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Analyse the Business Environment
Analyse the Business Environment
Analyzing a business is important as a strategic tool to process and identify both external and internal elements that affect the performance of your organization. The analysis entails assessing the level of threat or opportunity the factors might present. These evaluations are later translated into the decision-making process and it to helps align strategies with the environment.
What is Internal Environment?
What is Internal Environment?
Internal Environment: Influences the activities and the behavior of employees within the organization including current employees, management and corporate culture.
Internal Environment Factors:
Organizational structure
Human Resources
Value system
Physical Resources
Mission and Objectives
Corporate Culture
Financial and Marketing Resources
Plans and Policies
Corporate Image
Labor Management
Technical Capabilities
What is External Environment?
What is External Environment?
External Environment: Is composed of outside factors or influences that impact the operation of business and divided into two types.
Micro Environment: Factors that affect the micro environment: suppliers, customers, marketing intermediaries, financiers, and public perceptions.
Macro Environment: Factors that affect the macro environment: economic, sociocultural, political, legal, technical, and environmental considerations.
Why is PEST Analysis Important for a Business?
Why is PEST Analysis Important for a Business?
PEST analysis focuses with a broad factors that impact on your business performance and allows to overview an advance plan to prevent obstacles in the future.
PEST Analysis Factors:
Political
Economic
Social
Technological
Tip
When doing the PEST analysis, focus on those with the greatest impact on your business at this point in time. Most importantly, you must identify the key factors particular to your business. For example, if you are in the pharmaceutical business, government regulation on healthcare may be critical. If you are using the PEST analysis to compare options, develop a system for scoring of each factor to help you in your decision.
Case Studies
Case Studies
An aging population requires more medical health care and perhaps less demand for some other products and services. They may also be less likely to work, possibly reducing the workforce and increasing your labor cost.
A young workforce will have different expectations of job responsibilities and satisfaction. Growing competition for talent will require companies to think seriously about how to attract them.
With growing awareness of environment and corporate social responsibility, you will need to address the concerns of consumers and lobby groups.
When doing business in a foreign culture and society, you will need to be sensitive to cultural, superstitious and religious issues.
Assess the technologies available in the market. New technologies and processes can help develop new products; MP4 players, interactive video games, online gambling and high definition flat screen TVs are all new products created by technological advances. The products they have replaced no longer hold sway in the market.
Assess whether there are limitations in technology infrastructure when entering a new market. This will dictate the minimum efficient production level and influence outsourcing decisions.
Find out whether there are incentives for technology developments in the market you are intending to enter.
References
References
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