Lesson ENVIRONMENTAL

SCCANNING: SWOT AND PEST

4 ANALYSIS
OBJECTIVES:

At the end of this lesson, the students will be able to

1. define environmental scanning,
2. identify the various forces of the firm’s environment,
3. discuss SWOT and PEST analysis,
4. identify, common elements and differences between the two techniques , and
5. Employ SWOT and PEST analysis in analyzing the business environment of a firm
and in other situations.
THE ENVIRONMENT OF THE FIRM
 Cont’d

• The internal environment consist of elements that have a direct impact on

the business operations. These include the employees, the board of directors
(BOD), and the managers. The elements of the internal environment are
directly controlled can be freely modified by the firm itself.
• The external environment consists of factors that have indirect but
significant influence on the operations of the business. These factors,
however, cannot be controlled by the firm. There are two types of external
environment:
1. Microenvironment.
2. Macroenvironment.
 Cont’d
• Microenvironment is also known as the “operating environment.” It consist of
the of the following:
1. Customers;
2. Suppliers;
3. Regulatory Agencies; and
4. Competitors.

• Macroenvironment is also known as the “general environment.” It consist of the

of the following:
1. Economic Environment;
2. Political-legal Environment;
3. Technological Environment;
4. Global or International Environment;
5. Socio-cultural Environment;
6. Demographic Environment; and
7. Natural Environment.
 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. There are three modes of environmental
scanning as follows:

1. Ad hoc environmental scanning 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.
2. Regular scanning is usually done at least once a year or at regular intervals.
3. Continuous scanning refers to the continuous collection of data on a broad range
of environmental factors. It is also referred to as continuous learning done to
monitor the components of an organization’s internal environment.
 STRATEGIC PLANNING: SWOT AND PEST
ANALYSIS
• To adequately deal with the forces of the external environment, managers and
decision-makers apply certain techniques in gathering and analyzing information
and subsequently conducting strategic planning.

• Strategic planning techniques such as the SWOT analysis and PEST analysis
consider the elements of a firm’s internal and external environment in
formulating business plans and decisions.

• SWOT analysis is primarily used to analyze the microenvironment, while PEST

analysis is conducted to address the firm’s macroenvironment.
 Cont’d
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.
 Cont’d
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.
THE BENEFITS OF STRATEGIC PLANNING
USING SWOT AND PEST ANALYSIS