Business Environment and SWOT Analysis

Chapter 2
 The Marketing Environment

The business environment includes the actors

and forces that affect management’s ability
to build and maintain successful relationships
with customers

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 Microenvironment
The microenvironment is also called the internal
environment. It include forces affecting
operations that are within the control of the
company, that is the company is able to
manipulate these forces towards the firm
advantage.

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 The Microenvironment

The internal environment consists of five(5) equally

powerful forces namely:
1. Management
2. Marketing
3. Finance
4. Production and Operations
5. Human Resources

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 Management
This pertains to the organizational setup, including
goals and objectives, organizational structure,
managerial composition, company
philosophy,vision,mission,policies,programs,
plans,strategies,tactics etc.

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 Marketing
This includes the marketing program of the company covering
the basic marketing mix (product,price,place and
promotion). Specific forces falling under this force are
product quality,packaging,pricing strategies,
intermediaries used, advertising efforts, public relations,
company image and reputation, distribution
channels,warehousing,discounts and other sales
promotion tools, market segmentation

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 Finance
This includes the company’s resources. Items covered
under this force are profitability indices, financial
performance, balance sheet and income
statement,assets,liabilities,networth,investments,cap
ital expenditures and operating expenses

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 Production and Operations
This includes all aspects of manufacturing or operations.
Specific items falling under this force are quality and
sources of raw materials, machinery and equipment,
production efficiency, service reliability, technical
expertise, production credo,scheduling,delivery,sales
service,maintenance,factory location

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 Human Resources
This aspect pertains to the people in the organization.
Specificall it includemotivation,compensation,training
development,promotion,recruitment,selection,
placement, hiring policies and procedures, fringe
benefits, performance appraisal, grievance handling
mechanisms, management labor relations.

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 Macroenvironment
The macroenvironment is also called the
external environment, consisting of forces
that are beyond a company’s control.

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 The Macroenvironment

The external environment consists of the

powerful forces namely:
1. Economic Environment
2. Socio Cultural Environment
3. Politico-legal Environment
4. Technological Environment
5. Natural Environment

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 The Macroenvironment
Economic Environment
This environment includes such forces as
balance of trade, balance of payments, foreign
exchange, import-export situations, competitive
situation,taxation,energy and oil
prices,employment,GNP,GDP, per capita income
and other measures of economic performance.

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 The Macroenvironment

Sociocultural Environment
This environment pertains to people and their culture.
Examples of forces under this type of external
environment are education, customs and traditions,
religious affiliations,perception,cultural
values,demography,ethnic and racial diversity

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 The Macroenvironment

Politico-legal Environment
Politico pertains to government while legal
pertains to law. This environment includes
legislation regulating business, legal
restrictions,elections,political
stability,presidency,peace and order situations,
armed forces etc.

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 The Macroenvironment

Technological Environment
This refers to the advancement of science and
technology and includes new inventions or
dicoveries,technological breakthroughs, research and
development, information technology, scientific
experiments.

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 The Macroenvironment

Natural Environment
This includes typhoon,earthquakes,the El nino, La Nina
phenomena, climate change, global warming, Ozone
depletion,deforestration,preservation and extinction of
animal species.

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 SWOT Analysis

Strength
Something that a company is good at doing. It
is a quality that produces a competitive
advantage for the company. A characteristics is
said to be a strength if its belongs to the
internal environment is expected to affect
company operations in a positive manner.

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 SWOT Analysis

Weaknesses
The opposite of strength. Something that a c
company lacks. It is a quality that puts the
company at a disadvantage. A quality is said to
be a weakness if it belongs to the internal
environment and has a detrimental effect on
company operations.

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 SWOT Analysis

Opportunity
A factor in the external environment that is
expected to work favorably towards company
operations.

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 SWOT Analysis

Threat
A factor in the external environment that is
expected to have a negative effect on company
operations.

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 SWOT Analysis
The 2 Part Question for SWOT Analysis

1. Is the factor within the control of the company or is it beyond

the company’s control? If your answer is within, then it belongs
to the internal environment. If beyond, it is part of the external
environment.
2. Is the factor expected to affect the company operations
positively or negatively? If positively, it may either be a strength
or an opportunity. If negatively, it can either be a threat or a
weakness.

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