Step 2: Situation analysis.
Three tools are suggested for external analysis –
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a. Stakeholder analysis: Stakeholder analysis consists of an analysis of the firm’s customers, community, investors and risk assessors, regulators and watchdogs, employees, business partners and competitors (Esty & Winston, 2009). This should capture the changes on the horizon and the potential risks that the firm is exposed to from each of the stakeholders. The analysis should address the four parameters:
What is the power and influence of this stakeholder in my business? What is my focus on him now?
How would they react to our green behavior?
What is the risk of not meeting their expectations?
b. PESTLE: This is a tool for assessing the macro-environmental factors. The acronym stands for Political, Economic, Sociocultural, Technological, Legal and Environmental factors. It is evident that the factors analyzed in this tool cannot be influenced by the firm. Thus these will be the constraints that the strategic planning process must operate within.
c. Analysis of the Firm’s Industry in other developed countries. Industry analysis in developed countries is important because it tells of a regulatory trend which Indian markets are likely to follow.
Internal analysis looks at the firm’s own strengths and weaknesses. Strengths and weakness should be looked at from four perspectives: Product, Processes, Management, Research & development.