ENVIRONMENTAL ANALYSIS: ENVIRONMENTAL ANALYSIS SWOT
INTERNAL ANALYSIS (S&W)
PESTEL FRAMEWORK (O&T)
MCKINSEY 7S FRAMEWORK Slide2: SWOT –
AN INTERNAL CHECKLIST FOR AN
ORGANISATION’S INTERNAL ANALYSIS. INTERNAL ANALYSIS
GIVES THE INSIGHTS INTO
STRENGTHS AND WEAKNESSES
AND PESTEL PROVIDES THE FRAMEWORK FOR
OPPORTUNITIES AND THREATS,
INTERNAL ANALYSIS+ PESTEL = SWOT Management - 1: Management - 1 Does the firm use Strategic Management concepts?
Are company objectives and goals, measurable and well communicated?
Do managers at all levels plan effectively?
Do managers delegate authority well?
Is the organization structure appropriate? Management - 2: Management - 2 Are job descriptions and job specifications clear?
Is employee morale high?
Are employee turnover and absenteeism low?
Are organizational rewards and control mechanisms effective? Marketing - 1: Marketing - 1 Are markets segmented effectively?
Is the positioning well among competitors?
Has the firm’s market share been increasing?
Are present channels of distributions reliable and cost-effective?
Does the firm have effective sales functions? Marketing - 2: Marketing - 2 Does the firm conduct necessary market research?
Are product quality and customer service good?
Are they priced appropriately?
Is there effective advertising and promotion strategy?
Is the marketing planning in sync with the budgeting?
Do the firm’s marketing people have adequate training? Finance - 1: Finance - 1 Where is the firm financially strong and weak as indicated by financial ratio analysis?
Can the firm raise needed short term capital?
Can the firm raise needed long term capital through debt and/or equity?
Does the firm have sufficient working capital? Finance - 2: Finance - 2 Are capital budgeting procedures effective?
Are dividend pay out policies reasonable?
Does the firm have good relations with its investors and stockholders?
Are the firm’s financial managers experienced and trained in line with the firm’s financial policies? Production : Production Are suppliers of raw materials, parts and subassemblies reliable and reasonable?
Are facilities, equipment, machinery and offices in good condition?
Are inventory-control policies and procedures effective?
Are quality-control policies effective?
Are facilities, resources and markets strategically located?
Does the firm have technological competencies? Slide10: PESTEL FRAMEWORK THE FRAMEWORK PRIMARILY INVOLVES THE FOLLOWING
THE ENVIRONMENTAL FACTORS AFFECTING THE
2. THE IMPORTANT FACTORS RELEVANT IN THE PRESENT
CONTEXT AND IN THE YEARS TO COME. POLITICAL : POLITICAL GOVERNMENT STABILITY
POLITICAL VALUES AND BELIEFS SHAPING POLICIES
REGULATIONS TOWARDS TRADE AND GLOBAL BUSINESS
PRIORITIES IN SOCIAL SECTOR Slide12: IDENTIFY FEW KEY ACTIVE POLITICAL FORCES AND HOW
THEY ARE SHAPING THE OVERALL ENVIRONMENT IN THE
COUNTRY ? Slide13: ECONOMIC FACTORS GNP TRENDS
INTEREST RATES/ SAVINGS RATES
TRADE DEFICIT/SURPLUS Slide14: SUPPOSE THE FOREX RESERVES REDUCE TO HALF OF
THE PRESENT LEVEL BECAUSE OF FEW DEVELOPMENTS
IN THE OUTSIDE WORLD . DISCUSS THE ENVIRONMENTAL
EFFECTS IT MAY LEAD TO :: SOCIO-CULTURAL FACTORS: SOCIO-CULTURAL FACTORS POPULATION DEMOGRAPHICS
AGING OF POPULATION
REGIONAL CHANGES IN POPLULATION GROWTH/DECLINE
ATTITUDE TO WORK AND LEISURE
EDUCATION-SPREAD OR EROSION OF STANDARDS
HEALTH AND FITNESS AWARENESS
MULTIPLE INCOME FAMILIES Slide16: THERE HAS BEEN A THRUST ON WOMEN LITERACY. DISCUSS
THE INFLUENCES YOU SEE IN THE SOCIAL ENVIRONMENT AND
THEIR IMPACT ON BUSINESS. TECHNOLOGICAL: TECHNOLOGICAL BIOTECHNOLOGY
GOVERNMENT SPENDING ON RESEARCH
GOVT AND INDUSTRY FOCUS ON TECHNOLOGICAL EFFORTS
SPEED OF TECHNOLOGY TRANSFER
RATES OF OBSOLESCENCE Slide18: ENUMERATE FEW OF THE TECHNOLOGICAL ADVANCES IN THE
AGRICULTURE AND DISCUSS ITS ROLE IN TAPPING BETTER
OPPORTUNITIES IN THE OVERSEAS MARKETS LEGAL: LEGAL MONOPOLIES LEGISLATION/ ANTITRUST REGULATION
HEALTH AND SAFETY
ENVIRONMENTAL LAWS Slide20: LIST OUT THREE MAJOR INDUSTRIES WHICH IN YOUR VIEWS
POSE DANGER TO ENVIRONMENTAL CONDITIONS.MENTIONING
YOUR REASONS SUGGEST HOW THESE INDUSTRIES MAY
CORRECT THE SITUATIONS.
DISCUSS THE LEGISLATION ON PATENTS IN INDIA AND
COMMENT ON ITS IMPACT ON THE BUSINESS. Slide21: PESTEL-AN INDIAN FRAMEWORK PESTLE - Key Economic Variables-1: PESTLE - Key Economic Variables-1 Shift to a service economy in India
Availability of credit
Level of disposable income
Propensity of people to spend
Economies of scale
Money market rates PESTLE – Key Economic Variables-2: PESTLE – Key Economic Variables-2 Federal government budget deficits
Gross domestic product trend
Worker productivity levels
Value of the Rupee in world markets
Stock market trends
Foreign countries’ economic conditions PESTLE - Key Economic Variables-3: PESTLE - Key Economic Variables-3 Import/export factors
Demand shifts for different categories of goods and services
Income differences by region and consumer groups
Exportation of labor and capital from India
Monetary policies PESTLE – Key Economic Variables-4 : PESTLE – Key Economic Variables-4 Fiscal policies
European Economic Community (ECC) policies
Organization of Petroleum Exporting Countries (OPEC) Policies
Coalitions of Lesser Developed Countries (LDC) policies PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 1 : PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 1
Number of marriages
Number of divorces
Number of births
Number of deaths
Immigration and emmigration rates
Life expectancy rates
PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 2: PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 2
Per capita income
Location of retailing, manufacturing, and service businesses
Attitudes toward business
Inner-city environments PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 3: PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 3
Average disposable income
Trust in government
Attitudes toward government
Attitudes toward work
Attitudes towards saving
PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 4: PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 4
Attitudes toward investing
Use of birth control
Average level of education
Attitudes toward retirement PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 5: PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 5
Attitudes toward leisure time
Attitudes toward product quality
Attitudes toward customer service
Attitudes toward foreign people
Social programs PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 6: PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 6
Number of religious places
Attitudes toward careers
Population changes by race, age, sex, and level of affluence
Attitudes toward authority
Value placed on leisure time PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 7: PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 7
Population changes by city, county, state, region, and country
Regional changes in tastes and preferences
Number of women and minority workers
Number of high school and college graduates by geographic area
PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 8: PESTLE – Key Social, Cultural, Demographic, Environmental Variables – 8
Slide34: MCKINSEY 7 S FRAMEWORK :
A TOOL TO EVALUATE AND CONTROL AN ORGANISATION Slide35: Structure Staff Systems Style Skills Shared
Values Strategy Supporting organization Centralized The winning formula 7-S FRAME WORK Single noble purpose Slide36:
Strategy Skills Shared
Values Structure Staff Style Systems 7-S FRAME WORK : The winning formula sets the goals and
standards for the organizations and
identifies the key skills required
The supporting organization provides
quidance, motivation and monitoring
to see that the right decisions are made Single noble
purpose The winning formula Supporting organization Slide37: Strategy Skills Shared
Values Structure Staff Style Systems 7-S FRAME WORK : STRATEGY An integrated set of actions to deliver a
Superior value to a chosen set of
Customers with a cost structure that
Allows continuing excellent returns Which customers does the company
target? Which products/services does it offer? How can it serve its customers
How can the company build a
sustainable advantage over
What are the strategic priorities for the
What are the actions required across
different functional elements. Slide38: Strategy Skills Shared
Values Structure Staff Style Systems 7-S FRAME WORK : SHARED VALUES How do people in the organization describe
the way we do things around here? E.g.,
- How decisions are taken
- How important stake holders are dealt
- How thing get down
- What preoccupies senior management Those ideas of what is right and desirable (in
Corporate and/or individual behavior) which
Are typical of the organization and common
To most of its members How do people in the organization
describe the way in which it is
distinctive? Which things get most and least
management attention? E.g.,
- Markets, product lines
- Organizational units
- Short versus long term issues Slide39: Strategy Shared
Values Structure Staff Style Systems 7-S FRAME WORK : SKILLS Capabilities possessed by the organization
As a whole as distinct from those of
individuals Skills what business activities important to its
success is the company distinctively
good at performing? What business activities – important to
its success – is the company weak at
performing? . How are important business activities
What important management activities
must the company perform much better
than it does now?
- Non-business system function – e.g.,
people development, industrial
- Special management challenges – e.g.,
multi-product line management,
resource deployment Slide40: Strategy Skills Shared
Values 7S FRAME WORK : THE WINNING DORMULA Vision Activities the organization
Must be really good at in order
To deliver winning value
proposition An integrated set of actions
To deliver a superior
Value (benefits minus
Price) to a chosen set
Of customers, with a
Cost structure that
Excellent returns The overriding goal of the organization
A clear, compelling statement of what
It aspires to become that is demanding but
Achievable and reflects a fact-based view
Of the future The commonly held beliefs of the
Organization – simple terms that say
What’s important around here Slide41: Strategy Skills Shared
Values Structure Staff Style Systems 7-S FRAME WORK : SYSTEMS The Process and procedures through which things get done
from day to day
What are the most important management
processes that top management uses to run an organization. .E.g.,
- Annual strategy reviews
- Monthly operating reviews
- Management by walking around
What are the most important systems in the
organization? How well are they managed?
What variables are monitored and controlled
How relevant, accurate, and reliable is the
Slide42: Strategy Skills Shared
Values Structure Staff Style System 7-S FRAME WORK : STYLE The way managers collectively behave with
Respect to use of time, attention and symbolic
actions How does top management make
Consultation versus solitary
Reliance on data versus experience How does management seek to motivate
- Compensation and fringe benefits
- Internal competition
- Participation How does top management view its own principal role?
Making tough decisions directly
Staying on top of internal operations
Changing course, setting direction Slide43: Strategy Skills Shared
Values Structure Staff Style System 7-S FRAME WORK : STRUCTURE An orderly and predictable system to determine
Who reports to whom and how tasks are
Divided up and integrated What is the basis structural form
of the organization? E.g.,
Centralized versus decentralized
Product versus customer group
. What is the top management
. What is the approach to
(corporate) staff? E.g.,
. Large versus small
. How are the key functions
R&D : Project based versus on-
Marketing: Centralized versus
per business unit
Sales: by customer group or
geographic Slide44: Systems SKILL SUPPORT AT McDONALD’S USING ORGANIZATION DESIGN Structure Skills
control Staff Style Centralized buying to
control content The structure, staff,
Systems and style of
The organization has
To be carefully
Designed to support
Necessary for success
attitude on how to run
the business Inspections
Franchise expansion based on high grades
on prior inspections
Many procedures’ mechanisms, aimed
building employee enthusiasm, loyalty
Procedures for consistent food preparation
including a 600 page manual Owner operators
Promotion from within
to build experience Slide45: Strategy Skills Shared
Values Structure Staff Style System 7-S FRAME WORK : STAFF The people in the organization, considered in
Terms of corporate demographics, not individual
personalities What Kind of people does the company employ?
- Educational background
- Average age
- Experience profile
How fast is the company growing in terms of
number of employees?
How well does the company manage to retain
How well are employees rewarded?
How well trained are employees?