The service which is dynamic and changing holds both opportunities and threats for the organizations. The organizations while attempting at strategic realignments, try to capture these opportunities and avoid the emerging threats. At the same time the changes in the environment affect the attractiveness or risk levels of various investments of the organizations or the investors. There is a strong linkage between the changing environment, the strategic response of the business to such changes and the performance. It is therefore important to understand the forces of external environment the way they influence this linkage.
The macro environment in which all organizations operate broadly consist of the economic environment ,the political and legal environment ,the socio cultural aspects and the environment related issues like pollution, sustainability etc.These factors often overlap and the developments in one area may influence developments in other. The external forces can be classified into: Political, Economic, Social, Technological, Environmental and Legal Forces. Changes in these external forces affect the changes in consumer demand for both industrial and consumer products and services. These external farces affect the types of products produced the nature of positioning them and market segmentation strategies, the types of services offered, and choice of business. Therefore, it becomes important for the organizations to identify and evaluate external opportunities and threats so as to develop a clear mission. designing strategies to achieve long-term objectives and develop policies to achieve short-term goals. While the framework may be used to understand the most important factors at the present time, it should be primarily used to look into the future impact which may be different from their present or past impact.
Political: Politics has a serious impact on the economic environment of a country. Political ideology and political stability or instability strongly influence the pace and direction of the economic growth. Also it contributes to the economic environment which is conducive for some businesses to grow or remains indifferent for some businesses and at times is a hurdle.
Service Guarantees: Throw light on the nature and direction of the economy in which a
firm operates. The firms must focus on economic trends in segments that affect their industry. Consumption patterns are the relative affluence of market segments and firms must understand them through the level of disposable income and the tendency of people to spend. interest rates, inflation rates, unemployment rates and trends in the gross national product, government policies and sect oral growth rates are other economic influences it must consider.
Demographic Factors: Demographic characteristics such as population, age distribution, literacy levels, inter-state migration, rural-urban mobility, income distribution etc. are the key indicators for understanding the demographic impact on environment. The shifts in age distribution caused by improved birth control methods have created opportunities for youth centric products ranging from clothes to entertainment to media. The growing number of senior citizens and their livelihood needs have been highlighted and the government is being forced to pay more attention in the form of social security benefits etc.
Service Recovery: Service Recovery factors represent major opportunities and threats which must be taken into account while formulating strategies. It can dramatically influence the organizations products, services markets, suppliers, distributors, cornpetitors, customers, manufacturing processes, marketing practices and competitive position. Technological advancements can open up new markets, change the relative position of an industry and render existing products and services obsolete. Technological changes can reduce or eliminate cost barriers between businesses, create shorter production runs.
Global Strategies For Services: It gained prominence because of deteriorating balance which is threatening the sustainability of life. Largely, business is also held responsible for such situations as emissions from industries polluting the air, excessive chemical affluents drained out in water making it poisonous and unfit for use, usage of bio non-degradable resources affecting the bio-chain adversely and exposure of employees to hazardous radiations bring their life in danger
Understanding Customer Needs
The data for the global stand of the product depends on to the market, product, competition, distribution and macro-environment.
· Market Situation: Data on the target market served like the size and growth of the market for the past several years, and customer needs, perceptions and buying behavior trends.
· Product Situation: Data on sales, prices, contribution margins and net profits for each major product for the past several years.
· Competitive Situation: Data on major competitors in respect of their size, goals, market share, product quality, marketing strategies and other relevant characteristics that are likely to help in understanding and predicting their behavior.
· Distribution Situation: Data on the number and value of the units sold in each distribution channel together with the changes that are taking place in the power and importance of each channel and also the changes in the trade relations mix like prices trade terms, etc. required to motivate channel members.
· Macro-environment Situation: Data on changing trends in respect of political, legal, technological, demographic, economic and socio-cultural factors.
The data required to be collected in respect of the current marketing situation helps in identifying major strengths, weaknesses, opportunities and threats. The identification of these issues in turn helps in arriving at the decisions about the objectives. These objectives will guide the subsequent search for strategies and action programmes. These objectives may be in terms of –
1. Financial objectives (long-run rate of return on investment; profits and cash-flow during the current year)
2. Marketing objectives (sales revenue, sales volume, market share, average realized price; consumer awareness, distribution coverage, etc.) to achieve the financial objectives.
THE SERVICE VISON
Service vision is the ‘game plan’ that the marketer will use in attaining the objectives of the business. The basic tested methods include increasing the average price of all units, increasing the overall sales volume and selling more of the higher price units which are related to the increase in market growth and market share.
Coherence: Do all the sub-strategies fit together in focusing on the market
Consistency: Are there any inconsistencies among the individual elements?
Contribution: Does each sub-strategy or element of the strategy make a distinct contribution?
Product: Options, models to be marketed, modifications for specific target market, product simplification, invention, service and warranty system, spare parts.
Price: Skimming vs. penetration, price relative to current and potential competition. Promotion: Budget, theme, media, timing. If major resources are to be committed, plan for measurement of promotional effectiveness should be include feedback from the market place,
Distribution channels: Mode of market entry. Functions to be performed by channel
members. Margins, promotional allowances (if any) Short-terms vs. long-term
Consumer taster is the study of why, how, what, when, where, and how often do consumers buy and consume different products and services. Knowledge of consumer taste is helpful to understand the needs of different consumer segments and developing appropriate marketing strategies for each. It is also useful for understanding of how consumers respond to the various stimuli, which he provides in terms of the product, price, promotion and place. If he can correctly identify those stimuli that evoke a positive response in the consumer he can very easily design effective strategies using these stimuli.
Federal and State regulation of Business
In the area of the product the Federal control may affect decision-making with regard to product-line expansion, product quality and safety, provision of adequate and efficient services, branding, sizes and, information to be given with regard to sponsorship, performance characteristics, warranty or guarantee provisions. The other decision areas concern the use of deceptive or confusing trade marks, use of advertisements to cause the ignorant consumer to resort to self-medication. The organizer must ensure that his decision in all these fields conforms to the relevant Provisions of the various Acts and Statutes.of. State Regulation.
The managers must take notice of the fact that if the changes are significant, it may have the potential of changing the competitive rules of the game in the industry.
Managers need to be cautious of the fact that there may be developments, which are not so easy to be predicted and therefore need further attention so that they can be incorporated in their strategy. In the global context, the managers must see the kind of impact any single change will have in different markets. It is quite possible that they are very different both in degree and their nature.
Understanding of the general environment in which an organization operates is the foremost pre-requisite towards strategy formulation. The six broad dimensions which the framework provides of the environment-political, economic, sociocultural, technological, environmental and legal are capable of giving a comprehensive overview of how things may be unfolding. The objective of the analysis out of this framework however should not only restrict to the present and past but the real focus should be on projecting the trends into future in order to get the real feel of the environment then. This shall enable the firm to proactively strategize for future considering the general environment; it is going to face and the issues which will be of importance.
Thompson, A. Arthur, Jr. and Strickland, A.J. III. (2003). Strategic Management, Concepts and Cases-social and cultural of industry, 245, Thirteenth edition. Tata McGraw Hill Publishing, New Delhi.