ENVIRONMENTAL ANALYSIS

WHAT IS ENVIRONMENT?
The environment means the - surroundings, - external objects, - influences or - circumstances Under which someone or something exists.

CHARACTERISTICS OF ENVIRONMENT.
Environment is complex Environment is dynamic Environment is multi-faceted Environment has far reaching impact

INTERNAL & EXTERNAL ENVIRONMENT

The internal environment refers to all factors within the organization that impact strengths or causes weaknesses of a strategic nature. The external environment includes all the factors outside the organization which provide opportunities or pose threats to the organizations.

INTERNAL ENVIRONMENT

1.

2.

Internal environmental influences are: Strength : an inherent capacity which an organization can use to gain strategic advantage. (eg. Good reputation among customers, people, knowledge and capabilities etc.) Weakness : an inherent limitation or constraint which creates strategic disadvantage. (eg. Financial deadline, low morale, overdependence on one product line etc.)

EXTERNAL ENVIRONMENT

1.

2.

External environmental influences are: opportunity: favorable position in the organizations environment that enables it to consolidate and strengthen its position. (eg. Economic boom, new technologies etc.) Threat: an unfavorable condition for in the organizations environment which creates a risk for, or causes damage to the organization. (eg. New competitors, change in customer preference etc.)

SWOT ANALYSIS
Popular strategic planning technique evolved during 1960s. This analysis helps the firm to match the strength and weaknesses of the firm with the opportunities and threats operating in the environment. If used in best way, a firm can - capitalize on the opportunities through the use of strengths and - neutralizes the threats by minimizing the impact of weaknesses.

SWOT ANALYSIS

Internal Environment

Strengths 1. 2. 3.

Weaknesses 1. 2. 3.

External Environment

Opportunities 1. 2. 3.

Threats 1. 2. 3.

SWOT ANALYSIS PROCESS

Setting the objectives of the organization or its unit Identifying SWOT Asking four questions 1. How d we maximize our strengths? 2. How do we minimize our weaknesses? 3. How do we capitalize on the opportunities from external environment? 4. How do we protect ourselves from threats in our environment?

GENERAL VERSUS RELEVANT ENVIRONMENT

General Envt.

Organization Relevant Envt.

ENVIRONMENTAL FACTORS
Economic environment International environment Market environment Political environment Regulatory environment Socio-cultural environment Technological environment