The understanding of business environment helps the managers to identify 

threats.

What is meant by ‘threats’ here?

Explain how these threats are overcome.

Cite suitable examples.

Ans. Threats refer to the external environment trends and changes that will hinder a firm’s
performance.
Identify threats and early warning signals Environmental awareness helps an enterprise
in identifying possible threats in future, so that the enterpirse can take timely measures to
minimise the threats and its adverse effects, if any, e.g. when the new firms entered in the
mid segment cars (threat), Maruti Udyog increased the production of its Esteem car.
Increase in production enabled the company to make faster delivery. As a result, the
company captured a substantial share of the market and became a leader in this segment.

n the given context, threat refers to the dynamic external environmental

trends and all other changes that are likely to affect the business.
The external environmental trends such as technological improvements,
increase in competition, etc. are highly flexible and keep changing. It is
uncertain as the future changes can never be predicted accurately.

An organization is exposed to external environment, which is dynamic in nature.

Threats are anything from an organization's external environment that can adversely
affect its performance or achievement of goals.

Threats refers to the external environment trends and changes that will hinder a firm's
performance. Threats work as warning signals for organisation to take suitable actions. By
identifying threats and early warning signals, the organisation may effectively overcome it by
adopting counter strategy. Timely scanning of business environment acts as warning signals
for a business to prepare itself to modify its working in advance and try to utilize the
qualitative information it receives about the competitors

Explain how these threats are overcome.

Strategies to Overcome Marketing Threats

Marketing threats are part of the external environment, and they will be there no
matter how old or young your business is. They are part of your external
environment and they should be constantly dealt with so that you are able to
accomplish your marketing objectives.

SWOT Analysis
While we’re exploring the idea of marketing threats on its own, here, it should be
mentioned that the whole analysis of the threats in your market fits into a wider
framework known as SWOT analysis. Before you can explore your ideas and
options on how to overcome the threat and weakness that is facing you, you should
understand what SWOT analysis is all about. SWOT stands for Strengths,
Weaknesses, Opportunities, and Threats. It is a method by which a business can
analyze its external environment in order to better plan its future strategies for
getting some leeway in the market.

Strengths
These are the strengths of the business. They are what makes a business stand
out from its competition and, ideally, what the business does best. A business
might be particularly good at producing quality goods, providing excellent customer
service, or stimulating employee morale like none of its competitors. Whatever the
strength is, it should give the business some kind of competitive advantage in the
marketplace.

Weaknesses
These are the weaknesses of the business. They are the things that the business
should look into improving going forward. A business that produces excellent
software might have poor customer service. On the other hand, it might have the
best customer service in the market but the worst product quality. Whatever the
weakness is, it should be something inherent in the business that it can control and
work on improving.

Opportunities
These are external opportunities in the industry environment that the business can
take advantage of. Typically, opportunities aren’t always opportunities for every
player in a market. They are usually opportunities because the combine with the
individual strengths o the business in such a way that the business can exploit the
opportunities to make a profit. They could also be general opportunities caused by
a gap in the market that a business could move to fill in.

Threats
These are external threats that the business faces that could potentially inhibit its
ability to make a profit or grow. Threats are not always threats for all players
involved in a market. Sometimes they are threats for a single business because the
external conditions mesh with the weaknesses of the business in such a way as to
form threats. The business should thoroughly analyze all the threats it faces, see
how they are exacerbated by the business’s own weaknesses, and take the
necessary steps to mitigate the threats before they become disastrous to the
business.

There are a variety of strategies that a business can take to overcome threats to its
marketing efforts. The very first step, however, is to understand what a threat is
and what causes them.

A Closer look at Threats

Marketing threats can come in many different shapes and sizes. They could be
anything, including regulatory changes that make operations more expensive in
general or compliance very difficult, new products coming into the market that
perform better and are priced lower, competitors coming into the market who can
operate at a lower cost than the business, or just new competitors in general. In
fact, threats could be there for a business before it even gets into business: they
are called barriers to entry in that case. Additionally, threats may be caused by
political, economic, social and technological changes in the environment. At the
heart of the matter is the fact that a threat is pretty much anything inhibiting its
profit-making or operations.

Monitor Your Threats Closely

Because the economy is always changing, more so at varying speeds from industry
to industry, a business should constantly monitor the threats that it faces within its
environment and come up with an effective strategy to manage these threats.
Additionally, the business should be prepared to alter and improve this strategy as
new threats come up or things change about the old threats. Here a powerful tool
you can use to your advantage is the internet, which will allow you to monitor what
your competitors are up to and perform competitive threat analysis as well as to get
a good idea what new threats are coming up in the industry. Of particular
importance are price comparison sites, which you can use to stay alerted about low
prices coming up in the market as competition.
Different Types of Threats in the Market and How to
Overcome Them
There are two main ways to protect your market share from being cannibalized b
competitors offering low prices and generally overcome competition. You can either
play on your product costs or your product strengths.

If you have an advantage over your competitors in terms of cost, then you can
utilize that advantage to lower your prices in order to match those of your
competitors. As long as your costs are low enough, you will still be able to make a
profit, even with the low prices. The problem with this strategy is that you can only
lower your prices up to a point before it ceases to be viable. That is where the other
strategy comes in.

You can also differentiate yourself from your competitors by adding value to your
products in some way. Of course, you should try to have products that are of a
higher quality than those of your competitors. However, that is not the only way that
you can add value. You can also include such things as free maintenance or free
installation or 24-hour customer service as part of the price of the product. The
customer will feel like they’re getting a lot more bang for their buck with you than
they’re getting with your competitors.

The Threat of New Products

If new products coming into your industry are threatening your market share or
profitability due to their superior performance, there is one major strategy you can
apply that is effective in the long run. You can have a product development
department that formulates and implements product development strategies for
your business in the long run. This ensures that you are always at the frontier of
the market, leading the pack when it comes to innovating new products. As for a
short-term solution, you can think of licensing or sourcing any new and promising
product that comes onto the market and incorporating it into your own products.
Basically, if you can’t beat them, join them.

The Threat of New Competitors Entering the Market

If new competitors enter your market with a very strong offering that appeals to
consumers, they can pose a massive threat to your business and its corresponding
market share. The best way to protect your market share, in this case, is to either
increase the barriers to entry so that it is extremely difficult for new players to come
into the market or to develop a strategy based around fostering customer and
brand loyalty for your business. With a customer loyalty program, you can
formulate a program that rewards your most loyal customers for continuing to do
business with the company or even increasing the amount of business they do with
the company. If you decide to increase barriers to entry, then you can form
strategic alliances with key suppliers that provide raw materials or components of
the products your industry deals in order to make it almost impossible for new
competitors to get into the market.
The Threat of Your Own Weaknesses
Your own weaknesses are also a potential threat to your business. They include
weaknesses in your supply chain, your distributor network, your skills, your service
portfolio or your product. The can make you more vulnerable over time and may
also inhibit your ability to deal with other more external threats as they arise. You
should, therefore, be able to identify any weakness in your own business as soon
as it arises and prioritize which one to deal with in order of the level of risk posed to
the business. By analyzing your weaknesses, you will be better able to formulate
effective training, recruitment, and investment strategies that will help you
overcome problems in the long run.

Cite suitable examples.