Exercise No.

2: The Industry
Analysis and the Project Area
Introduction
Business organizations are affected by conditions in the environment like the type of industry the
proposed business belongs, and the area/location of your project. Evaluation of the external
environment or industry analysis which the business will operate is needed to determine the
attractiveness of the project. It helps to identify key opportunities and threats confronting the
business so that managers can formulate strategies to take advantage of the opportunities and
avoid or reduce the impact of threats.
In this lesson, the PESTEL analysis will be used as a tool assess the external environmental
factors that may affect the implementation of your business project.

To assess the external environment of your proposed business project, you may use the PESTEL
analysis. A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the
macro-environmental (external marketing environment) factors that have an impact on an
organization, company, or industry. It examines the Political, Economic, Social, Technological,
Environmental, and Legal factors in the external environment. A PESTEL analysis is used to
identify threats and weaknesses which are used in a SWOT analysis
(https://libguides.libraries.wsu.edu/c.php?g=294263&p=4358409.
➢ Political factors include government policies, leadership, and change; foreign trade
policies; internal political issues and trends; tax policy; regulation and de-regulation
trends.
➢ Economic factors include current and projected economic growth; inflation and interest
rates; job growth and unemployment; labor costs; impact of globalization; disposable
income of consumers and businesses; likely changes in the economic environment
➢ Social factors include demographics (age, gender, race, family size); consumer attitudes,
opinions, and buying patterns; population growth rate and employment patterns; socio-
cultural changes; ethnic and religious trends; living standards.
➢ Technological factors affect marketing in (1) new ways of producing goods and
services; (2) new ways of distributing goods and services; (3) new ways of
communicating with target markets
➢ Environmental factors are important due to the increasing scarcity of raw materials;
pollution targets; doing business as an ethical and sustainable company; carbon
footprint targets.

➢ Legal factors include health and safety; equal opportunities; advertising standards;
consumer rights and laws; product labeling and product safety.
The Project Area
The business project should be located in strategic location. The term strategic means that the
location of the business, its head office, plant site and outlets, should provide a competitive
advantage and ensure the attainment of maximum efficiency. Competitive advantage means that
the business has gained over its competitors that can hardly be copied and which provides higher
profitability level. The location could provide maximum efficiency if the business would be able
to produce same amount of products at a lower cost (Aduana, 2015).

The following information should be explained in this section:

➢ General Description of the Project Area
- Place and Location of the Project
➢ Geographic and Topographic Profile
- Land Area and Geographic Location, Topography & Climate/Temperature/Weather
Condition
➢ Socio-economic Profile
- Population, Livelihood, Dialect
➢ Status of Land Use
➢ Infrastructure and Facilities
- Road System and Transportation Facilities, Power Supply, Water Supply &
Communication Facilities

Collecting Information on the Overview of the Industry and the Project Area
Data gathering plays a very important role in the conduct of the feasibility study since facts are
established through data. Without the desired data, good and reliable conclusion can hardly be
reached (Aduana, 2015).
The data and information on the overview of the industry and the project area can be obtained
from journals, books, reports, magazines available in the library or published in the internet by
the following:
• Philippine Statistics Authority (PSA)
• National Economic and Development Authority (NEDA)
• Department of Trade and Industry (DTI)
• Food and Agricultural Organization (FAO)
• Local Government Units and offices
• Universities and Colleges
• Existing and Prospective users of the product
• Other government and non-government offices/agencies

Learning Outcomes
At the end of this exercise, you should be able to:
 1. Evaluate the external environment of the business project through PESTEL analysis.
2. Identify the factors in selecting the project area.
3. Develop skills in gathering secondary information and data sources.
4. Create the overview of the industry and the project area write-up.

Materials
• Laboratory Manual
• Laptop

Procedure

Given your proposed business idea/concept that you chose for feasibility study, brainstorm
among your group members and fulfill the following questions/requirements:
1. Evaluate the external environment of your business project using PESTEL Analysis.
2. Using the results and information that you gathered from your PESTEL analysis,
develop the Overview of the Industry and Project Area Write-up following the format
presented in the following manner presented in the next page:
 COVER PAGE
The cover page should contain the title of the course (BOLD letters), module number (BOLD
letters) and title (1st letter of each word is capitalized), complete name of student (BOLD letters)
and date of submission.
Example:

MGMT 145 – INTRODUCTION TO PROJECT

FEASIBILITY STUDY

The Overview of the Industry and Project Area

JUAN DE LA CRUZ
MARIANO PONCE
September 2021