2 INTRODUCTIONAn integrated understanding of the external and internal environment is essential for firms to understand the present and predict the future.
3 INTRODUCTIONFirm’s external environment is divided into three major areas.GeneralIndustryCompetitor
4 General EnvironmentIt is composed of dimensions in the broader society that influence an industry and firm within it.PESTEL Analysis is used to analyze General Environment
5 Industry EnvironmentIt is a set of factors that directly influence a firm and its competitive actions and competitive response.Five Force Model is used to analyze Industry Environment.
6 Competitor AnalysisHow to gather and interpret the information about the competitor is called Competitor Analysis.
7 Environment AnalysisAnalysis of General Environment focused on the future.Analysis of Industry Environment is focused on the factors and conditions influencing a firm’s profitability within a industry.Analysis of Competitors is focused on predicting the dynamics of competitor’s actions, response and intension.
8 Environment AnalysisPerformance improves when the firm integrates the insights provided by analyses of all environments.
9 Components of External Environmental Analysis Scanning : Identifying early signals of environment changes and trendsMonitoring: Detecting meaning through ongoing observations of environmental changes and trends.
10 Components of External Environmental Analysis Forecasting : Developing projections of anticipated outcomes based on monitored changes and trendsAssessing : Determining the timings and importance of environmental changes and trends for firm’s strategies and their management
11 General Environmental Analysis PESTEL analysis is used to analyze General Environment.P = PoliticalE = EconomicalS = SocioculturalT = TechnologicalE = EnvironmentalL = Legal
12 1.Political FactorsPolitical factors, are how and to what degreeGovernment intervenes in the economy.Political stability.Tax policyTrade policyEx: Tata Nano
13 1.Political FactorsPolitical factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods).Furthermore, governments have great influence on the health, education, infrastructure, and of a nation.
14 1.Political FactorsPolitical decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.
15 2.Economical FactorsThese factors have major impacts on how businesses operate and make decisions.Economic growthInterest rateExchange rateInflation rateEtc ……
16 2.Economical FactorsEx.Interest rate affects on cost of capitalExchange rates affect price of imported goodsInflation may provoke higher wage demands
21 4.Technological Factors They can determine barriers to entry minimum efficient production level and influence outsourcing decisions.Furthermore, technological shifts can affect costs, quality, and lead to innovation
23 5.Environmental Factors Environmental factors include ecological and environmental aspects such asWeatherclimate and climate changewhich may especially affect industries such as tourism, farming, and insurance.
24 5.Environmental Factors Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones
25 5.Environmental Factors GLOBAL WARMINGThe general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.
26 6.Legal Factors Legal factors include Consumer Protection law,Company’s Act,Minimum Wage Act,Equal Remuneration ActThese factors can affect how a company operates, its costs, and the demand for its products.
27 PESTEL Analysis Of Cosmetic Industry Political Factors:2% reduction in excise duty. ( Free Trade Zone)Foreign trade regulation(Imported cosmetics have to be registered)
28 PESTEL Analysis Of Cosmetic Industry Economical Factors :Disposable IncomeHigh Net worth
29 PESTEL Analysis Of Cosmetic Industry Socio cultural Factors :Income distributionSocial MobilityLife Style Change
30 PESTEL Analysis Of Cosmetic Industry Technological Factor :Nanotechnology
31 PESTEL Analysis Of Cosmetic Industry Environment Factor :Waste disposal
32 PESTEL Analysis Of Cosmetic Industry Legal Factors :The Drugs and Cosmetics Act, 1940The Pharmacy Act, 1948The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954The Narcotic Drugs and Psychotropic Substances Act, 1985The Medicinal and Toilet Preparations (Excise Duties) Act, 1956