m2l10 business environment
TRANSCRIPT
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Module 2 : Understanding the
Service Business Environment
Lesson 10:Understanding the
Business Environment
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Content
10.1 Introduction10.2 Keywords10.3 SWOT Analysis10.4 TOWS Analysis10.5 Concluding Remarks10.6 Questions10.7 Answers
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10.1Introduction
In this lesson we will understand one tool of analysis of the macro and micro environment, called the SWOTanalysis. Next we will understand one tool for formulating strategies based on the SWOT analysis called the TOWSmatrix.
10.2KeywordsSWOT, TOWS
10.3SWOT Analysis
The analysis of the macro-environment tells us about the opportunities and threats present in the environment forour company. Analysis of the micro-environment tells us about the strengths and weaknesses of our company. Whileopportunities and threats are external to a company, strengths and weaknesses are internal to the company. We canthen collate this information into a matrix of strengths, weaknesses, opportunities and threats, called the SWOT matrix.An example of SWOT matrix for Airtel, a telecom service provider in India, is given in Table Error! No text of specifiedstyle in document..1 below:
Table Error! No text of specified style in document..1 SWOT Matrix
Strengths
S1. It has the largest customer base of 95million (in 2009-10) in India.
S2. It has the infrastructure to provide telecomand broadband services.
S3. It has strategic alliance with handset
manufacturers like Sony-Erricson, Nokia and S-Tel.
S4. It is operating in all the 23 telecom circlesin India.
S5. It has good corporate structure and avisionary leader.
S6. It has the advantages of being an earlyentrant in the telecom service provider industry.
Weaknesses
W1. It had less expertise in its early days ofoperation, so it had to outsource many of itsoperations.
W2. The company shares the telecom towerswith many other companies and remainsdependent on them.
W3. Some human resource issues are hurtingits international image.
Opportunities
O1. There is a lot of opportunity as the mobiletelecom penetration is still much less that 100%
Threats
T1. There are threats from some of itscompetitors like Vodafone.
10.4TOWS Analysis
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Once the SWOTmatrixhasbeenprepared, it isused to conducta TOWSanalysis. TheTOWS analysis consistsof identifyingstrategic responses to the combination of Strengths and Opportunities (SO), Strength and Threats (ST), Weaknesses andOpportunities(WO)andWeaknessesandThreats(WT).AnexampleoftheTOWSmatrixforAirtelisgiveninbelow:
Opportunities Threats
Strength S1-O1 The company can grow using intensive
and integrative growth strategies.
S2-O1 The company can use existing
infrastructure or set us new infrastructure for
growth.
S3-O1 The company can go for strategic
alliances with smaller service providers also in
order to grow in the marketplace (integrative
growth). It can also form alliances with foreign
service providers to establish a presence in
foreign lands like Africa.
S4-O1 It can increase its market share all over
the country by offering high quality services at
affordable prices, thereby increasing market
share through intensive growth.
S5-O1 The company can take advantage of its
corporate structure to recruit more people for
ensuring adequate growth in the market place.
S6-O1 It can take advantage of its experience
and learning and provide services at ratesaffordable to most citizens of India.
S1-T1 It can provide better services than the
competition by providing enhanced service
quality.
S2-T1 Same as S1-O1
S3-T1 It can learn from its strategic alliances
and provide better services than its competitor.
S4-T1 Same as S1-O1
S5-O1 Same as S1-O1
S6-O1 Same as S1-O1
Weakness W1-O1 It must monitor its partners for quality
and value gain. The company must set up its
own operations if the partners under-perform.
W2-O1 The company must proactively manage
its infrastructure alliances as win-win
relationships to be able to provide acceptable
services at affordable prices.
W3-O1 It must re-look at its human resourcepolicies and provide an organisation climate
that can lead to high employee satisfaction and
citizenship behaviour.
W1-T1 The company has to cement strong
relationships with its partners so that they can
together perform better that the competition.
W2-T1 Same as W1-T1
W3-T1 Human resources issues can make
employees of the company to switch to
competitors. Hence, the company should have
good human resource policies so that they canretain their employees and keep them well
trained for higher productivity with can kee
them satisfied with their jobs and career.
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10.5Concluding Remarks
We have learnt to identify the opportunities and threats presented by the environment from Error! Referencesource not found.. We have learnt how to collate this data into a SWOT analysis. The marketer can formulate drawup strategic alternatives for marketing its services in the form of a TOWS matrix.
10.6QuestionsQ1.Listtheirstrengthsandweaknessesfromtheanalysisconductedbyyou inthepreviouslesson.UsetheSWOTanalysisandTOWSmatrixtoarriveatmarketingstrategiesforthecompanychosenbyyouinthepreviouslesson.
10.7Answers
Q1.Listtheirstrengthsandweaknessesfromtheanalysisconductedbyyou inthepreviouslesson.UsetheSWOTanalysisandTOWSmatrixtoarriveatmarketingstrategiesforthecompanychosenbyyouinthepreviousquestion.
Answer:Thestrengthsandweaknessesofatypicaltourismagencyareasfollows:Strengths:a.TherestaurantisverypopularwithitsNorthandSouthIndiandishes.b.IthasgoodpresenceinTiew1andTier2cities.c.CustomersperceiveSagarRatnatobehavinghighbrandvalue.d.ThefoodandambienceprovidedbySagarRatnaisofsuperiorquality.
Weaknesses:a.ThereisnomarketingofadvertisingeffortfromSagarRatnatolurenewcustomers.b.Therestaurantsareonlylocatedinmiddlelevelmarketsandnotpresentinshoppingmallsandhighendmarkets.Opportunities:a.Middleclasshouseholdsareincreasinginthepopulation.b.DisposableincomeofIndiansisincreasing.Threats:a.Thereisthreatfromotherrestaurantsb.MultinationalbrandslikeMcDonalds,PizzaHut,KFC,YoChina,etc.areflourishing.
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TheTOWSmatrixdelineatingvariousstrategiesthatcanbeadoptedbySagarRatnaareasfollows:Strengths&Opportunities(SO):1.IncreaserestaurantsinShoppingMalls2.AdvertisesuperiorfoodandambiencequalitytoattractcustomersWeaknesses&Opportunities(WO):1.SameasSOStrengthsandThreats(ST):1.increasenumberofoutletsandadvertiseheavilyWeaknessesandThreats(WT):1.SameasSTfsuperiorquality.