At the end of this learning material, you are

expected to:
1. Analyze the various environmental forces
affecting the firm (ABM_AOM11-Ic-d-4)
2. Summarize various environmental forces using
Political Economic Social and Technological
Analysis (PEST) and Strengths, Weaknesses,
Opportunities and Threats (SWOT) Analysis
frameworks (ABM_AOM11-Ic-d-5)
Organizational environment is the set of
forces surrounding an organization that have
the potential to affect the way it operates and
performs which consists of both external and
internal factors.
Internal Environment – are environmental
factors within the company and can be
controlled. It consists of organization’s owners,
board of directors, regulators, physical work
environment and culture; it includes strengths
and weaknesses of an organization.
External environment – are the forces and events
outside the company that have the potential to
influence or affect its operation. It consists of legal,
physical, economic, technology, social, political
culture; it includes opportunities and threats of an
organization.
Organizational environment must be scanned
so as to determine development and forecasts
of factors that will influence organizational
success.
What is a PESTLE and SWOT Analysis?

A PESTLE analysis is used to evaluate the

outside factors that affect a business:
Political -governmental activities and political conditions
that may affect your business
Economic- economic factors affect the purchasing power of
customers; e.g. economic growth, interest rates, exchange
rates, inflation rate
Social- includes demographic and cultural aspects of the
external macro-environment; e.g. health consciousness,
population, age distribution
Technology- Evaluate your company's current technology.
Is it up-to-date?
Legal- Anticipate any new laws and regulations that can
impact your operations.
Environment- Identify the environmental factors that
should be considered.
SWOT ANALYSIS - while PESTLE Analysis only
evaluates the outside factors that can affect the
business, SWOT examines both the internal and ex-
ternal business environment; where:
Strengths - refers to internal competencies possessed
by an organization that will enable it to achieve its
objectives.
Weaknesses - refers to the areas that limits the
organization’s overall success
Opportunities - refers to the external trends and
events that can benefit the organization in the future.
Threats - refers to the trends and events that are
potentially harmful to the organization’s present and
future position.
SWOT and PESTLE analyses are useful
tools in:
1. identifying the pros and cons of a
business;
2. Determining the future opportunities
and threats outside the company and a
vital guide in making action plans for the
management.
Directions: Read the following questions carefully and
write your answer before the number.
Q1. Statement 1. Environmental changes greatly
affect the business and businesses always control the
consequences.
Statement 2. Mr. Dy, the CEO of ABC Company gave
incentive to Mr. Eef and Mr. Ghi because they closed a
huge deal with XYZ Corporation is an example of an
Internal Environmental factor.
Which of the statements is correct?
a. Only Statement 1 is correct
b. Only Statement 2 is correct
c. Both Statements are correct
d. Neither Statement nor Statement 2 is correct
Q2. Which of the following best defines External
environment factor?
a. External environment are the forces and events
outside the company that have no potential to
influence or affect its operation.
b. External environment consists of legal, physical
work environment, economic, technology, social,
political culture; it includes opportunities and
threats of an organization.
c. External environment consists of legal, physical,
economic, technology, social and political culture
that have the potential to influence its operation.
Q3. The following statements define an Internal
Environment, which one is incorrect?
a. An internal environment factor can be evaluated
through SWOT and PESTLE Analysis.
b. An internal environment factor consists of the
owners of the company, its employees, the prevailing
norms and values and board of directors
c. An internal environment are environmental factors
within the company that can be controlled.
d. Internal environment factors can be evaluated
using SWOT Analysis.
Q4. ABC Company has decided to launch a new
line of clothing and wants to identify only the
treats and opportunities that may identify the
success or failure of their launch. What kind of
Analysis is recommended for them to use?
a. Only SWOT Analysis is recommended
b. Only PESTLE Analysis is recommended
c. Both SWOT and PESTLE Analysis is
recommended
d. Neither SWOT nor PESTLE Analysis is
recommended
Q5. Which of the following statements is correct?
Statement 1. Understanding Organizational
Environment is a very important factor in
determining if a business is feasible.
Statement 2. Organizational Environment can be
classified as Internal or External and has no
direct impact on the business.
a. Only Statement 1 is correct
b. Only Statement 2 is correct
c. Both Statements are correct
d. her Statement nor Statement 2 is correct
What you have to do
1. Choose one of the given situations and make a PESTLE or
SWOT Analysis for a business idea stated. List at least 5 PESTLE
and SWOT for each quadrant.
2. Discuss in not more than 10 sentences your choice of Analysis
to be used.
A. You are a graduate of K-12- ABM Strand and your parents
cannot afford to send you to college. Your thriftiness since you
entered high school enabled you to save a sum of money enough
to put up a small snacks and beverage business in your
barangay. Your eagerness to help and save up for your future
enrolment in college, you rely completely on what you have
learned and tried recalling on how you might apply SWOT and
PESTLE analysis before you start up your business.
B. You and your friends decided to contribute money to
start a small business of selling school supplies in your
department. This has been approved by your adviser but
required your group to make a PESTLE and SWOT
Analysis before you can proceed to selling.