EXTERNAL

ENVIRONMENTAL
SCANNING

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 1

Types of Environmental Scanning
Environmental Scanning

Resources/Capabilities
External Analysis Internal Analysis
Strength

Weaknesses

Macro Environment Micro Environment

PEST Analysis Five Force Analysis

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 2

External Analysis
The organization's environment consists of three components:
1. General Environment
2. Industry Environment
3. Competitor/Competitive Environment

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 3

General Environment
General environment is composed of factors that an have dramatic effects on firms strategy.

Consists of elements in the broader society that can indirectly influence an industry and the
firms within the industry. The general environment has an indirect effect on strategic
competitiveness and firm profitability. Consists of six segments:
1. Demographic
2. Economic.
3. Political/Legal
4. Sociocultural
5. Technological
6. Global

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 4

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 5
PESTEL FRAMEWORK
P E S T E L
Political Economic Social Technological Environmental Legal
• Tax Policy • Interest Rates • Population • New discoveries • Waste disposal • Employment
demographics and innovations laws regulations
• Entry mode • Inflation Rate (e.g. aging
regulations population) • Rate of • Environmental • Competitive
• Disposable technological protection laws regulations
• Political Stability income of • Distribution of advances and
consumers wealth innovations • Energy • Health and
• Social Policies consumption safety
(e.g. social • Credit • Changes in • Rate of regulation regulations
welfare) accessibility lifestyles and technological
trends obsolescence • Popular attitude • Product
• Trade • Unemployment towards the regulations
Regulations (e.g. rates • Educational • New environment
the EU & levels technological • Antitrust laws
NAFTA) platforms (e.g.
VHS and DVD) • Patent
infringements

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 6

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 7
Situation Analysis

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 8

SWOT ANALYSIS
Internal Assessment of the Organization

What are our strengths? What are our weaknesses?

• Manufacturing Efficiency • Outdated facilities
• Skilled workforce • Inadequate R & D
• Good market share • Obsolete technologies
• Strong financing • Weak management
• Superior reputation • Past planning failures

SWOT
What are our opportunities? ANALYSIS
What are our threats?
• Possible new markets
• New competitors
• Strong economy
• Shortage of resources
• Weak market rivals
• Changing market tastes
• Emerging technologies
• New regulations
• Growth of existing market
• Substitute products

External Assessment of the Environment

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 9

 PORTER’S FIVE FORCES MODEL

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 10

 Rivalry Among Existing Competitors Threat of New Entrants
• Number of Competitors
• Barriers to entry
• Diversity of competitors
Threat of • Economies of scale
• Industry concentration
new • Brand Loyalty
• Industry growth
entrants • Capital requirements
• Quality differences
• Government Policies
• Brand Loyalty
• Access to distribution channels
• Barriers to exit
• Switching costs
• Switching Costs
• Fixed Costs/value added
• Information complexity
Bargaining Rivalry Bargaining
among Power of
Power of
Bargaining Power of Suppliers existing Customers/
Suppliers competitors Buyers
• Number and Size of Suppliers
• Uniqueness of each supplier’s product
• Focal company’s ability to substitute
Bargaining Power of Buyers
• Threat of forward integration
• Number of customers
• Size of each customer order
Threat of Substitute Products • Differences between competitors
• Number of substitute products available Threat of • Price sensitivity
• Buyer propensity to substitute Substitutes • Buyer’s ability to substitute
• Relative price performance of substitute • Buyer’s information availability
• Perceived level of product differentiation • Switching costs
• Switching costs
01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 11
The Competitive Environment
Competitor/Competitive Environment: The competitor analysis provides an understanding of
the organization's current competitors and is a follow-up to an industry analysis.
1. Future Objectives - Seeks to answer "What drives the Competitor?" Comparing goals, emphasis, and
attitudes toward risk.
2. Current Strategy - Seeks to answer "What is/can the competition do?" How are we competing and
does our strategy support changes in the competitive structure?
3. Assumptions - Seeks to answer "What does the competitor believe about itself and the industry?"
Volatile future or stable competitive conditions?
4. Capabilities - Seeks to answer "What are the competitors capabilities?" Competitor's
strengths/weaknesses and comparison of yours to theirs.

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 12

The nature of competition in an industry, as well as the profitability of a firm, is often directly
influenced by developments in the competitive environment.
The competitive environment consists of many factors that are particularly relevant to a firm’s
strategy. These include competitors (existing or potential), customers, and suppliers.

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 13

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 14
Industry key drivers
Technology upgradation and digitalization

Connectivity

Networking

Human capital

Leadership

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 15

Competitive Positioning

The act of designing the company’s offering and image to occupy a distinctive place in the
mind of the target market.
Philip Kotler

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 16

Competitive Positioning
Competitive positioning is about defining how you’ll “differentiate” your offering and create
value for your market.
It’s about carving out a spot in the competitive landscape, putting your stake in the ground, and
winning mindshare in the marketplace – being known for a certain “something.”
A good positioning strategy is influenced by:
 Market profile: Size, competitors, stage of growth
 Customer segments: Groups of prospects with similar wants & needs
 Competitive analysis: Strengths, weaknesses, opportunities and threats in the landscape
 Method for delivering value: How you deliver value to your market at the highest level

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 17

 Mapping the cell phone market

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 18

Positioning Map
Positioning maps are used for developing the market positioning strategy for product or service.
They can represent products and services together.
"Perceptual mapping is a diagrammatic technique used by asset marketers that attempts to
visually display the perceptions of customers or potential customers. Typically the position of a
product, product line, brand, or company is displayed relative to their competition.“
A Positioning Map is a great tool to set yourself apart from your competition and to determine
where competitors are lagging behind when looking at what is important to your ideal customer.
This permits one to compare and contrast these two items in relation to one another.
The main strength of this tool is to help in making a decision on a competitive position that
enables you to distinguish your products from the offerings of your competition.

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 19

 Positioning Map- Competitor Analysis

01-02-2023 DR. NIVISHA SINGH IMT GHAZIABAD 20