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Understanding the environment and up to challenges and opportunities is raison d entre of successful companies. A systematic approach to environmental analysis and diagnosis involves the acknowledgement of following forces. Socio-Economic forces Socio economic forces in a country determines the extent and level of industrialization, as they influence the demand for a product or service at any given point of time. Competition Demand for a firms products/services is also affected by the nature and intensity of competition in an industry. Here the firm needs to extend its competitive analysis to include substitutes also, besides scanning direct competitors. The objective of such analysis is to assess and predict each competitors response to changes in the firms strategy, and industry conditions. Such analysis ensures that the firm emerging as the major competitive organization and also deciding on whom it should pick up as its major rival in the industry. Technology The level of technological developments in the industry creates an opportunity for a marketer to develop new products. The consumer tends to benefits from these developments. Technological developments are also influenced by the government policies and the industrys response in terms of investments in Research & Development. Government Policies Government policies also influence their respective economies. A government may either play key role and intervenes or may be least concerned so as to leave firms free to enter or leave any industry. Government policies may differ from industry to industry and country to country. A marketer needs to understand these policies and also the political philosophy and ideologies of major political groups and individuals. Suppliers The suppliers to a firm can also alter its competitive position and marketing capabilities. These are raw material suppliers, energy suppliers, suppliers of labour and capital. The relationship between suppliers and firm epitomizes a power equation between them. This equation is based on the industry conditions and the extent to which each of them is dependent on the other. The bargaining power of the buyer firm increases in the following circumstancesThe buyer firm is a monopoly or in an oligopoly position and buys large volumes relative to sellers sales. The buyer firm can easily switch its vendors as it faces few switching costs. The buyer firm earns low profits and hence has a pressure to lower its purchasing costs. The buyer firm poses a real threat of backward integration.

MARKETING ENVIRONMENT-Som; MBA 2nd Sem; FoM; GEU

These factors change over a time or a result of companys strategic decisions thereby affecting the buyers bargaining power. On the other hand, bargaining power of the suppliers gets maximized in following situationsThe seller firm is a monopoly or an oligopoly firm. The supplier is not obliged to contend with other substitute products for sale to the buyer group. The buyer is not an important customer. The suppliers product is an important input to the buyers business and finished product. The suppliers products are differentiated or it has built up switching costs. The supplier poses a real threat of forward integration.

Motivators

Current and future goals

Current and future strategy

Satisfaction with current level of performance.

Factors that will lead to maximum retaliation.

COMPETITORS
How strong they are and their assumptions of themselves and industry.

MARKETING ENVIRONMENT-Som; MBA 2nd Sem; FoM; GEU