms within it. The Structure Conduct Performance (SCP) model
suggests that industry structure influences firm conduct, which ultimately leads to market
performance.

1 Structure
This refers to the industry's characteristics, such as the number of competitors,
entry and exit barriers, and product differentiation.

2 Conduct
This refers to the actions of firms within the industry, including pricing,
marketing, and research and development.

3 Performance
This refers to the profitability and market share of firms within the industry.
Porter’s Five Forces Model
Porter's Five Forces model provides a framework for analyzing the competitive forces within an industry. It helps
businesses understand the attractiveness of an industry and the potential for profitability.

Threat of New Entrants Bargaining Power of Buyers Bargaining Power of


Suppliers
This force examines the ease with This force looks at the power
which new competitors can enter buyers have in influencing prices This force considers the power of
the industry. and other terms of trade. suppliers in setting prices and
dictating terms of trade.

Threat of Substitute Products Rivalry Among Existing Competitors


This force analyzes the availability of substitute This force examines the intensity of competition
products that can satisfy the same customer needs. among existing firms in the industry.
Understanding the Micro Environment:
Resource Based View (RBV) Analysis
The Resource Based View (RBV) shifts focus from the external environment to the internal resources and capabilities of
the organization.

1 Valuable Resources 2 Rare Resources 3 Inimitable Resources


These resources must These resources should be These resources are difficult or
contribute to the organization's scarce and not readily available impossible for competitors to
ability to create value for to competitors. replicate or imitate.
customers.

4 Non-Substitutable Resources
These resources should not be easily replaced by other resources or capabilities.
VRIO Framework
The VRIO framework is a tool for analyzing the strategic value of an organization's
resources and capabilities.

Factor Description Outcome

Valuable Does the resource or Competitive disadvantage


capability help the firm
exploit an opportunity or
neutralize a threat?

Rare Is the resource or Competitive parity


capability controlled by
only a few firms or no
other firms?
Inimitable Is the resource or Temporary competitive
capability difficult or advantage
costly to imitate?
Organized Is the firm organized to Sustainable competitive
exploit the full advantage
competitive potential of
the resource or
capability?
VRIO Framework
The VRIO framework is a tool for analyzing the strategic value of an organization's
resources and capabilities.
VRIO Framework
The VRIO framework is a tool for analyzing the strategic value of an organization's
resources and capabilities.
VRIO Framework
The VRIO framework is a tool for analyzing the strategic value of an organization's
resources and capabilities.
Using Resources to Gain
Competitive Advantage & Its
Sustainability
Competitive advantage is achieved when an organization can outperform its rivals in the
marketplace. Sustainability refers to the ability to maintain this advantage over time.

Cost Leadership
This strategy aims to be the lowest-cost producer in the industry.

Differentiation
This strategy focuses on offering unique products or services that are
perceived as valuable by customers.

Focus
This strategy concentrates on a specific customer segment or niche market.
Value Chain Analysis
Value chain analysis examines the different activities that an organization undertakes to create value for its customers. It helps to identify areas
for improvement and cost reduction.

Inbound Logistics Operations Outbound Logistics Marketing & Sales


This refers to the activities This involves the transformation This covers the activities related This encompasses activities
involved in receiving, storing, of raw materials into finished to the distribution and delivery of related to promoting and selling
and managing raw materials. products. finished products to customers. products to customers.

Customer Service
This focuses on providing support
and assistance to customers
after they have purchased a
product.
Value Chain Analysis
Value chain analysis examines the different activities that an organization undertakes to create value for its customers. It helps to identify areas
for improvement and cost reduction.

Inbound Logistics Operations Outbound Logistics Marketing & Sales


This refers to the activities This involves the transformation This covers the activities related This encompasses activities
involved in receiving, storing, of raw materials into finished to the distribution and delivery of related to promoting and selling
and managing raw materials. products. finished products to customers. products to customers.

Customer Service
This focuses on providing support
and assistance to customers
after they have purchased a
product.

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