Assignment

Course title: Strategic management.

Course code: MGT4356 Section: C

Presented to:
ABU SALEH MD. SOHEL-UZ-Zaman
Professor of School of Business & Economics, UIU.

Presented by:
Name: Jannat Afrose.
ID: 111 171 258

Date of submisson: 23rd November, 2020.

Question 1: Is it possible to do business smoothly without having a good relationship with
the external environment? Yes or no, whatever it is, present your logic as clearly as
possible.

Answer: My point of view is no.it isn’t possible to do business smoothly without having a good
relationship with the external environment. The external environment plays a condemnatory role
in shaping the future of entire organizations. The external environment is made up of supplier,
customers, distributers, competitors. It is crucial to have a good relationship with external
environment. Because suppliers are those who provide raw material which is used to produce the
final goods. The distributers are those who carry the product and reach the product to the
customers. Customers are those who buy the product which helps the company to make profit.
Every organization has competitors. If the company does not know its competitors very well so
the company does not know itself. Through the competitor’s company can measures its success.
We also know that the linkage between the external environment and the organization cannot be
easily copied. And this good linkage will help the organization to provide a superior performance
in the market. We can see that every significant activities are done by the external environment.
Having a good relationship with the external environment a company gets competitive advantage
as well because when the organization takes raw materials from the supplier and give the
payment on time so that the supplier considers them to provide the best raw material first. For
example. Facebook has a good relationship with supplier that’s why supplier first show their any
new software, servers, equipment to the facebook.as a result Facebook gets the initial
opportunity to get the best software in the markets. There must be a good given and taken
relationship with the external environment because this given and taken relationship makes the
relationship so strong. So, company should give commission on time to the distributers and
provide a quality product to the customers so that customer prefer to buy first from that
company. This all thing helps the company to create superior customer value than competitors.
So as strategist I would advise Mr. Sakib that, the Company should develop a good relationship
with its external environment which helps them to step ahead on business trade than its
competitors.
Question 2: In order to analyze the general business environment which among the
PESTEL and Scenario based analysis would be more appropriate and why-explain.

Answer: PESTEL analysis is a tool used by marketers to analysis and monitor the macro-
environment factors that have an impact on an organization. Through the PESTEL the
organization can collect information about political, economic, social, technological,
environment and legal information. It is very popular worldwide because of its simplicity.
Whereas Scenario analysis is a process of analyzing future events by considering alternative
possible outcomes. From my perspective scenario analysis would be more appropriate for
analyzing the general business environment. Because sometimes the situation may come that
company cannot put it under the six categories of PESTEL Analysis. Scenario analysis is more
relevant and flexible for the business decision. Above the case Mr. Sakib Zaman wants to expand
his business. He wants to examine several issues in depth. We know that when company
investigates the situation and wants to get information in depth regarding the certain context that
time scenario analysis is best. In scenario analysis the manager, the decision maker or data
analysist has the freedom to categorize the data the way they want but the data must be
representative according to the current situation. If Mr. Sakib Zaman collects the data through
scenario analysis so it would be more matching with his situation and it would be more effective
and relevant for his decision making as this analysis is done for precise information beside this
method is also flexible. So, if Mr. Sakib zaman wants to expand his business and make it more
competitive, he needs to investigate where the demand of his product is at peak level. Based on
that he needs to establish his business or supply it to the retailer where the demand for his
product is high. Besides he can also make a survey in high class area and setup his business
according to the attractive locations where he will provide a high-quality handicrafts product and
bring in god profit margin in his business. For example. Well food it is a Chittagong based
business. When they thought to give shop in Dhaka, they give large shop in enchanting location
where they provide variation of food and they put less variation of food where a less demand of
their food. So, because Mr. Sakib Zaman wants to enlarge his business so he can give a shop in
enchanting location and supply in those where the demand is higher and this issue is area based
and area-based information cannot be collected through PESTEL analysis. Scenario analysis is
narrower down focused analysis. Mr. Sakib Zaman can get the most precise and accurate
information about the area through scenario analysis. Besides this will also reduce the
uncertainty of his business as a perfect scenario of the demand of his product can be known.

Question 3: Analyze the ‘degree of threats of substitutes’ from the other local companies
and suggest how to minimize those threats.
Answer: Mr. Sakib is already an owner of local handicraft manufacturing company. He is
thinking of making his business more competitive with the expansion of his business. As Mr.
Sakib is not the only handicraft manufacturer, there are others competitors who makes handicraft
products. So, Mr. Sakib has a threat of substitutes of his product as there already competitors
exist in the market. Some of the threats of substitutes for Mr. Sakib’s company which may be
stronger than usual are discussed below:
I) Switching Costs: If there are very little of no switch prices for a customer, then there's
a lot of an opportunity that Clay Classic Ltd (CCL) explore and give to a lot of
enticing substitute. With the absence of different factors like whole loyalty or
differentiation, the selection to substitutes won't be a troublesome one for the
customers. Besides insufficient value in the product of CCL will also diverts
customers to search substitutes goods.
II) Product Price: If substitutes are priced a lot of moderately, then there is also a lot of
risk of consumers switch product from to CCL’s product to other substitute product.
Any move to price higher than substitutes may lead to consumer migration and loss
profits.
III) Product Quality: If the standard of substitute product is more than that of Mr. Sakib’s
product, then it's a lot of probably that buyers will creates differences and will switch
to other product.
IV) Product Performance: If a substitute product functions at a similar level or at a higher
level than Mr. Sakib’s product than there's an opportunity that buyers can need to
change over.
As the threats of substitutes where determined there is also ways in which these threats can
be minimized this are:
 I) Differentiation: Mr. Sakib through making aa eccentric product offering, customers
will be able to persuade their needs through a discrete product and cannot be simply
manipulated by substitute product.
II) Customer Value: clients usually hunt for the goods that provides the best worth for
money. This means that customers maximum benefits are being acquired by paying
out the minimal amount of money. If Mr. Sakib can able to delivery this value for a
customer than they may not need to look at other products.
III) Brand Loyalty: Mr. Sakib’s company must attempt to form and maintain a powerful
complete loyalty among their customers. This helps stop straightforward switchovers
to alternative brands or substitute product.
So, this are the threats of substitutes that will arise when Mr. Sakib company try to sell product
to the customers and to minimize those threats, he needs to follow the above solution in order to
make sustainable competitive advantage in the market and survive for a longer period of time in
the market.