Ateneo de Zamboanga University

SENIOR HIGH SCHOOL UNIT

Fr. Eusebio Salvador, SJ Campus, La Purisima St. Zamboanga City
Grade Level 12 Subject Area: Organization and Management
1st Semester, S.Y 2017-2018

ENVIRONMENTAL SCANNING AND SWOT ANALYSIS

Module 2
A Student Guide for ABM125 Students

I. Environmental Scanning and SWOT Analysis

Environmental scanning – the process of assessing the internal and external operating
environment of a firm to analyze its strengths, weaknesses, opportunities, and threats
(SWOT Analysis)
A. External analysis – examines the opportunities and threats in the firm based on the
different forces in the environment (PEST) that were discussed earlier.
o Also includes analysis of the competitive forces in specific industry where the
firm belongs, such as competitors, buyers, suppliers, and substitutes for the
firm’s product or service.
B. Internal analysis – examines the strengths and weaknesses of the conditions inside the
firm, such as skills and competencies of employees, capacities of resources,
organizational culture, and team spirit.
II. Performing a SWOT Analysis

You start by identifying your strengths, which represent your internal capabilities and
resources in this result area. Here are some questions you can use to help you get started:
 What are your core competencies in this area?
 What relevant skills, talents or abilities do you poses?
 What resources do you have at your disposal?
 What specialized knowledge or expertise do you have access to?
 Who can you ask for advice, support or help?
 What special/proprietary tools can you use or develop?
 What is already working well in this area? What related strength does that reveal?
Keep in mind that not all of these questions will apply to every result area. Just use the
ones that make sense to help you identify your strengths.
The next step is to identify your weaknesses, which represent your internal liabilities. In
many cases, the lack of a strength or resource can be considered a weakness. Here are
some ideas to help you identify your weaknesses:
 What are your main liabilities in this area?
 List all the relevant skills, abilities and talents that you would find helpful in this
result area. Which ones are you the least good or proficient at?
 List the specialized knowledge or expertise that you would find helpful in this result
area. Any knowledge or expertise that you lack could be considered a weakness.

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  Are there any resources (money, time, and help) that you currently don't have
access to?
 What is not working in this area right now? What related weakness does that reveal?
Your strengths and weaknesses give you an idea of your internal capabilities, resources
and liabilities. The next step in SWOT analysis is to identify your external opportunities for
profit, growth and improvement. Here are some ideas to help you identify them:
 List the opportunities that you have been considering.
 What things could you improve in this result area?
 Think of one thing you could do that would significantly improve your situation in
this area.
 What important goals could you pursue?
 How can you take advantage of your strengths?
 Can you take advantage of any changes in your environment or circumstances?
 What opportunities would become available to you if you eliminate some of your
weaknesses?
Now identify your threats, which represent external events, environmental factors, or
changes that could affect you negatively. Here are some ideas to help you identify some
threats:
 Make a list of serious risks you are facing in this area if you continue along your
current path.
 What obstacles or roadblocks are impeding your progress?
 What environmental factors are affecting you negatively?
 Think about how current changes to your environment or circumstances could affect
you negatively.
III. PESTN Analysis (External Analysis)

A. Political Forces
These pertain to legal regulations, political orientations, government policies, and
compliance procedures of government bodies that affect or control the operations of a
firm. These forces are implemented by government, regulatory agencies, or influenced
by political figures. These forces regulate the conduct and operations of business firms
to protect the general public. In the Philippines, these include the guidelines and
procedures for business registrations, financial accounting and auditing, labor
management, and contract administration.
Examples:
(1) Business registrations
(2) Payment of taxes
(3) Submission of audited financial reports
(4) Political conflict between leaders of two or more countries may potentially cause
a trade embargo or import restrictions between their nations
(5) ASEAN Economic Integration may increase trading activities that promotes
greater socioeconomic linkages and cultural relations among the ASEAN member
countries.

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B. Economic Forces
These pertain to economic conditions relevant to the business. These factors include
employment rates, income levels, inflation rates, savings and investment rates,
insurance rates, and monetary policies. These are essential to businesses as they
influence the cost of capital, consumer spending, degree of tolerance or aversion to
financial risks, job creation, and the market entry or exit of certain types of business
firms.
Example: Consumer preferences because due to the economic power of consumers,
businesses direct their marketing efforts to influence consumer buying behavior.
C. Socio-cultural Forces
These are people’s characteristics and lifestyles that impinge on the operations of a firm.
They pertain to social norms, customs, and values. To understand cultural forces, it is
important to note Hofstede’s study on differences in national cultures based on the
following dimensions:
(1) Power distance – degree to which power differences among are accepted
(2) Uncertainty avoidance – degree to which members of society become uncomfortable
when faced with uncertainty or ambiguity
(3) Individualism-collectivism – focus on self-interests vs. focus on group’s or society’s
interests
(4) Masculinity-femininity – emphasis on career achievement as measures of success vs.
emphasis on quality of life as measures of success
(5) Therefore, managers must recognize and understand these cultural differences to
effectively cater to market that might be composed of people coming from different
countries and cultures
Demographic forces include population trends, migration patterns, and health indicators,
changes in consumer tastes and lifestyles, and improvements in educational status.
Sociocultural factors can help the firm identify the size and scope of potential markets,
consumer needs and wants, cultural biases or preferences, learning potentials of people,
gender profiles, labor supply and mobility, and job skills and competencies.
For example: in recruiting persons for specific jobs, managers should identify the
applicants’ backgrounds and skills, without discrimination in terms of gender, age,
and ethnicity.
Different generations with their distinct outlook or preferences in work:
(1) Baby boomers (born in ‘40s and ‘50s) are described as hard workers
(2) Generation X (born in ‘60s and ‘70s) are described as more pragmatic
(3) Generation Y or Millennial (born in the ‘80s) are more idealistic
D. Technological Forces
Recent advancements in technology have led to great strides in product innovations,
process improvements, and integrated systems in the manufacturing and service
sectors. Innovations in digital technology, breakthrough in medical science, and waves

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 of inventions in transportation and communications have contributed significantly to the
rapid technological changes in the environment of many firms
For examples:
(1) Solar power technology as an alternative energy source
(2) Rapid advancements in cellular phone technologies (new features of
smartphones)
E. Natural Risks
In the light of adverse impacts of climate change and global warming, business
establishments need to assess their exposure to natural risks. Include typhoons, floods,
earthquakes, tsunamis, storm surges, and volcanic eruptions.
The Philippines is known as being prone to natural disasters due to its geographic
location and agro-climatic conditions.
For example: to prepare for natural risks, business establishments begun adopting
disaster preparedness measures like holding regular earthquake and fire drill.

Reference: Cabrera, H.F., Altarejos, A.D.C., & Benjamin, R. (2016). Organization and management (pp.
12-19). Philippines: Vibal Group, Inc.

Garalde-Orjalo, V., & Frias, S.A. (2016). Organization and management: Concepts, caselets,
and Exercises (p. 17). Quezon City, Philippines: Phoenix Publishing House, Inc.
Quero, R.A., (2017). Organization and management. Philippines: DIWA Learning Systems Inc.
pp. 41-53.

Velez, D. (2012, December 9). SWOT analysis. Retrieved from

https://www.facebook.com/notes/mgt101-accountancy-dept/swot-
analysis/284396138330173/

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