ENVIRONMETAL SCANNING:
SWOT AND PEST ANALYSES
Objectives
• Define environmental scanning
• Identify the various forces of the firm’s environment
• Discuss SWOT and PEST analysis
• Identify common elements and differences between
the two techniques
• Employ SWOT and PEST analysis in analyzing the
business environment of a firm and in other
situations.
Major Problems Faced by Businesses
Uncertainty Technology
Globalization Diversity
Innovation Complexity
Government Information
Policies overload
The Environment of the Firm
External Environment
Microenvironment The Firm
Macroenvironment
• Cutomers • General environment
• Suppliers of the firm
• Regulatory agencies
• Competitors Internal Environment
• Employees
• Board directors
• Managers
The internal environment consists of elements that
Internal Environment
• Employees
have a direct impact on the business operations. The
• Board directors elements of the internal environment are directly
• Managers controlled and can be modified by the firm itself.
The external environment consists of factors Types of external
environment
that have indirect but significant influence on • Microenvironment
the operations of the business. These factors, • Macroenvironment
however, cannot be controlled by the firm.
Microenvironment is also known as
Microenvironment “operating environment”. The factors
• Cutomers in this environment have a direct
• Suppliers relevance to the business operations
• Regulatory agencies but are uncontrollable to a certain
• Competitors
extent.
Macroenvironment is also known as “general
Macroenvironment
en-vironment”. It consists of the economic, • General environment
political, social, legal, and technical environment of the firm
of the business organization. The factors in this
environment are beyond the control of the
firm but are important determinants of success.
Environmental
Scanning
Environmental Scanning
Environmental scanning 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 market operations.
3 Modes of Environmental
Scanning
3 Modes of Environmental Scanning
Ad Hoc Environmental Scanning
It is not often done and is usually applicable
only during a crisis situation. The firm does ad
hoc scanning to determine whether a problem is
either external or internal.
3 Modes of Environmental Scanning
Regular Scanning
Usually done at least once a year or at
regular intervals.
3 Modes of Environmental Scanning
Continuous Scanning
Refers to the continuous collection of data on
a broad range of environmental factors.
Strategic Planning:
SWOT and PEST Analyses
SWOT Analysis
SWOT analysis is a technique that identifies the
Strengths and Weaknesses of a company , as well as
the Opportunities and Threats it faces. In conducting
this analysis, it is imperative to note that strengths
and weaknesses are part of the company’s internal
environment, while opportunities and threats are part
of its external environment.
SWOT Analysis
STRENGTHS (What does your company do better than others?)
WEAKNESSES (What aspects of your company need to be
improved?)
OPPORTUNITIES (What trends/conditions can positively
impact your company?)
THREATS (What trends/conditions can negatively impact your
company?)
SWOT Analysis
• Strengths include the company’s attributes that give a
S competitive edge over others.
• Weaknesses are the attributes of a company that need to
W be improved or changed.
• Opportunities are factors or events that can give a positive
O impact to the company if properly addressed.
• Threats are external factors which may negatively impact
T the company.
Internal/External Opportunities (External) Threats (External)
Strengths (Internal) Strengths-opportunities Strengths-threats
(SO) strategies (ST) strategies
Which of the company’s How can the strengths be
strengths can be used to take used to minimize the
advantage of the opportunities threats that were
identified? identified?
Weaknesses Weaknesses-opportunities Weaknesses-threats
(Internal) (WO) strategies (WT) strategies
How can the identified How can the weaknesses
opportunities be used to be minimized to avoid the
address the company’s impending threats
weaknesses? identified?
PEST Analysis
PEST analysis is a method used in analyzing
the Political, Economic, Social and Technological
forces affecting the company. This technique
focuses on the factors that define the
macroenvironment of the business.
PEST Analysis
Political factors include laws, regulations,
and restrictions that may intervene of affect the
company’s business course. Significant political
factors include tax policies, labor laws,
environmental laws, trade restrictions and
tariffs.
PEST Analysis
Economic factors directly affect the
capability of business to generate profits.
These include economic growth, interest
rates, exchange rates, and inflation rates.
PEST Analysis
Social factors include demographic aspects
such as age, affiliation, religion, civil status, and the
economic status of consumers. Companies focus on
information regarding their target market, particularly
its buying habits, attitudes, ethics, personalities,
and values.
PEST Analysis
Technological factors include research
and development activities, automation,
licensing, patenting, technological shifts, and
outsourcing decisions.
The Benefits of Strategic Planning
SWOT and PEST analysis help companies in
formulating and aligning their vision and mission to the
general direction of the business environment where
they operate.
SWOT Analysis vs. PEST Analysis
Strengths Political
Weaknesses Economic
Opportunities Social
Threats Technological
Thank you
