M2L10 Business Environment

7/30/2019 M2L10 Business Environment

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NPTEL IIT Kharagpur Page 1

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.

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