Project on EIC

Analysis & Summary

Lesson 8 : Module 1
SAPM
 Lesson goals

 To understand the basic models for

analyzing the Industry

 To evaluate the learning in this module

EIC Analysis
 EIC Analysis is a top-down approach.
 Here we evaluate the present status of
economy and understand which industries will
thrive and in those industries which companies
have the potential to grow.
 So industry analysis is an important step
requiring focus.
 First we will look at the models for industry
analysis and then see how it is practically done
with an example.
Models for Industry Analysis
 Five Forces
 Four routes to strategic advantage
 PESTLIED
 BCG Matrix
 SWOT Analysis
 Five Forces
 Given by Michael E
Porter
 Professor – Harvard
University
 Books - Competitive
Strategy: Techniques for
Analyzing Industries and
Competitors (1980)
The Competitive Advantage
of Nations (1991)
Source: http://hbr.org/2008/01/the-five-competitive-forces-that-shape-
strategy/
Four routes to strategic advantage
 Kenichi Ohmae
 The Mind of the Strategist",
 The End of the Nation State
 The Borderless World.
Four routes to strategic advantage
1. Key Factors for success
 Resources are allocated where they will
be most effective in relation to the
identified key success factors.

2. Relative Superiority
 Competitors’ weaknesses are exploited
using new technology or other strengths
such as an effective sales force.
Four routes to strategic advantage
3. Aggressive Initiative
 Direct competition with new business or
new products.

4.Strategic Degrees of Freedom

 Embrace innovations in products or
markets where no competition exists.
 PESTLIED
While analyzing organizations, the environmental
factors that need to be addressed.

P -Political  I -International
E -Economic  E -Environmental
S -Social  D -Demographic
T -Technological
L -Legal
Applications
 PESTLIED is used in analysis and audit.
 The model is used as a checklist in the
planning process.
 The managers are also forced to consider
the impact of external influences on their
organizations.
BCG Matrix
 Large organizations face the challenge of
allocating resources among various
strategic units.
 Boston Consulting group developed a
model for managing business units.
BCG Matrix
BCG Matrix Explained
 Cow: Market is matured but firm is doing
well. So there are no additional investment
opportunities.
 Star: Doing well in a growth market. May
need to invest continuously to capture
market.
 Question Mark: Need to invest to grow in a
growing market and future is not certain.
 Dog: Market is matured and performance is
not good. May need to close.
 SWOT Analysis
 A tool that identifies the strengths, weaknesses
opportunities and threats of an organization /
project / industry.
 The method is to take the information from an
environmental analysis and separate it into
internal (strengths and weaknesses) and
external issues (opportunities and threats).
 SWOT analysis determines what may assist the
firm in accomplishing its objectives, and what
obstacles must be overcome or minimized to
achieve desired results.
Indian Leather & Tanning Industry
Profile 2010
 http://italiaindia.com/images/uploads/pdf/le
ather-industry-in-india-2010.pdf

 You may visit the site above and read the

complete report on the Leather & tanning
Industry.
SWOT Analysis of the Indian Leather Industry
Strengths
 Uniqueness of Leather
 Fashion Choice
 Fine Quality of Skins
 Abundance of Human Resource
 Easily Accessible Raw Material
 Prevalence of Production Chain from Village
to Fashion
 Versatile Bio-Polymer Collagen
 Policy Support from the Government
 Encouragement by International-
Development Agencies
Weaknesses
 Traditional Processing Technology
 Dependence on Imported Machines and
Components
 Inadequate Internal Demand
 Pollution Problem
 High Degree of Subjectivity in Quality
Assessment and Grading
 Widely Dispersed Units
 Insufficient Enterprising Attitude of the Industry
 Poor Database
 Technology Management and Financial Problems
Opportunities
 Incentive from the Government
 Advances in Modern Biology, Genetics,
Chemical Engineering, Computers and
Electro polymer Science
 Opulence of Synthetic Support Materials
 Preference for Indian Leather –The
Goodwill factor
Threats
 Environmental Pollution may force closure of
Tanneries unless relocated to a specified
cluster
 Liability Aspects of Pollution
 High Price of Leather & Leather products
 Inelastic Supply of Raw Material
 Perpetual Dependence on Western Market
 Rising Aggressive Competition from
International Players
 Challenges from Synthetics
Module Summary
1. Introduction to Stock Markets
2. Introduction to Security Analysis & Portfolio
Management
3. Portfolio objectives
4. Financial Mathematics
5. Illustrations / Examples
6. Illustrations / Examples
7. Global forces affecting the world economy
8. Summary & Project on EIC analysis
Thank you