Strategic ManagementStrategic Management

Environmental AnalysisEnvironmental Analysis

Prof.Dr. E.VatchkovaProf.Dr. E.Vatchkova

ContentsContents

Environmental influencesEnvironmental influences The PESTEL frameworkThe PESTEL framework Environmental factors and Environmental factors and

componentscomponents Environmental dimensionsEnvironmental dimensions The five forces frameworkThe five forces framework SWOTSWOT

STRATEGYWHAT DO WE DO?

ENVIRONMENTWHAT IS POSSIBLE?

OBJECTIVESWHAT DO WE WANT?

RESOURCESWHAT DO WE HAVE?

1

3

4

2

The PESTEL frameworkThe PESTEL framework- six main types of influences- six main types of influences

J&Sh, 2002J&Sh, 2002 PoliticalPolitical EconomicEconomic SocioculturalSociocultural TechnologicalTechnological EnvironmentalEnvironmental LegalLegal

PoliticalPolitical

Government stabilityGovernment stability Taxation policyTaxation policy Foreign trade regulationsForeign trade regulations Social welfare policiesSocial welfare policies

EconomicEconomic

Business cyclesBusiness cycles GNP trendsGNP trends Interest ratesInterest rates Money supplyMoney supply InflationInflation UnemploymentUnemployment Disposal incomeDisposal income

GDP growthGDP growth((source: NSI)source: NSI)

-15

-10

-5

0

5

10

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005(%)

Dynamics of direct Dynamics of direct foreign investmentsforeign investments

((mill., Source: BNB0mill., Source: BNB0))

0

500

1000

1500

2000

2500

3000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Unemployment levelUnemployment level(% (% of economic active populationof economic active population, , Source: Employment agencySource: Employment agency))

5

7

9

11

13

15

17

19

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Average salary by economic Average salary by economic sectors sectors (source: NSI)(source: NSI)

0 100 200 300 400 500 600 700 800

Хотели и ресторанти

Търговия

Селско стопанство

Други обслужващи дейности

Строителство

Преработваща промишленост

Операции с недвижими имоти и бизнесуслуги

Търговски д-ва с приходи от стоп. дейност

Средна

Образование

Бюджетни организации

Здравеопазване и социални дейности

Транспорт, складиране и съобщения

Държавно управление

Добивна промишленост

Пр-во и разпр-е на ел.енергия, газ и вода

Финансово посредничество

Real incomes increase level Real incomes increase level 2000-2005 2000-2005 ((SourceSource: : ISSRISSR))

2005 2004 2000Реален ръст

2005/2004Реален ръст

2005/2000Паричен доход на 1 лице (лв. годишно) 2031 1833 1274 105,5 123,2Общ доход на 1 лице (лв. годишно) 2579 2466 1664 99,6 119,8Средна работна заплата (лв. средномесечно) 320 292 225 104,4 109,9

Territorial unemployment Territorial unemployment levellevel

SocioculturalSociocultural

Population demographicsPopulation demographics Income distributionIncome distribution Social mobilitySocial mobility Lifestyle changesLifestyle changes Attitudes to work and leisureAttitudes to work and leisure ConsumerismConsumerism Levels of educationLevels of education

TechnologicalTechnological

Government spending on researchGovernment spending on research Government and industry focus on Government and industry focus on

technological efforttechnological effort New discoveries/developmentNew discoveries/development Speed of technology transferSpeed of technology transfer Rates of obsolenceRates of obsolence

EnvironmentalEnvironmental

Environmental protection lawsEnvironmental protection laws Waste disposalWaste disposal Energy consumptionEnergy consumption

LegalLegal

Monopolies legislationMonopolies legislation Employment lawEmployment law Health and safetyHealth and safety Product safetyProduct safety

Drivers of globalizationDrivers of globalization

Global market convergenceGlobal market convergence Cost advantagesCost advantages Global competitionGlobal competition Government influenceGovernment influence

InterdependenceCompetitors global

High exports/imports

Trade policiesTechnical standards

Host government policies

Scale economiesSourcing efficiencies

Country specific costsHigh product development

costs

Similar customer needsGlobal customers

Transferable marketing

Global strategies

Global market convergence

Government influence

Global competition

Drivers of globalization

J&Sh,2002

Costadvantage

Environmental dimensionsEnvironmental dimensionsAldag, Stearns,1987Aldag, Stearns,1987

MunificenceMunificence ReachReach leanlean

DynamismDynamism StableStable UnstableUnstable

ComplexityComplexity HomogeneousHomogeneous HeterogeneouHeterogeneouss

ConcentratiConcentrationon

ConcentratedConcentrated DispersedDispersed

TurbulenceTurbulence Low Low interconnectiointerconnectionn

High High interconnectiointerconnectionn

ConsensusConsensus ConsensusConsensus DissensusDissensus

Organizational adaptation Organizational adaptation (coping strategies)(coping strategies)

BufferingBuffering SmoothingSmoothing ForecastingForecasting RationingRationing Boundary spanningBoundary spanning Structural complexityStructural complexity Managerial successionManagerial succession

Environmental controlEnvironmental control

Establishing favorite linkagesEstablishing favorite linkages Manipulating the environmentManipulating the environment

Establishing favorable Establishing favorable linkageslinkages

Mergers and/or acquisitionsMergers and/or acquisitions Joint venturesJoint ventures Interlocking directoratesInterlocking directorates Executive recruitmentExecutive recruitment AdvertisingAdvertising

Manipulating the Manipulating the environmentenvironment

Change domainsChange domains LobbyingLobbying Trade associationsTrade associations

SWOT ANALYSIS DIAGRAMSWOT ANALYSIS DIAGRAMNumerous Environmental

Opportunities

Major Environmental

Treats

Critical

Internal

Weaknesses

Substantial

Internal

Strengths

QUADRANT || QUADRANT |

QUADRANT |VQUADRANT |||

Forces Affecting Industry CompetitionForces Affecting Industry Competition

Suppliers

Bargaining Power of Suppliers

Buyers

Bargaining Power of Buyers

Substitutes

Treat of Substitute

Products or Services

Potential Entrants

Treat of New Entrants

Industry Competitors

Rivalry among Existing Firms

TANK YOU !TANK YOU !