Environment:

Environment means the surroundings, external objects, influences or

circumstances under which someone or something exists.

The environment of any organization is the aggregate of all conditions, events,

influences that surround and affect it.

Business – Economic activity

Business Firm – Economic Unit

Business Decision Making – Economic in Nature

Business Firm: Adaptability and adoptability to environment.

Managers: Capability to deal with environment.

Internal Business External

Environment Environment Environment

Regarded as controllable Regarded as uncontrollable

factors factors factors
Internal and External business environment

Internal business environment External business environment

 Internal structure  Industry level
 System, culture  Suppliers
 Staff  Customers
 Resources of the organization  Competitors
 Marketing-distribution  Financiers
 Finance accounting  Society
 Human resources  General level
 Production-operation  Regional
 Research-development  National
 International level
 Macro Environment:
Economic Environment Non Economic Environment

 Economic System  Political Environment

 Growth  Regulatory & Legal Environment

 Economic stability  Social / Cultural Environment

 Economic policy  Demographic Environment

 Technological Environment

 Natural Environment
Nature of Business Environment:

 Dynamic
 Uncertain
 Opportunity & Threat
 Internal & External factors
 Economic and Non Economic factors
 Types of Business Environment Risk

 Legal Risks

 Regulatory Risks

 Political Risks

 Social Risks

 Natural Risks
 Process of Environment Analysis :

Scanning : General surveillance of environmental factors & their interactions.

Monitoring : Tracking environmental trends events.

Forecasting: Developing plausible projections of direction, scope & intensity of

environment changes

Assessment: Identifying & evaluating how & why current and projected environment
changes will affect strategic management of organization
 Environment Scanning

Environmental scanning is a process of gathering, analyzing, and dispensing

information for tactical or strategic purposes. The environmental scanning
process entails obtaining both factual and subjective information on the
business environments in which a company is operating or considering
entering.

 Strategic planning in which manager try to determine best fit b/w

organization and its external environment.

 Important step towards corporate planning & business policy decision.

 Aimed at conditions improvement of the company, its policies &

programs.
Internal Scanning :
Acquisition, analyses, use of information from within the organization that
will help the mngt in determining future course of action of business.

External Scanning:
Acquisition, analyses, use of information about events & establishing the
relationship of business with its environmental variables.

SWOT analysis
There are three ways of scanning the business
environment:

 Ad-hoc scanning - Short term, infrequent examinations usually

initiated by a crisis

 Regular scanning - Studies done on a regular schedule (e.g.

once a year)

 Continuous scanning (also called continuous learning) -

continuous structured data collection and processing on a
broad range of environmental factors
 SWOT analysis

Strengths: attributes of the person or company that are helpful to achieving the
objective.

Weaknesses: attributes of the person or company that are harmful to achieving

the objective.

Opportunities: external conditions that are helpful to achieving the objective.

Threats: external conditions which could do damage to the objective.

List Strengths:
Develop a list of all of the internal strengths of the agency incorporating
feedback from the team members, emails and surveys. Discuss the
strengths and clarify any questions or confusion.
Examples of strengths could include an experienced staff or good employee
training program.
Identify Weaknesses

Weaknesses are internal factors that may impact workforce planning

negatively.
Examples of weaknesses could include an absence of procedural manuals or
lack of an employee mentoring program. It is possible that a strength could
also be a weakness. For
example, long-time employees could be a strength because of their experience,
but may be a weakness because it might indicate a workforce close to
retirement..
List Opportunities:

Opportunities are external factors, as opposed to the internal factors of

strengths and weaknesses. Opportunities could include new relevant training
programs at educational institutions or an emerging diverse workforce.

Identify Threats:

Threats are also external factors. Threats could have a negative impact on your
workforce planning and could include a projected increase in the cost
of employee health insurance or an expected reduction in government funding.
Again it is possible that an opportunity may also be perceived as a threat. For
example, new technology tools might be an opportunity, but also threaten
staffing levels.

Establish Priorities
 SWOT Analysis
Strengths
What does your community do
well?
What unique resources do you
have?
What do others see as your
strengths?
Opportunities
What good opportunities are
available to you?
What trends would you take
advantage of?
How can you turn your strengths
into opportunities?
Weaknesses
What could you improve?
Where do you have fewer resources than
other communities?
What do others see as your weaknesses?
Threats
What trends could affect you negatively?
What are competing communities doing?
How would a weakness be potential
threat?
Responses
 When an issue is detected, there are generally six ways of responding to
them:
 opposition strategy - try to influence the environmental forces so as to
negate their impact - this is only successful where you have some control
over the environmental variable in question
 adaptation strategy - adapt your marketing plan to the new environmental
conditions
 offensive strategy - try to turn the new influence into an advantage - quick
response can give you a competitive advantage
 redeployment strategy - redeploy your assets into another industry
 contingency strategies - determine a broad range of possible reactions -
find substitutes
 passive strategy - no response - study the situation further