Week 2: Examining Environmental Variables (Back in states, blogging from Columbus, IN)

I am glad to be back home and return to normal routine. It was hard managing school work in transit esp. without relevant books :).

Following are the key learning for me for this week. 

1. SWOT Analysis
2. Internal and external factors that directly/indirectly impact marketing decisions for a firm
3. What all is entailed in developing a marketing plan

I was formally introduced to SWOT analysis a year back at the first in-residence Kelley direct week in a strategy class. Since then, I have used the analysis in two important situations at work and several other situations outside work, as I find value in the concept.

No firm can survive for long, without being agile to its internal and external factors! There are several examples that come to mind of firms that understand this well and firms that have ceased to exist because either they remained in denial or were too late to accept this fact. Google, Apple, Bestbuy are a few firms that continue to utilize respective internal and external factors to their advantage. Circuitcity, Borders, Quiznos are few companies which failed to react in time to their external threats.

Questions to be answered this week

A.     I work for Cummins Inc. like many other members in this class. I saw that few of my Cummins colleagues have already posted their views on this question. Like any firm in the marketplace, Cummins Inc. is no different, in that it needs to be agile to its external environment at all times. Economic, political, geographical, environmental and social factors have a considerable bearing on our industry as well. One external factor that is critical to Cummins and other engine manufacturers is regulation passed by government agencies such as EPA (Environment Protection Agency) in US. Another factor that impacts our industry is price of heavy metals and price of fuel, both of which are outside our control.  These are just a few examples to highlight that it is critical to closely monitor and gain deep understanding of external factors when defining strategic plans for our line of businesses. The one difference I see for equipment manufacturing and/or industrial firms is that the product launch cycle is relatively longer than say apparel industry. Given the capital intensive nature of the product development work for a heavy equipment manufacturer, changing course is not easy and therefore, accuracy in strategic planning becomes even more important.

B.     Analysis on Mission statements

a.       Cummins Inc. is actively engaged in being consumer focused and not simply product focused. Our sales and marketing partners work hard to gauge consumer needs not only in developed markets but in new and emerging markets as well. The company is committed to releasing products that fit needs of all our customers as we understand one size does not fit all.

b.      In my opinion, consumer focus is a better approach. Consumer focus is sustainable in the long term. It forces the company to not sit on its past laurels as consumers are bound to change in their preferences overtime.

c.       I do believe the mission statement at Cummins helps to drive positive company culture. As another colleague has already posted, following is our mission statement(s).

·   Motivating people to act like owners working together.

·   Exceeding customer expectations by always being first to market with the best products.

·   Partnering with our customers to make sure that they succeed.

·   Demanding that everything we do leads to a cleaner, healthier, safer environment.

·   Creating wealth for all stakeholders.

C.     Changes in external environment (such as culture, technology, politics)

a.       For Cummins Inc., change in political environment can be a big driver or deterrent. For example, change in political climate can impact the governing bodies such as Emission Protection Agency (EPA) and its decisions can result in requiring Cummins Inc. to revisit its solution of next tier engine launch. Change in political climate can impact rules around outsourcing of work or it can impact trade agreements between countries causing issues in procuring parts from different parts of the world.

D.    What do consumers get when they buy Cummins engines?

a.       Power, reliability and satisfaction.

b.      When consumers buy and install Cummins engines in their truck, tractor, wheel-loader or Genset, they know they are getting a product that will do what it says it will do.

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