Amity Business School
ETOP – Environmental Threat and
Opportunity Profile
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Amity Business School
ETOP
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The preparation of ETOP involves dividing
the environment into different sectors and
then analyzing the impact of each sector
on the organization.

Amity Business School
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• Environment analysis results in a mass of information related to forces in the
environment .
• Structuring of environmental issues is necessary to make them meaning full for strategy
formulation.

ETOP involves:
• Dividing the environment into different sectors . Each sectors can be subdivided into
sub sectors.
• Analyzing the impact of each sector and subsector on the organization.
Describe the impact in the form of a statement.

ETOP FOR BICYCLE COMPANY
Environmental sectors Nature of impact Impact of each sector
Economic Growing affluence among urban
consumers, rising disposable
incomes & living standards.
Market Organized sector a virtual oligopoly
with 4 major manufacturers, buyers
critical & better informed, overall
industry growth rate not
encouraging, growth rate for niche
market like sports, trekking etc is
high.
International Global imports growing but India’s
share shrinking, major importers
are the US & EU but India exports
mainly to Africa.

Political Bicycle principal mode of
transport for low & middle
income, Industry too small to
draw attention.
Regulatory Parts & components reserved for
SSI, bicycle industry a thrust area
for exports,
Social Environment & health friendly
transport option, wide usage, as
recreation, convenient in traffic,
customers preference

Supplier
Mostly ancillaries in small-scale
sector supply parts & components,
rising steel prices, industrial
concentration in Punjab &
Tamilnadu.
Technological
Up gradation in progress, import of
machinery simple, product
innovations ongoing like battery
operated & lightweight foldable
cycles

Advantage of ETOP
• Provides a clear picture of which sector and sub
sectors have favorable impact on the organization.
• Helps interpret the result of environment analysis.
• The organization can assess its competitive position.
• Appropriate strategies can be formulated to take
advantage of opportunities and counter the threat.

In this session, we have discussed about:
• ETOP process involves dividing the environment into different environmental
sectors and then analyzing the impact of each sector on the organization.
• ETOP gives a clear picture to the strategies about each aspect of the
business environment, the various individual factors within each sector which
affect the business favorably or otherwise.

Amity Business School
SAP
Strategic Advantage Profile (SAP) is a summary statement
which provides an overview of advantages and
disadvantages in key areas likely to affect future
operations of an organization.
There are generally five functional areas in most of
organisations
• Production or OperationØ
• Finance or AccountingØ
• Marketing or DistributionØ
• Human Resource & Corporate Planning
• Research & Development
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SAP – Maruti,SWIGGY

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Porter Five Force
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The Five-Forces Model of
Competition
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Amity Business School
The Five-Forces Model
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• Rivalry among competing firms
– Most powerful of the five forces
– Focus on competitive advantage of strategies
over other firms

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The Five-Forces Model
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Amity Business School
The Five-Forces Model
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• Potential Entry of New Competitors
– Barriers to entry are important
– Quality, pricing, and marketing can overcome
barriers

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Barriers to Entry
• Need to gain economies of scale quickly
• Need to gain technology and specialized know-
how
• Lack of experience
• Strong customer loyalty – Cadbury , Maruti ,
Paytm
• Strong brand preferences
• Large capital requirements – coca – Cola
• Lack of adequate distribution channels – Coca
Cola

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Barriers to Entry
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• Government regulatory policies
• Tariffs
• Lack of access to raw materials
• Possession of patents
• Undesirable locations
• Counterattack by entrenched firms
• Potential saturation of the market

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The Five-Forces Model
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• Potential development of substitute
products
– Pressure increases when:
• Prices of substitutes decrease
• Consumers’ switching costs decrease

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The Five-Forces Model
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• Bargaining Power of Suppliers is
increased when there are:
– Large numbers of suppliers.
– Few substitutes.
– Costs of switching raw materials is high.
• Backward integration is gaining control or
ownership of suppliers, product oriented vs customer
oriented .
• Forward (M->WS->R->C) ,
• backward (c->R->WS->M).

Amity Business School
The Five-Forces Model
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• Bargaining power of consumers
– Customers being concentrated or buying in
volume affects intensity of competition.
– Consumer power is higher where products
are standard or
undifferentiated.(KFC).American tourist ,
thomson cook .

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Scenario Analysis/SWOT Analysis
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Amity Business School
The Matching Stage
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• The Strengths-Weaknesses-
Opportunities-Threats (SWOT) Matrix
helps managers develop four types of
strategies:
– SO (strengths-opportunities) Strategies
– WO (weaknesses-opportunities) Strategies
– ST (strengths-threats) Strategies
– WT (weaknesses-threats) Strategies

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A SWOT Matrix for a Retail
Computer Store
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Amity Business School
A SWOT Matrix for a Retail
Computer Store
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SWOT – Coca Cola
• Strength – Brand , Supply Chain Control
• Weakness – Health Awareness
• Opportunity
• Threat
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Value Chain Analysis
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Amity Business School
Value Chain Analysis
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Value Chain Analysis (VCA)
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• Value chain analysis (VCA)
– refers to the process whereby a firm determines
the costs associated with organizational
activities from purchasing raw materials to
manufacturing product(s) to marketing those
products
– aims to identify where low-cost advantages or
disadvantages exist anywhere along the value
chain from raw material to customer service
activities

Environmental analysis and dealing with
uncertainty