B U S I N E S S E N V I RO N M E N T
W H AT
I S E N V I R O N M E N TA L S C A N N I N G
It is a process by which organizations monitor their
relevant environment to identify
opportunities &
threat that affect business for the purpose of strategic
decision making .
 Environmental scanning is the acquisition and use
of information about events, trends, and
relationships in an organization's external
environment, the knowledge of which would assist
management in planning the organization's future
course of action.

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F A C TO RS
TO B E C O N S I D E R E D F O R
E N V I R O N M E N TA L S C A N N I N G
Events - are important and specific occurrences
taking place in different environmental sectors.
 Trends- The general tendencies or the course of action
along which events take place.
 Issues- are the current concerns that arise in response to
events and trends.
 E x p ectations- are the demands made by interested
groups in the light of their concern for issues.

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S I G N I F I C A N C E O F EN V I RO N M E N TA L
SCANNING
Helps in converting threats to opportunities
 Changing color of environment – to manage imbalance
 Narrowing down to alternatives
 Strategic management start with environmental
scanning

SOURCES
O F I N FO R M AT I O N F O R
E N V I R O N M E N TA L
SCANNING
Secondary source – Published data
 Documents
 Mass media: radio, T V, Internet
 Internal sources –MIS, sale staff, memorandums,
company file, documents
 External agencies – customer, supplier, trade
associations, govt agencies etc
 Formal studies - consultants , educational institute, mkt
research agencies etc
 Spying

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TYPES OF ENVIORNMENT
E N V I RO N M E N T
EXTERNAL
M ICR O
IN T E RN A L
M AC RO
•CATWOE (Customers, Actors, Transformation Process, World View, Owner, and Environmental
Constraints). This technique identifies the main parties and processes potentially affected by any
action the business undertakes. This technique helps business analysts to thoroughly evaluate
how a proposed action will affect a collection of different parties and elements.
•MoSCoW (Must or Should, Could or Would). This process prioritizes requirements by presenting
a framework where every single demand is evaluated compared to other requirements. Is it a
must-have or a should-have? Is it something that could improve the product or something that
would be an ideal future element?
•MOST (Mission, Objectives, Strategies, and Tactics). Business analysts use these elements to
conduct a detailed and complete internal analysis of an organization’s goals and how to handle
each one.
•PESTLE (Political, Economic, Sociological, Technological, Legal, and Environmental). Business
analysts use the PESTLE model to evaluate the various external factors that can potentially
affect their company and how best to address them.
SWOT analysis
•SWOT (Strengths, Weaknesses, Opportunities, and Threats). This technique
identifies a corporate structure’s areas of strength and weakness, translating them
into opportunities and threats. The knowledge gained helps determine proper
resource allocation.
•Six Thinking Hats. This analysis process directs a group’s line of thinking by
brainstorming alternate perspectives and ideas. The ‘six hats’ in question are White
(focus on your data, logic), Red (uses gut feelings, emotions, intuition), Black
(potential negative results, what can go wrong), Yellow (focus on positives,
optimistic), Green (creativity), and Blue (process control, the big-picture overview).
•The 5 Whys. Commonly found in Six Sigma and business analysis techniques, this
series of leading questions, all posed with “Why?”, helps business analysts identify a
problem’s origin by asking why a situation exists, then raising another “why?”
question to the answer, and so on.
BASIS
FOR
C O M PA R I S O N
B asis
Micro environment
Macro environment
1. Meaning
Micro environment is defined as the
nearby environment, under which the
firm operates.
Macro environment refers
to the general environment,
that can affect the working
of all business enterprises
2.Elements
COSMIC
I.E. Competitors, organization itself,
suppliers, market, intermediaries and
customers.
P E S T L E - population &
demographic, economic,
socio-cultural,
technological, legal &
political and
environmental.
3are these
factors
controllable?
Yes
No
4. Nature
S pecific
G eneral
Influence
Direct & regulatory
Distantly


MICRO
ENVIRONMENT

Micro environment components are within
the
immediate surroundings of the
organization.
Micro factors do not affect all the businesses
in the industry in the same manner. The
reason is that every business is different in
size, capacity, financial resources, human
resources and overall strategies.
Microenvironment has a direct impact on
the business activities
MI CRO ENVIRONMENT I N C LU D ES I . E C O S M I C
Porter's Five Forces Model
Porter's Five Forces of Competitive Position Analysis were developed in 1979
by Michael E Porter of Harvard Business School as a simple framework for
assessing and evaluating the competitive strength and position of a business
organisation.
Porter’s five forces help to identify where power lies in a business situation.
This is useful both in understanding the strength of an organisation’s current
competitive position, and the strength of a position that an organisation may
look to move into.
Strategic analysts often use Porter’s five forces to understand whether new
products or services are potentially profitable. By understanding where power
lies, the theory can also be used to identify areas of strength, to improve
weaknesses and to avoid mistakes.
PORTER’S 5
FORCE MODEL
P O RT E R ' S F I V E F O R C E S
Porter's Five Forces is designed to help financial professionals and other
managers explore how the following five forces determine the balance of
power in a situation:
1.
S U P P L I E R BARGAINING POWER, :
E X . if there are less suppliers than buyers then this allows the supplier to set
a price increase, as they have power. However, if there are more suppliers
than buyers, this increases the power that the organisation have, putting
the organisation in a position to negotiate terms and cost.
2 . B U Y E R B A R G A I N I N G P O W ER :
Buyers have more bargaining power when there is a higher supply
than demand for a product in the marketplace
3 . C O M P E T I T I V E R I VA L RY :
This increases the competition and decreases the level of profitability for
companies already in the market. This threat can be managed in various
ways, including; patents, brand persona, government policy and regulation
4. THREAT O F S U B STITU TION AND
Fo r example,

mobile phone cameras have improved vastly and for many people
have replaced the need for a separate digital camera.

Apple iPods meet the same needs as other branded MP3 players,
the strong branding draws people towards the iPods despite their
higher price tag.
5. T H R E AT O F N E W E N T RY.
Depending on your market position and customer perceptions,
there could be a high level of rivalry between your own and your
competitors’ products.
PORTER'S F I V E M O D E L
In examining how Porter's Five Forces apply to specific
business situations, managers brainstorm about various
factors associated with each of the five forces.
 For supplier power, examples of these factors include the
number of suppliers, use of suppliers, uniqueness of
service, ability to substitute suppliers and cost of changing
suppliers.
 Similarly, in using Porter's Five Forces, managers
apply each of the five forces to specific situations.
For example, a business with operations in New York,
Virginia, Colorado and California would need to study
state, local, and county laws in all four states regarding
employment, business partnerships,
competition and
taxation.
EXAMPLE
UBER
The analysis shows that the ride-hailing app’s customers enjoy high bargaining
power, lower transaction costs and shorter waiting time. At the same time,
competition is high as there are multiple players in the market and the customer is
well-informed. It’s highly likely that a customer will book a different cab if demand
and prices are high.
STARBUCKS
Starbucks Coffee tracked the key characteristics of the industry competition.
Starbucks faces stiff competition due to a large number of organizations in the
market, moderate variety of products and high probability of customers
switching. They have a coupled with substitute products, which increase chances of
customers ssmaller size of buyers and high prices, witching. Using Porter’s Five
Forces example Starbucks Coffee also evaluated the bargaining power of suppliers.
They buy from different sources to avoid monopoly.
EXAMPLE :
STARBUCKS
Starbucks operates in a
business environment that
involves
strong
competition with other
coffeehouse companies, as
well as food and beverage
businesses like Dunkin’
Donuts, McDonald’s, Wend
y’s, Burger King, and
Subway
SAMSUNG
https://www.mbaskool.com/five-forces-analysis/companies/18268-samsung.html
https://unteething.com/porters-five-forces-framework-for-industry-and
-competition-analysis/
What benefits does Porter’s Five Forces analysis provide?
Five forces analysis helps organisations to understand the factors affecting profitability in
a specific industry, and can help to inform decisions relating to: whether to enter a specific
industry; whether to increase capacity in a specific industry; and developing competitive
strategies.
EXAMPLE OF MINING INDUSTRY & IT NDUSTRY
https://timreview.ca/article/1366
2. PORTER DIAMOND MODEL
3.The Product life cycle model
The product life cycle analysis is a technique used to plot t
he progress of a product through its life span. The model
can be used to assess an individual firm's products (e.g., t
he iPod Classic), a type of product (e.g. CRT televisions)
or an industry (e.g., movies).
It is important in exam questions that you recognize the ap
propriate lifecycle stage and discuss the implications with
in the context of the scenario.
Four stages:
1. introduction 2. growth 3. maturity 4. decline.
PESTLE
MACRO ENVIRONMENT
1 . P E S T L E /S T E P /P E S T /S T E P L E D /S T E P L E
Economic Factors
1. Economic conditions –National income, economic stage, distribution f
income, wealth, per capita income, G N P, monetary fiscal policy etc
2. Economic system :capitalist, Socialist , Communistic, Pure Economy ,
Mixed Economy etc
3 Economic policies
4. Economic growth
5. Interest rate
6. Exchange rate
2.
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T E C H N O LO G I C A L E N V I R O N M E N T
Source of technology, Stages
Impact of technology on hum
New discoveries
Rate of technological advancement etc
3. S O C I A L E N V I R O N M E N T /SOCIO C U LT U R A L E N V I R O N M E N T
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Implication of society from business
Attitudes of society towards business & its management
Views towards achievement of work
Outlook towards authority structure
Customs traditions conventions
Level of education
Class structure
Education level
Culture
Gender etc
DEMOGRAPHIC
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ENVIRONMENT
Population size
Birthrate
Growth rate
Income level
Family size
Language
Earners &n on earners of family
Age etc
P O L I T I C A L & L E G A L E N V I RO N M E N T
•
•
•
•
•
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Provision by constitution
Govt policies
Laws
Patent
Health & safety regulation
I N T E R N AT I O N A L
•
•
•
•
•
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ENVIRONMENT
Globalization
Global environment
Worldwide market
Global H R M
International information system
Quality standards
Laws
Taxation etc
What is a PESTLE Analysis used for?
•A PESTLE analysis is often used as a broad fact-finding activity.
• It helps an organization establish the external factors that could impact decisions made
inside the organization.
•By understanding the impact these external factors can have on an organization, it becomes
handy for organizations to plan better.
• They can form strategies to minimize the threats and maximize opportunities for
themselves.
PESTLE ADVANTAGES & DISADVANTAGES
Advantages
Disadvantages
• simple framework- easy to understand and conduct • Some PESTLE analysis users oversimplify the
amount of data used for decisions – it’s easy to use
• facilitates a better and broader understanding of the insufficient data.
business environment.
• It’s easy to get lost in the enormous amount of
data. So, there always remains a risk of capturing
• encourages organizations to develop external and
too much data and undertaking too much data
strategic thinking
analytics that may lead to ‘paralysis by analysis’
• enables an organization to anticipate future
• As a PESTLE analysis works on assumptions,
business threats and allows it to minimize or
there remains a risk of being wrong
nullify the impact
• allows organizations to spot an opportunity and to
capitalize on them
• Once in a while an attitude doesn’t work with
PESTLE analysis. So, it must be a regular
practice.
• The pace of change makes it difficult to anticipate
the developments and this may affect the
organization in fut
SWOT and PESTLE of Nissan
https://www.swotandpestle.com/nissan/