B a n g l a d e s h I n s ti t u t e

Governance & Management

Welcome to my presentation

Topic: External Environment Analysis

Course: Strategic Management

Presented By

SUMON KHAN
HRM ID: 24
 External Environment Analysis

 Concept of Business Environment

 Business environment is the set of all the conditions and events
that are directly or indirectly related to the operation and
development of the business.
 It is formed by internal and external factors.
 The Internal factors consists of : Organizational goals & policies,
Structure, Culture and resources.
 Concept of Business Environment

 The external factors consists of : Political, Economic, Social – Cultural,

Technological, Legal and Global factors.

 Thus, Business Environment is complex, dynamic and is operates in

different environments existing around it.
Classification of Business Environment

Business
Environment

Internal External
Environment Environment

General Operating
Environment Environment
External Environment

 The external environment of a business comprises the factors

which are external to a firm.
 The external environment of an organization are those factors
outside the company that affect the company's ability to
function.
 Firms understand the external environment by acquiring
information about competitors, customers, stakeholders as well
as other general conditions.
Element of External Environment

General Operating/
Environment Task
Environment
General Environment

 The general external environment is composed of the factors that

are broad and affect the industries and the firms competing each
other.
 The different components of general environments are:
 Economic Environment
 Political Environment
 Legal environment
 Socio-Cultural Environment
 Technological Environment
 Physical / Natural Environment
 Global Environment
Operating / Task environment

 The operating or Task environment is composed of the factors

that are directly related to the competitive position of a
business.

 It consist of different stakeholders who have direct or indirect

interest in the performance of the business.
Operating / Task environment
 The components of task environment are :
 Customer
 Competitors
 Distributors
 Government
 Suppliers
 Creditors
 Media
 Pressure group.
Process of Environmental Analysis

Scanning Monitoring Forecasting Assessing

 Scanning

 Environmental Scanning involves gathering information

from the environment to access its nature.
 It helps identify the early signals of potential changes in
the environment.
 It also detects changes that are already under way.
 Monitoring

 Monitoring is auditing the environment.

 It involves observation of the environmental changes to see
the trend.
 It detects meaning in different environmental events and
trends.
 It helps to identify the effects of environment in term of
opportunity and threat
 Forecasting

 Scanning and monitoring are concerned with events and trends in the
general environment at a point in time.
 Forecasting involves developing feasible projections of what might
happen and how quickly.
 It is done on the basis of changes and trends.
 Assessing

 Accessing determines the timing, and significance of the effects

of environmental change and trends that have been identified.
 It evaluate or estimate the nature, ability or quality of the data
and information with competitive relevance and interpret it to
determine the trends as opportunity or threats for the
organization.
 Technique of Environmental Analysis

1. PESTLEG Analysis
2. Scenario Planning
3. Industry and Competitive Analysis
 PESTLEG Analysis

 P= Political
E= Economic
S= Social cultural
T= Technological
L= Legal
E=Environmental
G=Global
 These factors are uncontrollable to an organization.
 They are analyzed to identify the environmental trend and access
possible
opportunities or threats.
Scenario Planning
 Scenario planning is a structured way for organizations to think about the
future.
 A group of executives sets out to develop a small number of scenarios—stories
about how the future might unfold and how this might affect an issue that
confronts them.
 Scenario planning is making assumptions on what the future is going to be and
how business environment will change overtime in future.
 It is a process of visualizing:
(1) what future conditions or events are probable,
(2) what their consequences or effects would be like, and
(3) how to respond to, or benefit from, them.
 Scenario planning is also know as Contingency Planning
Industry and competitive Analysis.

 Industry

 An industry is a group of firms producing a similar product or

service, such as airlines, fitness drinks, furniture, or electronic
games, etc.
 Industry Analysis
 Is business research that focuses on the potential of an industry.
Conclusion

As a conclusion, business environment involve internal

and external environment. External environment is important for
an organization to identify the weaknesses and threats. ... This
helps an organization to reduce the risk of getting failure in their
operation and development in new product.
THANK
YOU