Lecture : 04 - Analysis of micro and macro environment - II

Summary

In this lecture, the focus is on the micro environment analysis, discussing market types, demand aspects, competition, skilled labor availability, industrial relations, regulatory provisions, and financial climate. A framework for assessing the impact of opportunities and threats is introduced, along with methods to evaluate strategies against mega-environment trends. Useful sources for environmental information are also highlighted.

Takeaways

• 📚 The lecture continues the discussion on external environment analysis, focusing on the micro environment and its constituents.
• 🛒 Different market types are explained, including consumer (B2C), industrial, institutional, international, and resellers markets.
• 📉 The concept of market demand is introduced, highlighting the importance of understanding demand behavior, including cyclic, seasonal, and steady demands.
• 🤔 The lecture emphasizes the need for analyzing competition, which will be covered in a separate module, as it's a significant part of the micro environment.
• 👨‍🏫 Skilled labor availability is a key micro environmental factor, with examples given of how certain regions thrive due to specific skilled workforces.
• 🤝 Industrial relations climate is crucial for business growth, with contrasting examples of thriving and declining industrial states in India.
• ⚖️ Regulatory provisions such as Special Economic Zones (SEZs) and tax incentives are highlighted as important elements of the micro environment.
• 💼 The financial climate and institutions' role in providing loans and financial assistance are discussed as part of the micro environment.
• 🔍 A framework for assessing the impact of opportunities and threats is introduced, using a 2x2 matrix to categorize threats and opportunities based on probability and impact.
• 📈 An illustrative example of applying the framework to the steel industry is given, showing how to assess the impact of threats like power supply issues.
• 🌐 The lecture concludes with a summary of the micro environment analysis and the importance of information gathering from various sources for environmental scanning.

Q & A

What is the main focus of the lecture?

The main focus of the lecture is on the external environmental analysis, specifically the micro environment constituents and the framework for assessing the impact of opportunities and threats.

What are the different types of markets discussed in the micro environment?

The different types of markets discussed are the consumer market (B2C), industrial market, institutional market, international market, and resellers market.

What is the significance of understanding market demand in the micro environment?

Understanding market demand is significant as it involves demand fluctuations, forecasting, and regulation, which are crucial for strategic business planning and decision-making.

What are the three aspects of market demand mentioned in the lecture?

The three aspects of market demand mentioned are the quantum of demand, the behavior of demand, and the types of demand such as cyclic, seasonal, and steady.

Why is the availability of skilled labor important in the micro environment?

The availability of skilled labor is important because certain industries prosper in specific areas due to the presence of skilled manpower, which can significantly impact the success of businesses in those regions.

What is the role of industrial relations climate in the growth of industries?

The industrial relations climate can make or break a business. A conducive climate fosters growth, while a hostile climate can lead to the decline of industries, as seen in the case of West Bengal in the late 1960s.

What is the impact of regulatory provisions on the business environment?

Regulatory provisions such as Special Economic Zones (SEZs) and tax incentives can boost business and investment in certain areas, improving the presence of industries and attracting investments.

How does the financial climate affect the micro environment of an industry?

The financial climate, including the availability of loans, financial assistance for working capital, and tax incentives, plays a significant role in creating a conducive environment for business growth.

What is the importance of assessing the impact of opportunities and threats in strategic planning?

Assessing the impact of opportunities and threats is crucial for strategic planning as it helps organizations identify major risks and potential areas for growth, allowing them to make informed decisions.

Can you explain the 2x2 matrix framework for assessing threats mentioned in the lecture?

The 2x2 matrix framework assesses threats based on two metrics: the probability of occurrence and the impact. It categorizes threats into major, moderate, and minor threats based on their likelihood and severity.

What are some sources of environmental information mentioned in the lecture?

Some sources of environmental information include annual reports, company advertisements, periodicals, government publications, financial newspapers, and directories like the Times of India and the Hindu Annual Review.