Day 3 - Environmental Scanning

ENVIRONMENTAL
SCANNING:
SWOT & PEST
ANALYSIS
MAJOR PROBLEMS
FACED BY FIRMS
UNCERTAINTY
GLOBALIZATION
INNOVATION
GOVERNMENT POLICIES
MAJOR PROBLEMS
FACED BY FIRMS
TECHNOLOGY
DIVERSITY
COMPLEXITY
INFORMATION OVERLOAD
THE
ENVIRONMENT
OF THE FIRM
The business firm’s environment refers to
the conditions and elements that
define its operations and determine its
success.
THE
ENVIRONMENT
There are two types of the firm’s
environment: OF THE FIRM
Internal Environment: employees,
board of directors, managers
External Environment:
(1) Microenvironment: customers,
suppliers, regulatory agencies,
competitors.
(2) Macroenvironment: General
environment of the firm.
External Environment
Microenvironment
THE Macroenvironment
- Customers - General environment

-
-
Suppliers
Regulatory Agencies
FIRM of the firm.
- Competitors Internal Environment

- Employee
- Board of Director
- Managers
THE
ENVIRONMENT
OF THE FIRM
Internal environment consists of
elements that have a direct impact on
the business operations. The elements
of the internal environment are
directly controlled and can be freely
modified by the firm itself.
THE
ENVIRONMENT
OF THE FIRM
External environment consists of factors
that have indirect but significant
influence in the operations of the
business. These factors CANNOT be
controlled by the firm.
ENVIRONMENTAL SCANNING
It is the actual monitoring and evaluation of information from

the external and internal environment of a business
organization. The information is then provided to the key
people to guide the organization in its business operations and
in preparing for target operations.
ENVIRONMENTAL
SCANNING MODELS
AD HOC ENVIRONMENTAL SCANNING
REGULAR SCANNING
CONTINUOUS SCANNING
STRATEGIC PLANNING: SWOT and PEST Analyses
To deal with the external environment, managers and decision-
makers apply certain techniques in gathering and analyzing
information and subsequently conducting strategic planning.
SWOT analysis and PEST Analysis are techniques in making

strategic planning where it considers the elements of a firm’s
internal and external environment in formulating a business plans
and decisions.
SWOT analysis focuses on analyzing the firm’s microenvironment

PEST analysis focuses on analyzing the firm’s macroenvironment
SWOT
1. Strengths
Analysis
2. Weaknesses
3. Opportunities
4. Threats
Strengths and Weaknesses analyzes the

firm’s internal environment.
Opportunities and Threats analyzes the
firm’s external environment.
It includes the firm’s attribute that give a
competitive edge over others. STRENGTH
It includes the firm’s attribute that give a
competitive edge over others.
Strengths may include:

1. being a market leader
2. having a good brand image
3. providing quality products and services
4. having a good reputation in the business
The attributes of the firm that needs to be
improved or changed WEAKNESSES
These attributes hinders the firm’s growth
and performance
Weaknesses may include:

1. Lack of access of technology
2. Limited distribution channels
3. Poor location
4. Lack of Facilities and equipment
5. Poor transportation system
Opportunities are factors or events that
can give a positive impact to the
company if properly addressed.
OPPORTUNITIES
Opportunities can come at a different
form:
1. New markets
2. Potential Profits
3. Additional sources of raw materials
4. Increased purchasing power of
consumers
5. Better location
6. New user or customers
Threats are external factors which may
negatively impact the firm.
THREATS
Those are trends, changes, or movements
over which the firm has NO CONTROL
but should be addressed to maintain
its status in business. Increase in price
of resources, entry of new
competitors, and highly inflation rates.
OPPORTUNITIES (EXTERNAL) THREATS (EXTERNAL)
STRENGTHS Strengths – Opportunities (SO) Strategies Strengths – Threats (ST)

(INTERNAL)
Which if the company’s strengths can be used to How can the strengths be used to
take advantage of the opportunities identified? minimize the threats that were identified?
WEAKNESSES Weaknesses – Opportunities (WO) Strategies Weaknesses – Threats (WT)

(INTERNAL)
How can the identified opportunities be used to How can the weaknesses be minimized to
address the company’s weaknesses? avoid the impending threats identified?
SWOT Analysis is a quick and SWOT Analysis can be used to SWOT Analysis can be used to
easy technique in analyzing examine the entire firm. examine a particular department
business situations. It is a or business operation.
versatile tool that can be applied
at the different levels of the
company.
The main However, SWOT It is not very effective
advantage of this Analysis is more when dealing with
analysis is for effective if managers more complicated
use clear and issues and factors
managers to be accurate data and that cannot be clearly
able to understand analyze the factors in assigned to only one
their business an objective manner. category. Such
better, particularly factors ay be both
in terms of how considered a strength
the company’s and a weakness.
internal
environment aligns
with externally.
PEST analysis is a method used in
analyzing the Political, Economics,
PEST Analysis
Social, and Technological forces
affecting the firm.
This technique focuses on the factors that

define the macroenvironment of the
firm.
PEST stands for:
POLITICAL
ECONOMICAL
TECHNOLOGICAL
SOCIAL
This includes laws, regulations, and
restrictions that may intervene or
POLITICAL
affect the firm’s business course.
Firms must comply with the rules and

regulations set by the government,
and compliance requires managers to
adjust their operations accordingly.
ECONOMIC
FACTORS
Economics Factors directly affect the
capabilities of business to generate
profits.
Economic growth
Interest rates
Exchange rates
Inflation rates
SOCIAL
Social Factors include demographic
aspects such as age, group affiliation,
FACTORS
religion, civil status, and the economic
status of consumers.
Firms focus on information regarding

their target market, particularly its
buying habits, attitudes, ethics,
personalities, and values.
TECHNOLOGICAL
Technological factors include research
and development activities,
automation, licensing, patenting,
technological shifts, and outsourcing
decisions.
Firms need to keep track of the latest

technologies and determine ways that
these can aid in their business
processes
Importance of PEST Analysis
PEST analysis exclusively 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.
It also helps firms identify new directions for growth and expansion.
A major limitation with PEST analysis is that it does not consider the internal elements of the
company.
Benefits of Strategic Planning using SWOT and PEST
Analysis
SWOT analysis and PEST analysis helps firms in formulating strategies
and aligning their vision and mission to the general direction of the
business environment where they operate.
The similarity between SWOT and PEST is their focus on the external
environment.
SWOT Analysis focuses on the internal and external environment
PEST Analysis consider the external environment only of the firm.
It is recommended that the information gained from PEST analysis be used in

identifying the opportunities and threats in SWOT analysis
Conducting
SWOT and
PEST Analysis
How to conduct SWOT Analysis
1. Analyze the internal and external environment of your firm.

2. Identify the Strengths, Weaknesses, Opportunities, and Threats of your firm.
3. Develop strategies to address issues in the SWOT.
• How can we use our strengths to take advantage of the opportunities identified?
• How can we use these strengths to overcome the threats identified?
• What do we need to do to overcome the identified weaknesses in order to take
advantage of the opportunities?
• How will we minimize our weaknesses to overcome the identified threats?
How to conduct PEST Analysis
1. Gather relevant data.

Identify the following:
• Political Factors
• Economic Factors
• Social Factors
• Technological Factors
2. Analyze the data and categorize which are Opportunities and Threats.
3. Analyze the effects of the data to your firm.

Day 3 - Environmental Scanning

Uploaded by

Copyright:

Available Formats

Day 3 - Environmental Scanning

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Day 3 - Environmental Scanning

Uploaded by

Copyright:

Available Formats

ENVIRONMENTAL

- Customers - General environment

- Competitors Internal Environment

It is the actual monitoring and evaluation of information from

SWOT analysis and PEST Analysis are techniques in making

SWOT analysis focuses on analyzing the firm’s microenvironment

Strengths and Weaknesses analyzes the

Strengths may include:

Weaknesses may include:

STRENGTHS Strengths – Opportunities (SO) Strategies Strengths – Threats (ST)

WEAKNESSES Weaknesses – Opportunities (WO) Strategies Weaknesses – Threats (WT)

This technique focuses on the factors that

Firms must comply with the rules and

Firms focus on information regarding

Firms need to keep track of the latest

SWOT Analysis focuses on the internal and external environment

PEST Analysis consider the external environment only of the firm.

It is recommended that the information gained from PEST analysis be used in

1. Analyze the internal and external environment of your firm.

1. Gather relevant data.

You might also like