Strategic Responses To the Environment

It refers to responsing to the environment in case of change. There are 3 types of responses.

1) Least Resistance - It means to copy the changes of other organisations. They are very passive in nature and not ambitious.
For example: Chinese phones

2) Proceed with Caution - It means to monitor the changes in the environment and analysing their impact on their own business.
For example: Samsung Phones

3) Dynamic Response - External environmental factors are partially manageable and they are controlled by these type of organisations. They are confident on their own strengths and the first to make the innovations and strategies.
For example: Apple Phones

                  PHENOMONIC - LCD

What are the characteristics of business environment?

Business environment refers to the internal and external factors which affects the business. It's features are as follows:

1) Multi-faceted - A single development may be opportunity for one while may be threat for others. It depends on the perception of observer.
For example: Ban on Maggi was an opportunity for Baba Ramdev 😜

2) Has far reaching impact - It impacts the business growth and profitability.

3) Dynamic - Factors of Business environment keeps on changing. Thus organizations need to be dynamic.
For example: Nowadays technology is changing at very fast pace which affects the business.

4) Complexity - Environment consists of many factors. It is easy to understand them in parts but difficult to grasp in totality.

What are the Objectives of Business?

The Objectives for which a business exists are as follows:

1) Survival - It is the basic objective and initial stage for establishment of business.

2) Stability - It is the most important objective. Stable business reduces the managerial tensions and demand less dynamism.

3) Growth - Every business wants to grow. Growth can be achieved through increase in sales, assets , profits, market share manpower employment, etc.

4) Efficiency - It means doing the things in best possible manner and using the resources in most suitable way.

5) Profitability - Business are generally motivated by profits. For some it is the sole motive. All other objectives of facilitative. 

SWOT Analysis

SWOT Analysis refers to the comparison between strength, weakness, opportunity and threats. Through it organisations are able to make strategies for getting a competitive edge in the market.

STRENGTH - It refers to inherent capabilities of am organisation.
For example: Apple's brand image and its latest innovations.

WEAKNESS - It refers to inherent limitations of an organization.
For example: Apple phones are not compatible with others. 

OPPORTUNITY - It refers to favourable conditions for an organization.
For example: Increasing trend of smartphones

THREATS - It refers to unfavourable conditions for an organization.
For example: Cheap Chinese phones, Free Android OS

Michael Porter's Generic Strategies

Michael Porter's Generic Strategy refers to adoption of different strategies as per the needs of customers. There are 3 strategies:

1)Cost Leadership Strategy
2)Differentiation Strategy
3)Focus Stretgy

COST LEADERSHIP STRATEGY
Under this strategy companies reduces the cost of there products. Companies adopt this strategy when people are price sensitive i.e they are willing to pay less. They demand 'quantity' rather than 'quality'.
               For adopting this strategy companies have to achieve high efficiency, less overheads, less wasteges and has to control there costs.

Example:
 1) Dell sells its laptops at cheaper prices than other companies.
2) Big Bazar
3) Chineese Phones


DIFFERENTIATION STRATEGY
Under this strategy companies sell there products at higher prices because customers are quality conscious. Only those companies follow this strategy who have unique products, superior service,etc. These type of companies generally spend a lot of money towards Research & Development.

Example:
1) Apple company has the most expensive phones as its phones are superior than others.
2) Patanjali Ghee is expensive than others as it has quality.


FOCUS STRATEGY
Under this strategy companies focus on only a segment of products. They have a narrow market.

Example:
1) Johnson & Johnson company focuses only on baby products.
2) Companies selling Sugar free tablets can only be used by Diabetic patient.