Environmental analysis is a continuous
process which includes:
•Scanning: Identifying early signals of environmental
changes and trends
•Monitoring: Detecting meaning through ongoing
observations of environmental changes and trends
•Forecasting: Developing projections of anticipated
outcomes based on monitored changes and trends
•Assessing: Determining the timing and importance of
environmental changes and trends for firms’
strategies and their management
- consists of identifying
changing trends and
patterns, monitoring specific
trends and patterns,
forecasting the future
directions of these changes,
the impact on the
What will our
competitors do in the
Where do we hold an
advantage over our
How will this change our
relationship with our
9. Competitive Environment
Competitive analysis – in similar industries
– Panelco III, Decorp and the like
What drives the competitor
– As shown by its future objectives
What competitor is doing and can do
– As revealed by its current strategies
What competitor believes about the industry
– As shown by its assumptions
What the competitors capabilities are
– As shown by its strengths and weaknesses
10. Industry Environment
A set of factors that
directly influences a
company and its
11. The following areas of analysis are used to look at all
external factors effecting a company:
• Customer analysis: Segments, motivations, unmet needs
• Competitive analysis: Identify completely, put in
strategic groups, evaluate performance, image, their
objectives, strategies, culture, cost structure, strengths,
• Market analysis: Overall size, projected growth,
profitability, entry barriers, cost structure, distribution
system, trends, key success factors
• Environmental analysis: Technological, governmental,
economic, cultural, demographic, scenarios, information-
need areas Goal: To identify external opportunities,
threats, trends, and strategic uncertainties
12. It identifies target customers,
ascertains the needs of these
customers, and then specifies how
the product satisfies these needs.
A customer profile is a simple tool
that can help business better
understand current and potential
Two primary aspects of
Demographic Profile: break down
customers into age, income, geographic and other
easily identifiable categories.
Behavioral Analysis: identifies the reasons
customers choose to buy a product instead of the
•Customer Buying Criteria
•Purchase Process and Patterns
14. - Knowledge on the industry
- Information on the current size and stage
- Growth history
- Projected rate of growth
- Trends and characteristics
- Target market
15. 1. Distinguishing Characteristics – what makes your target
market special, including the location of the individuals
and seasonal/cyclical trends.
2. Size – the number of potential customers your target
market contains and the average annual purchases of your
product/service they make.
3. The percentage of market shares you expect to obtain.
4. Pricing – how much your customers will be charged for
your product/service (including any discount structures,
such as purchasing in bulk or annual sales) and your gross
Aspects in Defining Company's
16. 5. Resources – how/from whom you obtained your
information about your target market.
6. Media – what media outlets you will use to advertise to
your target market (i.e. television, radio, billboards, fliers,
newspaper ads, etc.)
7. Need/Solution – identify the needs of your target
market; research and evaluate possible solutions; and
identify who within your company has the authority to
choose which solutions your business will be
8. Trends & Changes – what trends and changes may effect
your target market and how well they respond to your
17. General Environment
– Influences the firm and its industry
– Firms can not directly control these but collect
information and formulate strategies
– Six Segments
• Socio- cultural
18. Six Areas of Analysis in General
Threat of new entrants
Power of suppliers
Power of buyers
Intensity of rivalry
19. For us to understand better
the internal and external analysis
lets take a look and have some
review on SWOT analysis
20. SWOT Analysis
SWOT is an acronym for Strengths,
Weaknesses, Opportunities and Threats. By
definition, Strengths (S) and Weaknesses
(W) are considered to be internal factors
over which you have some measure of
control. Also, by definition, Opportunities
(O) and Threats (T) are considered to be
external factors over which you have
essentially no control.
21. The External Analysis examines opportunities and
threats that exist in the environment. Both
opportunities and threats exist independently of the
firm. The way to differentiate between a strength or
weakness from an opportunity or threat is to ask:
Would this issue exist if the company did not exist? If
the answer is yes, it should be considered external to
the firm. Opportunities refer to favorable conditions in
the environment that could produce rewards for the
organization if acted upon properly. That is,
opportunities are situations that exist but must be
acted on if the firm is to benefit from them. Threats
refer to conditions or barriers that may prevent the
firms from reaching its objectives.
22. • Organizations also need to analyze the external environment.
This would include customers, suppliers, creditors, and
competitors. Analyze the opportunities and treats or
constraints that exist in the organization’s external
environment, including industry and micro environmental
forces. Several questions can be asked which may help
analyze the external environment.
• What is the relationship between the PANELCO III and its customers?
• What is the relationship between the PANELCO III and its suppliers?
• Does PANELCO III have a good rapport with its creditors?
• Is the PANELCO III actively trying to increase the value of the
business for its shareholders?
• Who is the competitor?
• What advantages do competitors have over the PANELCO III?
24. Purpose of External
• Organizations are affected by conditions
in the environment
• Managers need to be aware of these
conditions in order to:
– Take advantage of opportunities that
lead to higher profits
– Reduce the impact of threats
– that can harm the organization’s
refer to favorable conditions in the
environment that could produce rewards for the
organization if acted upon properly
Where can you apply your strength?
How are your customers and their needs
How is technology changing your business?
Are there new markets for your strengths?
Are there new ways of producing your
Are your rivals customers dissatisfied?
Opportunities may arise from market,
competition, industry/ government and
technology. Increasing demand for
telecommunications accompanied by
deregulation is a great opportunity for
new firms to enter telecom sector and
compete with existing firms for revenue.
Opportunities are presented by the
environment within which our organization
operates. These arise when an organization can
take benefit of conditions in its environment to
plan and execute strategies that enable it to
become more profitable.
Organizations can gain competitive
advantage by making use of opportunities.
Organization should be careful and recognize
the opportunities and grasp them whenever
they arise. Selecting the targets that will best
serve the clients while getting desired results is
a difficult task.
* Are the customers meet their needs with alternative
*Are customers needs changing away from your products?
* What are the competitors developing?
* Are your rivals improving their products offering or
*Is new technology making your product obsolete?
*Is new competition coming?
- increase in trade barriers, new regulations and
emergence of substitute products
Threats arise when conditions in
external environment jeopardize the
reliability and profitability of the
organization’s business. They compound the
vulnerability when they relate to the
weaknesses. Threats are uncontrollable.
When a threat comes, the stability and
survival can be at stake. Examples of threats
are ; ever changing technology; increasing
competition leading to excess capacity, price
31. SWOT analysis is the most renowned
tool for audit and analysis of the overall
strategic position of the business and its
environment. Its key purpose is to
identify the strategies that will create a
firm specific business model that will
best align an organization’s resources
and capabilities to the requirements of
the environment in which the firm
32. The SWOT analysis is the
foundation for developing
your strategies and tactics
that then become the road
map for writing the
33. In other words, it is the foundation
for evaluating the internal potential and
limitations and the probable/likely
opportunities and threats from the
It views all positive and negative
factors inside and outside the firm that
affect the success. A consistent study of
the environment in which the firm
operates helps in forecasting/predicting
the changing trends and also helps in
including them in the decision-making
process of the organization.
34. 1. Be realistic about the strengths and weaknesses of your c
organization when conducting your SWOT Analysis.
2. A SWOT Analysis should distinguish between where your
organization is today, and where it could be in the future.
3. SWOT should always be specific. Avoid gray areas. Stay focused
on the topic being analyzed.
4. Always apply SWOT in relation to your competition, i.e. better
than or worse than your competition. It is important to identify
who you are competing against; the competition may be private
sector or other public agencies or non-profits.
5. Keep your SWOT short and simple. Avoid complexity and over
6. SWOT is subjective.
Taken from: www.marketingteacher.com/Lessons/lesson_swot.htm
Six Simple Rules for a Successful SWOT
35. If you don't design your own life plan,
chances are you'll fall into someone else's
plan. And guess what they have planned for
you? Not much.
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