BUSINESS OPERATIONS

AND ENVIRONMENT
THE GENERAL
ENVIRONMENT
General Environment

 The organization's external

environment that may affect the
organization, usually in the long
run.
1. POLITICAL / LEGAL ELEMENT
 related to government affairs
and laws or regulations

 It includes factors such as

government industry
regulations,passage of laws and
politics.
 EXAMPLES

1. tax policies
2. trade restrictions and
tariffs
3. stability of
4. discrimination government
laws 5. health and safety
regulations
2. ECONOMIC ELEMENT

 Related to the use of scarce

resources in the econmoy to
create and distribute wealth.
IT INCLUDES FACTORS SUCH AS:

INTEREST IFLATION OR
PRICE LEVELS UNEMPLOYMENT
RATES
PAY MORE RAISE SELECTIVE
WHEN IT
BORROWS
COMMODITY IN HIRING
PRICES
 3. SOCIAL ELEMENT

 related to societal
characteristics
 It includes demographics and
values of people in society
 SOCIAL ELEMENT
It indicates the product,
services, and standards of
conduct that the society is
likely to value and appreciate.
4. TECHOLOGICAL ELEMENT

 related to new tools, ideas, and

approaches used to produce goods
and services

 It includes new procedures and

equipment
THE OPERATING
ENVIRONMENT
Operating Environment

It indicates the elements of

external environment that has a
direct and immediate impact on
the organization.
 WAYS TO SCAN THE
BUSINESS ENVIRONMENT

PEST ANALYSIS
helps a manager determine the impact of
environmental factors to the long-term
performance and activities of the business
 POLITICAL
FACTOR TECHNOLOGICAL
P FACTOR
T
ENVIRONMENTAL
FACTOR
E SOCIAL
S FACTOR
WHY DO A
Y

PEST
ANALYSIS?
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1. HELPS TO EVALUATE HOW YOUR

STRATEGY FITS INTO THE BROADER
ENVIRONMENT AND ENCOURAGES
STRATEGIC THINKING.
2. SUPPORTS MORE DECISIVE AND
KNOWLEDGEABLE DECISION MAKING.
3. ASSISTS IN PLANNING, MARKETING,
PRODUCT DEVELOPMENT AND RESEARCH.
Political stability and The level of
government intervention innovation,
in economy that affect
research and
business and their
development and
expansion
P other related
T factors
Economic policies
and factors that
E Social factors that
affect business
S affect purchasing
behavior of
and their
consumer markers
expansion
STRENGTHS OPPORTUNITIES
S
O
WEAKNESSES W
T THREATS
 WAYS TO SCAN THE
BUSINESS ENVIRONMENT

SWOT ANALYSIS
• is a simple yet comprehensive way of assessing
the positive and negative forces inside and outside
your organization, so you can be better prepared to
act effectively.
Strengths describe the positive attributes,
tangible and intangible, internal to the
organization.
What do you do well?
What internal resources do you have?
What advantage do you have over your
competitors?
Do you have strong research and
development capabilities? Manufacturing
facilities?
Weaknesses are aspects of the
business that detract from the value you
offer or place you at a competitive
disadvantage.
What does your business lack?
Is your business in a poor location?
Does your business have limited
resources?
Are your products/services high in cost?
Opportunities are external factors that
represent reasons your business is likely
to prosper.
Is the perception of your business
positive?
Has there been recent market growth
or have there been other changes in the
market that create an opportunity?
Are there new markets being
Threats include external factors beyond control
that could place the business at risk.
Who are your existing competitors?
Has there been a significant change in
supplier prices or the availability of raw
materials?
Has a new product or technology been
introduced that makes your products,
equipment, or services obsolete?
 •Starbucks SWOT Analysis Example
• Strengths - profitable organization with a well-kno
wn name and product line. Nice, well-trained staff.
Customers have habits and routines to go to Starb
ucks frequently. Reputation for creatively developi
ng new products.
• Weaknesses - In some places, there are several St
arbucks stores within a very short distance, which
can make them susceptible in a down economy.
•Opportunities - new products and services ca
n be offered in their stores
•Threats - the prices of coffee and dairy produc
ts are rising, which may lower their profit mar
gins, or cause them to raise prices. Also, when
the general economy is not very good, many p
eople become much more cautious spending
money on non-essential items.
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