Business
Environment
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V. NEELAMEGAM
M.A., [Link]., M.B.A., A.M.T., MIMA.
Senior Lecturer
School of Commerce and Business
Administration
Faculty of Science and Humanities
SRM University
Tamil Nadu
VRINDA PUBLICATIONS (P) LTD.
DELHI - 110 091.
[Link]
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CHAPTER
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Business and
Strategic
Management
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Introduction
A business firm cannot operate in a
vacuum or in isolation of the society in
which it exists. It is a part of the
environment. So any business decision
has to follow a suitable strategy.
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Strategy at Different Levels of
a Business
Corporate Strategy
Business Strategy
Operational Strategy
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Strategic Management
Strategic Analysis
Strategic Choice
Strategic Implementation
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SWOT Analysis
SWOT is an abbreviation for strengths,
weaknesses, opportunities and threats.
SWOT analysis is important tool for
auditing the overall strategic position of
a business and its environment.
The basis objective of SWOT analysis is
to provide a framework to reflect on the
firm’s ability to overcome barriers (or
threats) and avail the opportunities
emerging in the environment.
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Michael Porter’s Five Forces
Model
Threat of New Entrants
Threat of Substitutes
Bargaining Power of Suppliers
Bargaining Power of Buyers
Intensity of Rivalry
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Ansoff Production/Market
Matrix
The Ansoff Growth matrix is a tool
that helps businesses decide their
production and market growth
strategy.
Ansoff’s product/market growth
matrix suggests that a business
attempts to grow depend on whether
it markets new or existing products
in new or existing markets.
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Product Portfolio strategy
The business portfolio is the collections
of businesses ad products that make up
the company. The best business portfolio
is one that fits the company’s strengths
and helps exploit the most attractive
opportunities.
The company must:
1. Analyze its current business portfolio and
decide which businesses to the portfolio, whilst
at the same time deciding when products and
business should no longer be retained.
2. Develop growth strategies for adding new
products and businesses to the portfolio, whilst
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Benchmarking Strategy
Benchmarking is the process of identifying
“best practice” relation to both products
(including) and the processes by which
those products are created and delivered.
The search for “best practice” can take
place both inside a particular industry, and
also in other industries (for example are
there lessons to be learned from other
industries?).
The objective of benchmarking is to
understand and evaluate the current
position of a business or organization in 11
Competitive Advantage
Strategy
A competitive advantage is an
advantage over competitors
gained by offering consumers
greater value, either by means of
lower prices or by providing
greater benefits and services that
justifies higher prices.
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Mckinsey Growth Pyramid
The Mckinsey model argues that
businesses should develop their
growth strategies based on:
Operational Skills
Privilege Assets
Growth Skills
Special Relationships
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PEST Analysis
PEST analysis is concerned with
the environmental influences on a
business.
The acronym stands for the
Political, Economic, Social and
Technological Issues that could
affect the strategic development of
a business.
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THE END
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