Analyzing Elements Influencing

Local & International Business

Environment using PEST &
SWOT Strategies

LILY MAR T. VINLUAN

SHS TEACHER II
 Various Forms of Doing Business

1. According to Nature of Ownership

Sole or Single Proprietorship

Partnership

Corporation

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 Sole or Single Proprietorship

• owned by 1 person
• This is the easiest form of business to start, set-up, and
disseminate
• All decisions come from the owner and all the profits go to him
as well but this proprietorship has limited resources.
• He is liable to pay all the business debts
 the existence of the business exists only during his lifetime, the
owner’s death, insanity, or imprisonment means termination.

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 PARTNERSHIP

• owned by 2/ more persons

• These persons agree to divide resources such as money, property,
and skills needed to operate the business and also the profit. it is
also easy to form but has more resources than a sole
proprietorship. .
• a partner may be held liable for each other’s actions.
• The partnership may be dissolved by a change of partner due to a
disagreement, insanity, or death of a partner

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 CORPORATION
• owned by many people called shareholders
• The form the business as an artificial person under the
operation of its Articles of Incorporation and Corporate
By-Laws registered with the Securities and Exchange
Commission (SEC).
• Shareholders are not liable for unpaid debts
• It can exist even if shareholder withdraw, change, or die.
However, it is very costly to organize and is taxed at a
flat rate
•.

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 2. According to Primary Activities

Service business – offers non-tangible products or service in exchange for a

fee.

Manufacturing Business – engages in the purchase and sale of goods and

earns profit by adding a mark-up to the cost of goods it is selling.

Merchandising Business – it transforms raw materials into finished goods that

are sold for a price.

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Business Operations and the Environment

Subtitle
 EXTERNAL ENVIRONMENT

Is the level of the environment that includes factors from OUTSIDE THE ORGANIZATION.
1. General Environment
2. Operating Environment

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 1.General Environment
This is an external environment that usually affects the business in the long run broadly classified
as:

+ Politico-legal Element – are elements related to government affairs and laws or regulations. It
involves factors such as: government, industry regulations, passage of laws, and politics.
+ Social Element – are elements related to societal characteristics? It involves factors such as:
demographics and values of people.
+ Economic Element – are elements related to the use and allocation of limited resources in the
economy to create and distribute wealth. It involves factors such as: interest rates, price inflations,
stock market fluctuations, exchange rates, incomes, business cycle, and phase of economic
development
+ Technological Element – are elements related to new tools, ideas, and approaches used to
produce goods and services. It involves: New gadgets, procedures, and equipment.

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 Operating Environment

also known as specific environment is an external environment that has a

direct and immediate impact on the organization classified as:

Customer element – are elements related to individuals or entities who

BUYS goods and services offered by the organization

Supplier element – are elements related to individuals or entities who PROVIDE goods and services
needed by the organization in the production of its offered products.

Competitor element – are elements related to those who THREATENS the organization’s battle for
resources and customers or markets.

Pressure Groups element – are elements related to special interest groups the try to INFLUENCE
Title the
actions of an organization through their campaigns and programs.

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 INTERNAL ENVIRONMENT

Is the level of the environment that is WITHIN THE ORGANIZATION.

 Structure – the place an organization runs to the hierarchy of member from shareholders to
the employees
 Culture – is how an organization responds to different factors.
 Resources – includes production technology and physical facilities.

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 International Environment – the factors you face when you cross borders for
expansion. It involves: Exchange rates, political risks, taxation laws, social

 Structure – the place an organization runs to the hierarchy of member from shareholders to
the employees
 Culture – is how an organization responds to different factors.
 Resources – includes production technology and physical facilities.

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 Cultural Intelligence

 It is an individual’s activity to favorably receive and adjust to an

unfamiliar way of doing things.

 Monochronic Culture – people do one thing at a

time with emphasis to punctuality and sticking
to set rules.
 Polychronic Culture – people do different
things at a time with regards to flexibility.
Geert Hofstede, also cited by Schermerhorn (2008), told the top 5 ranks in terms
of cultural dimensions needed for developing cultural intelligence:

1. . Power Distance
A degree to which a society accepts the unequal distribution of power among people in organizations and the institution of
society.

2. Uncertainty Avoidance – A degree to which society is uncomfortable with risk, change, and situational uncertainty.

3.Individualism – Collectivism – A degree to which a society emphasizes individual accomplishments versus collective
accomplishments.
4.Masculinity – Femininity – A degree to which a society values assertiveness and feelings of material success over concern for
relationships. Ex. Japanese and Mexicans show masculinity by pushing forward what they want and according to their plans while,
Filipinos, Thais, and swedes would rather keep quiet and accept defeat if what they want is not acceptable.
5.Time Orientation – A degree to which a society emphasizes short-term thinking versus greater concern for the future or long-
term thinking. Ex. Americans, as risk takers, prefer short-term thinking while Filipinos and Japanese, non-risk takers, prefer long-
term thinking.

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 Ways to analyze Business Environments: PEST and
SWOT StrategY

1. Political, Economic, Social, and

Technological Analysis (PEST

helps you determine the impact of environment factors or conditions to the long term
performance and activities of the business.

The outcome of this analysis is best used with another analytical tool called SWOT.

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 Ways to analyze Business Environments: PEST and
SWOT StrategY

2. Strength, Weakness, Opportunity,

and Threat Analysis (SWOT

Threat and opportunity are used to analyze environmental actors or conditions

External to the firm.

Strength and Weakness are used to analyze environmental actors or conditions

Internal to the firm.

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 ELEMENTS OF SWOT
The elements are as follows:
Strength – kind of resource or capability that gives the organization an
advantage over its competitors in selling goods or services.
Weakness – lack of resource or capability that makes the company
vulnerable to competition.
Opportunity – a development that is favorable to the operations of the
company and will most likely improve its performance and prospects.
Threat – an unfavorable development in any element in the general
environment which can slow down the development of the companY

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