THE FIRM’S
ENVIRONMENT
S THAT INFLUENCE THE ORGANIZA
• INTERNAL ENVIRONMENT
consists of elements that
have a direct impact on the
business operations. Ex.
Employees & Managers
• EXTERNAL ENVIRONMENT
consists of factors that
have
indirect
but
significant influence on the
operations of the business.
Ex. customers, competition,
INTERNAL & EXTERNAL
STRENGTHS
ENVIRONMENT
OPPORTUNI
AND
WEAKNESSES
are part of
the
company's
internal
TIES AND
THREATS
are part of
its external
environment
MACRO
TYPES
OF EXTERNAL
ENVIRONMENT
MICROENVIRONM
ENVIRONMENT
ENT
is also known as the
 is also known as "general environment."
the "operating It consists of the
environment.“
economic,
political,
social,
legal,
and
technical environment
 It consists of the of
customers,
suppliers,
regulatory
agencies,
the
business
organization.
The
factors
in
this
environment
are
and beyond the control of
ENVIRONMENTAL
SCANNING
 ongoing tracking of trends
and occurrences in an
organization's internal and
external environment that
bear on its success,
currently and in the future.
The results are extremely
useful in shaping goals
SWOT AND PEST ANALYSIS
What is SWOT
Analysis?
• SWOT is an acronym for strengths,
weaknesses, opportunities and threats.
SWOT analysis is a technique that identifies
the Strengths and Weaknesses of a company,
as well as the Opportunities and Threats it
faces.
• SWOT analysis is a quick and easy technique
in analyzing business situations. Enables
managers to understand their business
STRENGTHS
WEAKNESSES
● Internal
● Internal
environment
environment
● What does your ● What aspects of
company
do your
company
better
than need
to
be
others?
improved?
OPPORTUNITIES
THREATS
● External
environment
● External
environment
SWOT
ANALYSIS
STRENGTHS
WEAKNESSES
include the company's
attributes that give a
competitive edge over
others. Strengths may
include being a market
leader, having a good
brand image, providing
quality products and
services, and having a
good reputation in the
are the attributes of a
company that need to be
improved or changed.
These
attributes
may
hinder the company's
growth and performance.
Examples of weaknesses
are lack of access to
technology,
limited
distribution channels, poor
SWOT
ANALYSIS
OPPORTUNITIES are factors or events that
can give a positive impact to the company if
properly addressed. Opportunities come in
different forms like new markets, potential
profits, additional sources of raw materials,
increased purchasing power of consumers,
better location, and new users or customers.
THREATS are external factors which may
negatively impact the company. These are
trends, changes, or movements over which
the company has no control but should be
addressed to maintain its status in business.
PEST ANALYSIS
A PEST analysis is an assessment of the political,
economic, social and technological factors that
could affect a business now and in the future.
Focuses on the macroenvironment of the firm, it can
guide managers to identify the reasons why their
business is growing or failing within a certain
environment.
Also helps the company identify new directions for
growth and expansion.
PEST Analysis looks at "big picture" factors that
FACTORS
Political factors include laws,
regulations, and restrictions
that may intervene or affect
the company's business
course
Businesses must comply
with rules and regulations
imposed
by
the
government,
and
compliance
requires
managers to adjust their
operations
accordingly.
FACTORS
Economic factors
directly affect the
capability of business to
generate profits. These
include economic
growth, interest rates,
exchange rates, and
inflation rate.
The increased price will
SOCIAL FACTORS
• Include
demographic
aspects such as age,
group
affiliation,
religion, civil status,
and the economic
status of consumers.
• Companies focus on
information
regarding
their
target
market,
FACTORS
• Include research and
development
activities,
automation,
licensing,
technological shifts,
and
outsourcing
decisions.
• An
important
technological factor
at present is Social