SESSION:-2018-2021

STRATEGIC MANAGEMENT
ASSIGNMENT WORK
TOPIC:- ENVIRONMENTAL ANALYSIS

Submitted Submitted
To:- By:- Akash
doklan
BBA 6thSEM
 Environmental Analysis

• Environmental analysis is a strategic tool. It is a process to

identify all the external and internal elements, which can
affect the organization’s performance. The analysis entails
assessing the level of threat or opportunity the factors
might present. These evaluations are later translated into
the decision-making process. The analysis helps align
strategies with the firm’s environment.
• Our market is facing changes every day. Many new things
develop over time and the whole scenario can alter in only
a few seconds. There are some factors that are beyond your
control. But, you can control a lot of these things.
• Businesses are greatly influenced by their
environment. All the situational factors which
determine day to day circumstances impact firms.
So, businesses must constantly analyze the trade
environment and the market.
• There are many strategic analysis tools that a firm
can use, but some are more common. The most
used detailed analysis of the environment is
the PESTLE analysis. This is a bird’s eye view of the
business conduct. Managers and strategy builders
use this analysis to find where their market
currently.  It also helps foresee where the
organization will be in the future.
 PESTLE Analysis
• PESTLE analysis consists of various factors that affect the
business environment. Each letter in the acronym signifies a
set of factors. These factors can affect every industry
directly or indirectly.
 The letters in PESTLE, also called PESTEL, denote the
following things:
1) Political factors
2) Economic factors
3) Social factors
4) Technological factors
5) Legal factors
6) Environmental factor
 PORTER’S FIVE FORCES MODEL
• “Porter’s five forces model is an analysis tool that
uses five forces to determine the profitability of an
industry and shape a firm’s competitive strategy”
• “It is a framework that classifies and analyzes the
most important forces affecting the intensity of
competition in an industry and its profitability
level.”
 SWOT analysis
• SWOT analysis is one of the most popular strategic
analysis models. It involves looking at the strengths
and weaknesses of your business' capabilities, and
any opportunities and threats to your business.
 Once you identify these, you can assess how to:
1) capitalize on your strengths.
2) minimize the effects of your weaknesses.
3) make the most of any opportunities.
4) reduce the impact of any threats.
 Advantages of Environmental Analysis

• The internal insights provided by the environmental

analysis are used to assess employee’s performance,
customer satisfaction, maintenance cost, etc. to take
corrective action wherever required. Further, the external
metrics help in responding to the environment in a positive
manner and also aligning the strategies according to the
objectives of the organization.
• Environmental analysis helps in the detection of threats at
an early stage, that assist the organization in developing
strategies for its survival. Add to that, it identifies
opportunities, such as prospective customers, new product,
segment and technology, to occupy a maximum share of
the market than its competitors.
 Steps of Environmental Analysis
1) Identifying: First of all, the factors which influence the
business entity are to be identified, to improve its
position in the market. The identification is performed
at various levels, i.e. company level, market level,
national level and global level.

2) Scanning: Scanning implies the process of critically

examining the factors that highly influence the
business, as all the factors identified in the previous
step effects the entity with the same intensity. Once the
important factors are identified, strategies can be made
for its improvement.
3) Analyzing: In this step, a careful analysis of all the
environmental factors is made to determine their
effect on different business levels and on the
business as a whole. Different tools available for
the analysis include benchmarking, Delphi
technique and scenario building.

4) Forecasting: After identification, examination and

analysis, lastly the impact of the variables is to be
forecasted.
 Objectives of Environmental Analysis
1. To Identify Threats, Opportunities, Strengths &
Weaknesses: The main objective of environment
analysis is to identify the threats and opportunities
that exist in the external business environment. It also
helps a firm to identify its strengths and weaknesses
that exist in the internal environment.
2. To Understand the Change in
Environment: Environment analysis helps in
understanding the current business environment and
probable future changes, such as, change in legal
environment, technology, demand, etc.
3. To Provide Inputs for Decision Making: under the process of
environment analysis, information, related to different aspects of
business environment, is collected. This information is used by the
managers for the purpose of decision making. Different capital and
investment decisions are taken on the basis of such information.
4.  To Formulate Appropriate Strategy: After identifying all the
present strengths and weaknesses, or opportunities and threats,
by proper environment scanning, appropriate future plans and
strategies are formulated. These plans and strategies are
formulated with the objective to minimize the threat by using
present strength or try to overcome weaknesses by capitalizing the
opportunities.
5. To Identify the International Events and their Impact on
Business: Due to globalization, the impact of international events
on a business firm has increased. In this situation, environment
analysis helps to identify and understand the global events and
their influence on business.
 Importance of Environmental Analysis

1. Identification of strength:- Analysis of internal business

environment helps to identify strength of the firm. After
identifying the strength, the firm must try to consolidate
or maximize its strength by further improvement in its
existing plans, policies and resources.
2. Identification of weakness:- Weakness of the firm
means limitations of the firm. Monitoring internal
environment helps to identify not only the strength but
also the weakness of the firm. For further growth and
expansion, the weakness should be identified so as to
correct them as soon as possible.
3. Identification of opportunities:- Environmental analyses
helps to identify the opportunities in the market. The
firm should make every possible effort to grab the
opportunities as and when they come.
4. Identification of threat:- Business is subject to threat
from competitors and various factors. Environmental
analyses help them to identify threat from the external
environment. Early identification of threat is always
beneficial as it helps to diffuse off some threat.
5. Optimum use of resources:- Proper environmental
assessment helps to make optimum utilization of scare
human, natural and capital resources. Systematic
analyses of business environment helps the firm to
reduce wastage and make optimum use of available
resources.
6. Survival and growth:- Systematic analyses of business
environment help the firm to maximize their strength,
minimize the weakness, grab the opportunities and diffuse
threats.
7. To plan long-term business strategy:- A business organization
has short term and long-term objective. Environmental
factors help the business firm to frame plans and policies that
could help in easy accomplishment of those organizational
objectives. Without undertaking environmental scanning, the
firm cannot develop a strategy for business success.
8. Environmental scanning aids decision-making:- Decision-
making is a process of selecting the best alternative from
among various available alternatives. Success of the firm
depends upon the precise decision making ability. Study of
environmental analyses enables the firm to select the best
option for the success and growth of the firm.
THANK YOU