Environmental

Analysis
an evaluation of the possible or
probable effects of external
forces and conditions on the
survival and growth of the
business.
An environmental analysis includes a
thorough study of:
1. Economic Forces
2. Physical Environment
3. Political Environment
4. Cultures and lifestyles
5. Competition
1. Economic Forces
This involves a look at economic factors
such as income of the people, specifically
the target market, economic conditions
such as inflation, recession, prosperity,
demand, and supply in the market.
2. Physical Environment
This includes a look at the population
size, the geography of the place where
business will be located, land distribution,
climate, and in today’s global warming
situation, whether or not the area is prone
to flood or earthquake.
3. Political Factors
The type of government, the
stability and strength of the
government, and good leadership
are factors that can be an
advantage to a business.
4. Cultures and Lifestyles
It is important to study cultural practices
such as fiestas, celebration of the
Christmas season, trends in consumption
patterns, as a means to identify the goods
and services that will fit into these
celebrations and spending behavior.
5. Competition
This is something that needs to be studied.
As already mentioned above, the degree of
competition in the market and the extent
and strength of competition are all very
vital in determining the success or failure
of a business.