environmental analysis business plan example

A Comprehensive Guide to Business Environmental Analysis: What is It, and Why is It Important?

• Ossian Muscad
• August 28, 2022
• No Comments

Last Updated on January 3, 2024 by Ossian Muscad

Every business exists in an environment, and it’s important to understand that environment to be successful. Unfortunately, businesses sometimes tend to ignore this importance, leading to strategic planning failures. By getting to know the business environment and conducting regular environmental analysis, businesses can make the right decisions to stay ahead of the competition.

But what exactly is environmental analysis, and how do you conduct one? This article will discuss environmental analysis, its importance, and how to use it to improve your business’ strategic planning.

What is Business Environmental Analysis?

Business environmental analysis is studying the external factors that affect a business. This includes things like the political landscape, the economic conditions, the technological environment, and more. By understanding these factors, a company can develop strategies to optimize its performance within this context. 

This environmental analysis examines industry and organizational factors that positively or negatively affect the business. By determining short-term and long-term impacts, organizations can readily respond to them when they appear. 

Purpose of Environmental Analysis

An environmental analysis helps organizations define factors that can influence their business operations. Business leaders can make better decisions about moving forward by assessing and weighing these factors.

Additionally, environmental analysis can help business leaders anticipate changes in the market and adjust their strategies accordingly. Apart from that, here are other reasons why environmental analysis is essential for businesses:

• Identifying Opportunities: Environmental analysis can help businesses spot emerging trends and changes in the market. This allows them to seize new opportunities before their competitors do.
• Mitigating Threats: By understanding potential threats in the environment, businesses can design strategies to mitigate these risks, avoiding potential pitfalls.
• Formulating Strategies: Environmental analysis provides critical insights that can shape a company’s strategic planning process, ensuring alignment with the external environment.
• Enhancing Competitive Advantage: By understanding the external environment better than competitors, businesses can leverage this knowledge for a competitive advantage.
• Anticipating Change: Environmental analysis helps businesses anticipate and prepare for changes in the market, regulatory landscape, or technology trends.

Elements of Environmental Analysis

Two main elements of a business environmental analysis are internal and external factors.

Internal Factors

Internal factors are elements within a business that can influence its operation and success. These factors are primarily under the control of the business and can be altered or manipulated according to business needs. Here are some key internal factors:

• Resources: This includes all tangible and intangible assets a company has at its disposal to use in producing goods or services. Tangible resources include physical assets such as infrastructure, raw materials, and human resources. Intangible resources encompass elements like brand reputation, intellectual property, and corporate culture.
• Capabilities: A company’s capabilities are its skills or competencies in deploying resources to achieve business goals. It involves marketing effectiveness, production efficiency, technological innovation, customer service, etc.
• Management and Organization Structure: The organizational structure and quality of its management team can significantly impact a company’s operation. Effective leadership and a well-defined structure can facilitate smooth decision-making, coordination, and control, contributing to business success.
• Business Processes and Operations: These involve the methods and procedures for coordinating and conducting business activities. Efficient processes can enhance productivity and customer satisfaction, leading to higher profitability.

Identifying and evaluating these internal factors through an environmental business analysis can help businesses leverage their strengths, address weaknesses, exploit opportunities, and ward off potential threats.

External Factors

External factors are elements outside the control of a business that can significantly influence its performance. Recognizing and understanding these external factors can help a business to react and adapt to changing circumstances. Here are the key external factors:

• Political Factors: These include government policies, regulations, and legal issues that define formal and informal rules under which the firm must operate. Political stability, tax guidelines, trade regulations, and employment laws all influence the business environment.
• Economic Factors: Economic factors are determinants of a country’s economic performance that directly impact a company and have resonating long-term effects. These include inflation rates, interest rates, foreign exchange rates, economic growth patterns, and unemployment rates.
• Sociocultural Factors: These factors encompass the societal and cultural forces that shape consumer behavior. They include population growth rates, age distribution, attitudes towards health, and cultural trends.
• Technological Factors: Technological changes can create new industries and market opportunities. A company’s ability to manage its IT infrastructure might also affect its ability to compete and its efficiency.
• Environmental Factors: Environmental factors include weather, climate, and climate change. These factors can especially affect industries such as tourism, farming, and insurance.
• Legal Factors: These are related to the legal environment in which firms operate. They include consumer law, employment law, antitrust law, discriminatory law, and copyright law.

By evaluating these external factors during an environmental business analysis, businesses can develop effective strategies that align with their operating environment, thereby improving their chances of success.

Business Environmental Analysis Process

A business environmental analysis systematically uncovers factors affecting your business and its operations. When there aren’t any fixed and definitive rules on doing an environmental assessment, the following steps can guide you into making the most out of this process:

Step 1: Identify the Environmental Factors

Every environmental analysis will need a list of the factors that will undergo evaluation. These factors will depend on the business and its specific goals for conducting the analysis. This list should include micro- and macro-environmental factors that have short- and long-term effects on business.

For example, a company selling organic products might consider environmental factors such as changing consumer preferences, government regulations on organic labeling, and the availability of raw materials.

Step 2: Collect Further Information About These Factors

After outlining which factors will be included in the analysis, the next step is to conduct research and gather more information about each of these factors. This can be done through desk research, surveys, interviews, and focus groups . Again, you can utilize various sources to ensure accurate, relevant, and up-to-date information. 

For instance, organic product companies may gather data on consumer buying patterns through surveys and consumer behavior reports. They may also research government regulations and consult with suppliers to understand the availability of raw materials.

Step 3: Check the Competitors

When conducting an environmental analysis, your research isn’t limited to your organization’s business standing. It also involves understanding your competitors and how they’re faring in the business landscape. This will give you a better idea of where you stand and what you must do to stay ahead of the competition.

For example, the organic products company may analyze its competitors’ marketing strategies, product offerings, and financial performance to identify potential threats or opportunities.

Step 4: Determine the Impacts on the Organization

Once you’ve collected all the relevant information, it’s time to determine how these environmental factors will affect your business. This is where you need to weigh the risks and opportunities of each business situation. Doing so will help you develop strategies to take advantage of the opportunities and minimize the risks.

For instance, the organic products company may diversify its product offerings and invest in sustainable raw materials to capitalize on changing consumer preferences and government regulations. They may also implement cost-cutting measures to mitigate potential risks of rising production costs due to the limited availability of raw materials.

Step 5: Formulate an Effective Strategic Plan

The final step is creating a strategic plan to guide your business decisions and actions. This plan should be based on your insights from the environmental analysis. It should also be aligned with your business goals and objectives. Having a well-informed and strategic plan allows your organization to stay adaptable and competitive in the ever-changing business environment.

For example, based on their environmental analysis, the organic products company may decide to expand their market reach and invest in innovative technologies for sustainable packaging. They may also set goals for increasing sales and reducing costs.

Types of Environmental Analysis Techniques

There are two environmental analysis Techniques: PESTLE analysis and SWOT analysis. These methods help organizations assess their strategic positions based on the business environment and a wide range of internal and external factors. 

PESTLE Analysis

PESTLE analysis is a framework that helps organizations assess the factors that can influence their business on a larger scale outside the organization. It provides essential insights into the market status based on relevant trends concerning the market, technology, customers, and more. PESTLE has six key elements:

Political factors refer to government policies, regulations, and laws that regulate business operations. It is important to conduct business in any country. Other political factors include:

• Local, federal, and state policies.
• Tax regulations
• Trade rules
• Safety regulations
• Governmental stability

Economic factors are determinants of a country’s economic performance that directly impact the organization. By assessing the economic factors, organizations can anticipate potential opportunities and challenges. These include:

• Unemployment rates
• Inflation rates
• Economic growth rates
• Interest rates
• Foreign exchange rates

Social factors reflect the society in which an organization operates. It helps organizations to understand the evolving customer needs, preferences, and behaviors. These include:

• Attitudes and opinions towards health and work-life balance
• Key demographic trends
• Consumer buying patterns
• Cultural values
• Lifestyle trends 

Technological

Technology is a significant driver of change in the business environment. It has revolutionized how businesses operate, compete, and interact with customers. Key technological factors include:

• Research and development areas
• Technological incentives
• Up-and-coming technologies
• Disruptive technologies
• Technology transfer speeds

Legal factors are the laws and regulations that govern businesses. Organizations must comply with these laws to operate legally and avoid penalties. Legal factors include:

• Employment laws
• Product regulations
• Health and safety regulations
• Antitrust laws
• Environmental regulations

Environmental

Environmental factors encompass the natural environment in which an organization operates. These factors can impact industries such as tourism, agriculture, and energy. Environmental factors include:

• Energy consumption regulations
• Environmental policies
• Climate and weather conditions
• Sustainability efforts
• Natural disasters

SWOT Analysis

SWOT Analysis is a strategic planning tool organizations use to identify their Strengths, Weaknesses, Opportunities, and Threats – hence the acronym SWOT. The technique provides a framework to evaluate an organization’s competitive position and understand how the business can leverage its capabilities to succeed.

Strengths refer to the positive internal attributes of an organization, including resources, capabilities, and advantages that give it a competitive edge over others. This can range from strong brand recognition and skilled personnel to a robust financial position.

Weaknesses are the internal factors that prevent an organization from realizing its full potential and might hinder its performance. Examples could include poor infrastructure, lack of skilled labor, operational inefficiencies, or outdated technology.

Opportunities

Opportunities include the external factors that an organization could exploit to its advantage. These include market trends, shifts in customer behavior, technological advances, or changes in government policies.

Threats involve external factors that pose challenges or risks to an organization. These could include competitive rivalry, regulatory changes, unfavorable economic conditions, or technological disruptions.

Through a SWOT analysis, an organization can gain a comprehensive understanding of its internal and external environments. Consequently, it can develop strategies that leverage strengths, mitigate weaknesses, exploit opportunities, and defend against threats. This can ultimately lead to increased competitiveness and success.

Benefits of Environmental Analysis

Environmental analysis provides a strategic advantage to organizations by offering insights into the factors that might impact their business. By understanding the internal and external environments, a business can make informed decisions and develop robust strategies to respond to potential opportunities and threats. Here are three crucial benefits of conducting an environmental analysis:

Enhanced Market Understanding

Through an environmental analysis, businesses can comprehensively understand their market, including customer needs, competitor strategies, and current trends. This information can be instrumental in identifying viable market opportunities and potential threats, allowing businesses to make proactive decisions. Moreover, it helps define the market segment, understand the competitive landscape, and set realistic targets.

Risk Management

Environmental analysis also plays a vital role in risk management. By identifying potential threats in the business environment, organizations can develop contingency plans and mitigate the impact of adverse events. This includes changes in regulatory laws, economic downturns, technological disruptions, or social and political instability.

Strategic Planning

Conducting an environmental analysis can significantly inform the strategic planning process. The insights gained can help set realistic goals, strategize market entry or expansion, optimize resource allocation, and make informed investment decisions. It also facilitates the development of strategies that leverage organizational strengths and mitigate weaknesses, thereby enhancing business competitiveness and growth.

Frequently Asked Questions (FAQs)

Q1: what is the importance of a business environmental analysis.

A business environmental analysis is crucial as it helps organizations understand both their internal and external environments. This understanding allows them to identify opportunities and threats and develop strategies to leverage them and mitigate them. It facilitates informed decision-making and proactive planning.

Q2: In what ways does technology impact business environmental analysis?

Technology significantly impacts business environmental analysis by revolutionizing how businesses operate, compete, and interact with customers. Upcoming technologies, research and development, and technology transfer speeds are all crucial factors that need to be considered in an environmental analysis.

Q3: How do legal factors affect a business’s environmental analysis?

Legal factors, including employment laws, product regulations, health and safety regulations, and environmental regulations, affect a business’s environmental analysis by determining the legal constraints an organization must operate within. Non-compliance can lead to penalties and can negatively impact a company’s reputation.

Q4: How does the SWOT analysis process fit into business environmental analysis?

SWOT analysis is a part of the business environmental analysis that focuses on the organization’s internal factors (Strengths and Weaknesses) and external factors (Opportunities and Threats). It helps organizations understand their competitive position and leverage their capabilities for success.

Q5: Why is understanding social factors important in a business environmental analysis?

Social factors are essential in a business environmental analysis because they help organizations understand evolving customer needs, preferences, and behaviors. This can include attitudes towards work-life balance, buying patterns, cultural values, and lifestyle trends.

Q6: Does the size of a business influence the need for a business environmental analysis?

Regardless of the size, every business can benefit from conducting a business environmental analysis. It provides insights into the market, aids in risk management, and informs strategic planning. However, the scale and depth of the analysis may vary based on the size and nature of the organization.

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DATAMYTE is a quality management platform with low-code capabilities. Our Digital Clipboard , in particular, is a low-code workflow automation software that features a workflow, checklist, and smart form builder. This tool lets you streamline the process of conducting a business environmental analysis by automating data collection, analysis, and reporting.

DATAMYTE also lets you conduct layered process audits, a high-frequency evaluation of critical process steps, focusing on areas with the highest failure risk or non-compliance. Conducting LPA with DATAMYTE lets you effectively identify and correct potential defects before they become major quality issues.

With DATAMYTE , you have an all-in-one solution for quality management and environmental analysis, allowing you to make data-driven decisions for business success. Get in touch with us today to learn more about how DATAMYTE can help your organization thrive in a dynamic business environment!

While it may seem like a lot of work, business environmental analysis is crucial for any organization. With it, you can better understand your business’s strengths and weaknesses and the opportunities and threats of operating in a certain business environment. 

So, if you haven’t tried implementing this process in your business yet, now is the time. Use the information and insights gained from a business environmental analysis to make informed decisions, mitigate risks, and drive business growth. As the global marketplace continues to evolve, regularly conducting an environmental analysis will be essential for staying competitive and successful.

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Environmental Analysis: Steps, Examples & Benefits

A business environment refers to all the external and internal factors that affect its operation. It comprises economic, social, political, financial, and institutional elements. 

Environmental analysis helps a business identify its strengths, weaknesses, threats, and opportunities so organizations can operate efficiently.

What Is Environmental Analysis?

Environmental analysis refers to the study of external factors that impact a business. In this analysis, analysts study the economic conditions, financial position, political landscape, technical advancements, etc. 

Companies develop strategies after studying external factors. This improves business performance and optimizes operations. Analysts examine external factors, identify issues, and derive solutions.

Environmental Analysis Techniques 

1- pestle .

PESTLE analysis is the study of macroeconomic factors that impact a business. It helps enterprises make decisions after analyzing the external environment. Through PESTLE analysis, businesses can understand the overall industry sentiment. It provides future predictions about where the business is headed. 

It consists of six elements:

• Political factors that analyze a country’s political environment. It studies international relations, geopolitics, national and international politics. This helps the business understand how the country’s political environment can affect the business. Government policies and regulations are also studied in this analysis. 
• Economic factors study the economy. It provides businesses with information about where the economy is leading. It explores economic factors like GDP, unemployment, and the forex rate. A positive economic condition is beneficial for business operations. 
• Social factors such as values, people’s mindsets, norms, and traditions impact the business. The business’s sales, revenue, and income depend on human beings. Hence, social factors directly impact them. This includes wealth distribution, lifestyle, gender, and more.
• Technological factors refer to the advancement of industry or country. Advanced technology positively affects a business. The environmental analysis investigates discoveries, innovative technologies, etc., and increases operational efficiency.
• Legal factors such as regulations change over time. A business is impacted by the laws put in place by the government. If not, they can be sanctioned for violating the rules. Unfortunately, as regulations are stricter, the business process is weakened and slowed down. 
• Environmental factors like weather, climate, location, and waste disposal impact all businesses. How companies use a certain resource or product defines the implications of environmental analysis. 

2- SWOT 

SWOT analysis helps businesses understand their strengths, weaknesses, opportunities, and threats. These factors help understand where the business stands and where it is headed. It provides the analysts with a framework for what needs to be done next. 

It consists of two elements:

• Internal factors , aka strengths and weaknesses, are influenced by the business and can control these factors. A business’s strength can be the brand name or a lack of substitute products. A weakness can be inadequate product development. Both these factors are caused internally. 
• External factors , aka opportunities and threats, are outside of the business influence. The business has no control over them, and the factors occur independently. For example, a business threat is the presence of several competitors. An opportunity can be a drop in tariffs for import/export. Hence, the business has no control over the factors but is impacted by them.

Benefits of Environmental Analysis 

1- helps in forecasting .

Environmental analysis helps businesses understand where they stand and where they can be. This helps in forecasting future trends and market conditions. By doing this, businesses can make decisions that benefit them in the long term. 

2- Enables Achieving Business Objectives 

When a business adjusts its strategies based on environmental analysis, it moves closer to success. They can attain their goals by formulating strategies based on the analysis. 

3- Makes Business Aware of the Market 

With environmental analysis, businesses are in constant touch with the market. This helps businesses understand what is happening in the industry, allowing them to react and adjust to market demands and achieve corporate objectives. Additionally, businesses change their stages based on market requirements. 

4- Anticipate Opportunities and Threats

The environmental analysis makes organizations aware of business opportunities and threats. Companies can then respond to the opportunities and manage threats. This helps the firms gain a competitive advantage in the market. 

5- Understand the Causes of Disequilibrium

With the fast-changing environment and dynamic industry, a business can witness disequilibrium. Environmental analysis helps firms to identify the reasons behind this disequilibrium. Thereof, analysts can devise solutions to bring the business back into equilibrium. 

Limitations of Environmental Analysis 

1- does not warn against unforeseen events.

The environmental analysis does not warn businesses against unforeseen or adverse events. It does help businesses forecast future trends. However, it does not help eliminate the uncertainty. Through this analysis, businesses cannot avoid unexpected events that occur during analysis. Though, it does decrease the frequency of such shocks to occur. 

2- Does Not Follow a Strategic Approach 

Businesses can build strategies based on environmental analysis. However, the analysis itself does not follow a strategic risk-taking approach. This means it leads the businesses to operate cautiously and has no rigid strategy. 

3- Not Independently Reliable

The environmental analysis provides businesses with solutions but is not independently reliable. This means that businesses must conduct other analyses as well to confirm solutions. If an analyst only decides based on environmental analysis, it may or may not work in the business’s favor. However, when an environmental analysis is combined with other strategic approaches and analyses, the results are more reliable. 

4- Does Not Guarantee Effectiveness 

Environmental analysis is conducted to improve business effectiveness and operations. However, it does not guarantee the same. The analysis acts as an input in the strategy to develop an output. Hence, it is not advised to trust a single study to build organizational effectiveness critically. The data’s verifiability and accuracy must be confirmed to ensure ideal outcomes. If the data is not accurate, reliable, and verified, it may lead businesses to make wrong decisions. 

5- Creates Confusion

The environmental analysis focuses on too much business information at once. It considers both the advantages and disadvantages of a business. This may lead to confusion amongst analysts. The more information on hand, the more challenging to derive a solution. Hence, the abundance of information acts as a hindrance to solving issues. 

Steps To Conduct Environmental Analysis 

1. identify factors .

The first step in conducting an environmental analysis is to select the factors needing evaluation. These factors can be legal, social, technical, economical, or more. The factors for analysis depend on the industry the business belongs to. For example, an IT business focuses more on technical aspects. A healthcare business would want to analyze its legal factors. When analysts select the factors they plan to anatomize; they ensure the ones impacting the business are chosen. 

2. Critically Examine the Factors 

After choosing the factors, analysts examine them. Information is collected related to all these factors. Analysts research and observe the factors. They can either collect information verbally or in writing. 

Verbal information is collected through observation and note-taking. In contrast, written information is collected by reading and examining. Analysts can use online resources or read print magazines, journals, and books to research what will impact the business. 

3. Scan Competitors 

Analysts then scan the competitors and evaluate their position in the industry. This helps them determine threats and opportunities for the business. Analysts collect information about competitors in traditional or nontraditional ways. 

The traditional way of collecting information is through primary or secondary sources. A non-traditional way of collecting information is through spying. They learn the new events with competitors, so they implement the same in their businesses. Businesses also learn from other business mistakes and avoid them. This helps in increasing business effectiveness and efficiency. 

4. Evaluate Organizational Impacts

Once analysts know what other rival firms are doing, it is time to evaluate organizational impacts. This is done through forecasting. With forecasting, they can predict how certain factors impact a business. This helps in identifying threats, opportunities, weaknesses, and strengths. 

Analysts use brainstorming, surveying, and more to forecast the impact. Forecasting can also be done based on competitors and how they may impact the business. Decisions are taken based on such impacts for the betterment of the business. 

5. Devise A Plan

After evaluating organizational impacts, analysts devise a plan after surveying all environmental factors. The plan consists of problem statements and solutions focusing on bettering business operations and productivity. Through this plan, businesses can achieve their core objectives. 

6. Implement the Strategy 

After the analysts devise the plan, it is finally time to implement the strategy. The plan consists of solutions that the business must use to enhance efficiency. These solutions are factor-driven, meaning there is a specific solution for each problem concerning a particular factor. Once the strategy is implemented, businesses can use the opportunities and avoid threats. 

Example of an Environmental Analysis 

Consider Mr. X an analyst at ABC Pvt. Ltd., a financial services firm. The recent developments in the financial industry lead Mr. X to conduct an environmental analysis. Since technological advancements drive the financial sector, Mr. X decides to do a PESTLE analysis. 

In this analysis, Mr. X considers the political, economic, social, technological, legal, and environmental aspects. However, he focuses on the technical aspects more. He compares the technological advancements happening in other companies in the same industry. 

The results show the emerging technical sound service advancements. It shares that robust chatbots in financial services help increase business profitability. Since ABC Pvt. Ltd. does not have a powerful chatbot yet, Mr. X decides to build one. The solution from the analysis states that strengthening their after-sales services through technical advancements is needed. Once that is done, the business witnesses a 15% jump in revenue and profitability. Hence, the analysis is deemed successful.

Final Words

Environmental analysis helps organizations understand internal and external factors affecting the business. The strategic tool successfully assesses all factors affecting the business. It identifies problems and what needs to be done to solve them. This results in attaining business objectives. 

The environmental analysis process is lengthy and requires much time. However, the solution derived from the process improves organizational performance. Businesses can benefit from efficient strategies that help in enhancing operations. This results in increased revenue and business profitability.

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What is Environmental Analysis? Steps, Benefits & Tools

Organizations can use an environmental analysis to uncover both internal and external factors. This could have a beneficial or negative impact on their company. Businesses can identify possible opportunities and challenges by analyzing factors such as the economy and technology.

Several factors come to mind when analyzing what makes a business successful. It’s all about the resources. However, the environment in which the business operates or exists also has a significant impact.

In this article, we look at what environmental analysis is, why it’s useful, how to do one, the analytical research process, and the tool’s analysis.

Content Index

What is environmental analysis?

Importance of environmental analysis, environmental analysis process, environmental analysis tools, environmental analysis techniques, benefits of environmental analysis.

An environmental analysis is a strategic technique used to identify all internal and external factors that could affect a company’s success. Internal components reveal the strengths and shortcomings of a company, while external components represent the opportunities and risks. This exists outside of the company.

Trends and high-level factors are considered in it; another name for this is environmental scanning.

Interest rates, for example, and how they may affect a company’s operations. These analyses can help businesses achieve attractiveness in their market.

Organizations need to do environmental analysis because it helps them:

• Find opportunities: By looking at the outside world, organizations can find new trends and chances to enter new markets or make new products or services.
• Identify threats: It helps businesses find threats to their business, such as new competitors, changes in regulations, or a slowing economy.
• Create effective strategies: Organizations can create effective strategies that are in line with their goals and objectives when they understand how the outside world affects their business.
• Anticipate change: Environmental scanning helps organizations plan ahead for changes in the outside world and create strategies to deal with them.
• Make informed decisions: It helps organizations learn more about the outside factors that affect their business so that they can make better decisions.

Organizations that want to stay competitive and successful in a business world that is changing quickly need to do environmental analysis. It helps them take advantage of opportunities, lower risks, and come up with good plans that lead to growth and success.

Environmental analysis is the process of assessing and evaluating the internal and external factors that can have an effect on an organization’s performance and strategy. This analysis aims to find opportunities, threats, strengths, and weaknesses so that the organization can make a good workforce strategy that fits its goals and objectives.

The environmental analysis process usually involves the following steps:

1. Determine the effects on the environment

To begin a business environmental analysis procedure, select environmental factors evaluating. Your industry determines this. 

For example, if you work in a medical facility, you might want to think about legal implications. Regulations managing healthcare experience and safety, for example. Choose factors that have the potential to influence how you make deals.

2. Obtain information

Collect information about your chosen environmental factors once you decide which ones to evaluate. You can observe your factors and conduct research here. There are two types of information to gather: verbal and written data. Hearing is how people obtain verbal information.

As an example, consider listening to a radio broadcast. They obtain written information from sources such as newspapers and magazines. 

Using the preceding example, this would involve conducting research online and in medical magazines.

It will assist you in determining whether or not there have been any changes to health and safety regulations because this may have an impact on your healthcare facility.

3. Consider your competitors

You may want to gather information about your competitors. To see if they pose any threats. You can accomplish this by employing a technique known as spying. This involves unusually gathering information.

Using the same example, you could spy on a nearby health facility to learn about recent activity.

4. Examine your strategies

Finally, evaluate your present and prospective strategies to determine how future environmental changes will impact your organization. This assists you in resolving potential issues. These factors could have been to blame.

For example, the health facility may wish to develop a new strategy. It will clearly show how they aim to deal with the decrease in clients caused by their competitor’s new branch.

Environmental analysis is frequently used to assist businesses. It is used before launching a new product or service. 

For example, survey the landscape of competitors, customers, economic conditions, market conditions, and so on. PESTEL is a popular project management tool for performing this analysis.

It refers to the factors that are political, economic, social, and technological. The various components of a PESTEL analysis are listed alphabetically below.

Political issues refer to the level of government intrusion into an organization’s operations. Primary concerns include taxes, tariffs, regulations, elections, and political stability. 

For example, different political parties hold divergent viewpoints on raising the minimum wage. Small businesses may be affected by an election.

When one candidate proposes raising the minimum wage, it may impact their product/service prices and ability to retain current employees.

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Businesses in the United States first consider the overall health of the American economic factors. Growth, employment, inflation, and interest rates are just a few examples. Organizations operating outside of the United States will concentrate on exchange rates. 

A startup, for example, may assess the current state of the economy to determine whether or not it will be able to survive. The long-term revenue and expenses of a company are affected by economic conditions.

Shifts in age, demographic changes, changing attitudes toward safety and health, customer preferences, and technical improvements. All are examples of social challenges. 86 percent of young people, for example, use social media.

As a result, of successful business strategies, millennials are more likely to run promotional ads, especially on social media platforms.

The technology involves research and development, robotics, automation, and any other type of technological advancement. New technologies are referred to as “technological disruption.” It has the ability to change the cast of leading competitors dramatically.

For example, the popularity of Facebook was a technological challenge for Myspace. It was once the most popular social media network in the early 2000s.

Environmental

Climate change, weather, air quality, and natural disasters are examples of environmental factors. Changes in the environment threaten some industries more than others.

Farmers, for example, could watch the Weather Channel or read the Farmer’s Almanac. Because pesticide treatment, irrigation schedule, planting dates, and fungicide application are all affected by the weather.

Legal factors involve employment, health, and safety policies. Customer safety and discrimination laws can also have an impact on a company’s capacity to operate.

Congress, for example, passed the Dodd-Frank Act in 2009. Following the Great Recession, banks were subjected to strict requirements to protect customers.

A corporation can use environmental analysis techniques in a variety of ways. But some are more frequent. The PESTLE study is the most widely used tool for conducting a complete business or industry environment analysis.

PESTLE Analysis

This is essentially a bird’s eye view of corporate behavior. Because we take a broad look at some macro issues that significantly impact the health of a particular business or industry, this study is used by managers and strategists to determine where their market is right now. It also assists in evaluating the company’s future position.

The PESTLE study considers several factors that have an impact on the business environment. It is a macroeconomic instrument that is used to understand the external environment through more extensive environmental analysis. 

Each letter in the acronym represents a different component. These factors can directly or indirectly impact any sector or organization.

SWOT Analysis

SWOT stands for strengths, opportunities, weaknesses, and threats, in case you didn’t know. These four factors are utilized to determine where a company stands regarding strategy.

These four elements are divided into two groups. We must talk about them a bit to see how they can assist us in conducting an environmental study.

• Internal Factors

Internal factors in this type of analysis are strengths and weaknesses. Because they can be affected and even controlled by the organization, they are referred to as internal analysis if a corporation has a firm brand name.

This is a strength because it was made possible by the organization’s efficient use of resources. As a result, this is an internally generated element that highlights one of the causes of the company’s success.

• External Factors

External considerations in this type of environmental assessment include threats and opportunities. Unlike the elements listed above, the company cannot control them in any way. In fact, these circumstances frequently occur on their own.

Competition is a concern to all businesses since it is impossible to eliminate it. As a result, external factors function in this manner.

Now that you know how to do a SWOT analysis , you can include your findings in your environmental study. Strengths may be enhanced, weaknesses can be eliminated by taking advantage of opportunities when they arise, and threats can be minimized by remaining vigilant.

Environmental evaluations help organizations in detecting potential effects. That could pose a hazard or an opportunity. This assists them in anticipating changes in their environment.

The internal insights from the environmental analysis are used to evaluate things like how well employees are doing their jobs, how happy customers are, how much maintenance costs, etc., so that corrective action can be taken where needed.

Also, the external metrics help the organization positively respond to its environment and ensure its strategies align with its goals.

This helps to find threats early on, which helps the organization come up with plans for how to stay alive. On top of that, it looks for opportunities, like potential customers, new products, segments, and technologies, so that it can take up the most market share possible compared to its competitors.

Using environmental factors analysis has several advantages, including the following

• Predicting the future
• Recognizing threats and allowing them to develop a response strategy
• Assisting in the achievement of business goals
• Increasing organizational effectiveness

The analysis examines revenue, profitability, and company success in depth analysis . An environmental analysis can help you make the best decisions for your company. The nature of your business determines the type of environmental analysis you should perform.

It helps companies uncover opportunities, minimize risks, and create successful strategies that meet their goals. 

SWOT, PESTEL, and Porter’s Five Forces analyses are used to evaluate an organization’s performance and strategy.

Environmental analysis helps organizations anticipate change, make informed decisions, and stay competitive in today’s fast-changing business environment. Environmental scanning has several benefits and is vital for today’s businesses.

QuestionPro can help with environmental analysis by giving you tools for gathering, analyzing, and displaying data. It can also help you target specific audiences and work together as a team.

QuestionPro makes it easier for businesses to learn about environmental factors that affect their business and make decisions based on that information.

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What Is an Environmental Analysis for a Business?

by Billie Nordmeyer MBA, MA

Published on 5 Aug 2019

Business leaders can control aspects of the internal environment that can positively or negatively affect a company's operating and financial results. However, the greatest challenges to business success may be a consequence of the external environment over which company leaders have little, if any, control. To address these challenges, business leaders often conduct an environmental analysis and develop policies and processes that adapt company operations and products to this environment.

An environmental analysis looks at the industry and the political, economic, technical, cultural and other environments in which the business operates. The aim is to identify challenges facing the business, and opportunities it could exploit.

What is an External Environment?

The external environment consists of a general environment and an operating environment. The general environment consists of the economic, political, cultural, technological, natural, demographic and international environments in which a company operates.

The operating environment consists of a company's suppliers, customers, market intermediaries who link the company to its customers, competitors and the public.

Both the general and operating environments provide business opportunities, harbor uncertainties and generate risks to which a business must adapt.

For example, countries with large populations may coincide with a large market size for particular products. However, to offer its products in these markets, a company may be required to contend with a government that erects obstacles to trade in the form of tariffs, product standards and customs procedures.

Purpose of Environmental Analysis

Successful businesses adapt their internal environment – including human and financial resources, policies, technologies and operations – to the external environment. The company performs an environmental analysis to identify the potential influence of particular aspects of the general and operating environments on business operations.

This analysis identifies the opportunities and threats in a business environment in terms of a company's strengths and weaknesses.

For example, a company may consider the impact of operating in a communist country and the threats posed by government-controlled resources. A company might also consider the opportunities of a government-controlled market in terms of competing products, the implications of well-educated and well-paid consumers to product development and sales and the impact of the location of its primary suppliers in a country in economic crises.

Environmental Analysis Process

An organization relies on strengths to capture opportunities and recognize weaknesses to avoid becoming a victim of environmental threats. A company performs an environmental analysis to gain an understanding of these strengths, weaknesses, opportunities and threats.

The environmental analysis then influences corporate planning and policy decisions.

An environmental analysis is a three-step process in which a company first identifies environmental factors that affect its business. For example, the company might consider if a market is “difficult” because of its remote geographic location or the area's unfavorable economic conditions.

The company then gathers information about the selected set of environmental factors that are most likely to impact business operations. For example, the company might review government and industry reports and surveys that relay information about trade barriers that companies face in particular countries.

This information serves as input to a forecast of the impact of each environmental factor on the business. For instance, a company might project the volume of products likely to be sold in a country in light of existing poor economic conditions and significant trade barriers.

Limitations of Environmental Analysis

An environmental analysis reviews current environmental conditions to forecast a future business environment.

The static nature of the analysis ensures that unexpected environmental changes cannot be considered in a company's business projections. In addition, the environmental analysis is but one source of information that's evaluated as a company develops a strategic plan.

The benefit of the analysis is also limited by the reliability and timeliness of data used in the analysis. As a result, the analysis does not guarantee business success.

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Environmental analysis (or PEST)—an element of your startup’s strategic plan

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An  environmental analysis , or PEST analysis, categorizes the changes and forces that affect your startup either directly or indirectly through your customers, suppliers and competitors. PEST is an acronym that stands for the Political, Economic, Social and Technological market forces. This type of analysis is usually conducted in the process of preparing a strategic plan, with the goal being to identify  threats and opportunities  for your business.

PEST is a common framework for conducting this macro-environmental scan that summarizes high-level trends as they relate to your  target customers ,  markets and technology. To perform an environmental, or PEST, analysis, answer the following questions:

1. What key political and regulatory developments are taking place now? How do these changes affect your market and customers? How do these trends affect your industry, suppliers,  partners  and customers? Focus your analysis on:

• tax regulations
• trade rules
• environmental legislation

2. Are economic changes affecting your company, your customers or your suppliers? Does this create opportunities, or does it threaten your market potential or your customers’ economy? Focus your analysis on:

• economic growth rate
• interest rates
• currency changes

3. What social and cultural changes are occurring? Focus on shifts in the demographic profile, any broad attitudinal changes, and any cultural trends that may impact the potential of your startup in the short and long term. Look for movement in:

• demographic trends such as birth rates, aging, and migration patterns
• attitudes towards healthy lifestyles, organic foods, the environment, and so forth
• attitudes on issues such as security, executive compensation, and anti-terrorism

4. What key technological trends impact your business? Consider also technology advances that affect your customers and suppliers. Do any of these changes create opportunities or threaten your potential? Focus your analysis on:

• specific technological breakthroughs
• the launch of innovative new products
• areas that undergo much research and development
• patents  that receive publicity

Schewe, C.D. & Hiam, A. (1998).  The Portable MBA in Marketing.  New York: Wiley.

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What is an environmental analysis in marketing?

Last updated

1 April 2024

Reviewed by

Marketing is a crucial component in any business. For businesses to succeed in any industry, they must be aware of various challenges, like competition, trends, new technology, and regulatory changes. 

That’s where environmental analysis comes in. It evaluates the opportunities and threats in a business environment, allowing businesses to make informed decisions. 

This article will explore environmental analysis, its purpose, and its techniques.

Market analysis template

Save time, highlight crucial insights, and drive strategic decision-making

• What is an environmental analysis?

An environmental analysis is a strategic tool that businesses use to evaluate the internal and external factors that impact their operations. 

An analysis looks at factors like: 

Technological

This provides businesses with vital information that influences their marketing strategies.

Another important factor is social trends. Businesses need to be aware of changes in societal values and attitudes toward certain issues. For example, a beauty company may need to adjust its marketing strategy in response to the growing trend toward natural, organic products.

Technological advancements are also a crucial element in an environmental analysis. We saw the rise of e-commerce and mobile devices shift the business landscape, so it’s crucial to be aware of emerging technologies that could impact operations. 

They also need to consider how they can use technology to their advantage, such as developing new products or improving their supply chain management.

Legal and political factors are another critical consideration. Regulation changes can significantly impact businesses, particularly those operating in highly regulated industries such as healthcare or finance. 

Companies need to stay on top of legislation changes and adapt their operations accordingly.

Considering economic, social, technological, legal, and political forces means companies can make informed decisions about their marketing strategies and overall business operations.

• What is the purpose of environmental analysis?

An environmental analysis primarily aims to evaluate a business's external environment to identify opportunities and threats. With this information, a business can create a roadmap with strategies that take advantage of the opportunities and mitigate the threats. 

An environmental analysis also allows businesses to remain competitive by identifying technology, consumer, and market trends .

Environmental analysis is a critical component of strategic planning. It helps businesses understand their current position in the market and identify potential risks and opportunities. Analyzing the external environment means businesses can develop effective strategies to achieve their goals and objectives.

As we mentioned earlier, businesses must consider several factors when conducting an environmental analysis:

Political factors may include policies and regulations that impact the business.

Economic factors may include inflation, interest rates, and exchange rates.

Social factors may include cultural norms, beliefs, and demographic trends, such as population growth and aging.

Technological factors may include advancements in technology and innovation. 

Legal factors may include laws and regulations that impact the business.

Environmental factors may include climate change and natural disasters.

A comprehensive understanding of the external environment can help businesses implement effective strategies to achieve their goals and objectives.

• Environmental analysis techniques

Businesses can use several techniques to conduct an environmental analysis, which we can broadly categorize as quantitative and qualitative. 

Quantitative techniques involve mathematical models, surveys , and statistical methods to collect and analyze data. 

Qualitative techniques use interviews , focus groups , and expert judgment to gather opinions, attitudes, and perceptions.

Quantitative techniques

One of the most common quantitative techniques for environmental analysis is statistical analysis. Statistical analysis involves using mathematical models to analyze data and identify patterns and trends. This technique is handy for analyzing large data sets and identifying correlations between variables.

Another quantitative technique for environmental analysis is surveys. They’re a powerful tool for collecting data from many people. Businesses can conduct surveys online, over the phone, or in person. Survey data can identify trends and patterns in the external environment.

Qualitative techniques

One of the most common qualitative techniques for environmental analysis is expert interviews. Expert interviews involve gathering the opinions and perceptions of experts in a particular field. This technique is particularly useful for identifying emerging trends and potential threats.

Another qualitative technique in environmental analysis is focus groups. These involve gathering a small group of people to discuss a particular topic. The data from focus groups can identify attitudes and perceptions toward a particular product or service.

PESTLE analysis

PESTLE analysis is a commonly used technique for environmental analysis. 

PESTLE stands for: 

T echnological

E nvironmental

PESTLE analysis involves delving into these factors to identify potential opportunities and threats in the external environment.

SWOT analysis

SWOT analysis is another common technique for environmental analysis. 

SWOT stands for: 

W eaknesses

O pportunities

SWOT analysis involves identifying the strengths and weaknesses of a company and the opportunities and threats in the external environment.

Industry analysis

Industry analysis looks at the external environment of an industry. This technique is particularly useful for identifying potential opportunities and threats in the external environment. Industry analysis involves analyzing factors such as competition, market size, and market trends.

Competitor analysis

Competitor analysis involves analyzing the external environment of a company's competitors. This technique is beneficial for identifying potential threats in the external environment. Competitor analysis involves analyzing factors such as market share, product offerings, and pricing strategies.

Competitor analysis templates

What is an environmental analysis example.

For instance, if a business sells environmentally friendly products, it may conduct an environmental analysis to determine how government regulations may impact its operations. 

The business may evaluate the political forces to determine whether the government intends to tighten regulations or introduce new ones. It may also investigate the legal forces to check the existing regulations related to environmental issues. 

Benefits of environmental analysis

An environmental analysis offers numerous benefits to businesses:

Gaining a clear understanding of their market position and strengths and weaknesses

Identifying emerging trends and acting before their competitors gain an edge

Remaining competitive by understanding the ever-changing business environment

Limitations of environmental analysis

However, it's worth noting that environmental analysis has its limitations, including: 

It’s impossible to predict the future with certainty, so there’s always a risk of unforeseen events affecting business operations, regardless of a detailed environmental analysis.

The cost and time to conduct an environmental analysis may be challenging for businesses that lack resources.

Environmental analysis is an important tool that businesses need to master. Evaluating external forces and identifying opportunities and threats means businesses can make informed decisions and remain competitive. 

While not foolproof, environmental analysis is still worth conducting to stay ahead of emerging trends and protect businesses from unforeseen events.

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What is an Environmental Analysis? All Your Questions Answered

Lauren Christiansen

Because market research is based on ever-changing variables, businesses must always consider varying factors and the changing environment in their data analysis. Part of the challenge in adapting to changing variables is knowing how to adequately prepare for it and identify them. Mapping out a response to each potential external and internal environmental disuption by writing an optimized environmental analysis is an effective way to adapt to change. Here's what to know about the external environmental conditions businesses face and how they can cope by utilizing an e nvironmental assessment.

What is an External Business Environment?

An external environment is composed of all of the external factors that affect the operation of a business. Two aspects of an external environment are- The Operating Environment This refers to the company's suppliers and customers, as well as the marketers who promote or sell a company's products and services to customers and the public. The General Environment This includes an array of external influences that affect a company, such as technology, economic conditions, international trade agreements, demographics, politics, and the legal environment. The operating and general environment can either provide opportunities for increased growth and revenue, or they can generate uncertainties and risks that companies have to adapt to. Provided are some examples of how operating and general environmental factors can impact a business.

The Operating Environment

Positive - A retailer's marketing department ran a successful online advertising campaign for 6 months. The campaign targeted prospective and current customers, leading to an increased amount of online purchases, many from new users. Negative - A restaurant's change in management has lowered the quality of customer service, leading to a decreased level of customer satisfaction. Customers have made several complaints, and there have been fewer patrons frequenting the restaurant.

The General Environment

Positive - Strong economic conditions and lower property taxes have allowed an auto shop to open up an additional location. Negative- The FDA has issued a warning that a supplement is unsafe. Several states have banned the sale of that particular supplement. A vitamin shop that continues to sell it has lost many of its customers due to the FDA warning.

What is the Purpose of an Environmental Analysis?

An environmental analysis is a strategic analysis tool to identify all of the external and internal factors that can affect a company's performance. The purpose is to assess the level of risk various environmental factors pose as well as the business opportunities they present. The analysis considers the company's strengths and weaknesses and how they affect the ability to handle external threats/opportunities. Successful businesses can usually modify their internal business strategy and operating procedures to adapt to external circumstances. For example, Google is working with China on building a censored search app that could serve over 99% of queries. This move has been criticized by many who believe that it conflicts with Google's mission to organize the world's information and make it universally accessible and useful. However, it demonstrates that companies can find a way to expand even when confronted by political or legal challenges.

Environmental Analysis Process

Creating a strategic analysis is a 3-step planning process- 1. Identify Factors The company must first determine which internal and external factors may affect a business. More often than not, there is a combination of different elements at stake. For example, Toys R Us went out of business due to increasing competition from discount stores such as Target and Amazon. They were also saddled with debt from a buy out in 2005. The two environmental factors that affected Toys R Us were internal financial problems and external competing markets. 2. Gather Information The company then gathers information about the identified internal and external conditions that impact business operations. For example, some localities regulate or prohibit the usage of digital billboards due to environmental concerns. A company that utilizes digital billboards to run advertisements across many locations has heard that new regulations may affect their ability to run ads during certain hours. The company would then review the local ordinances and regulations to see if they can continue running their campaigns in each of their locations, or if they need to change their advertising strategy. 3. Determine Impact The gathered information predicts how environmental factors will affect the business. Internal operational and financial processes need to be reviewed to determine how the company will be able to respond to each risk. For instance, a company has an opportunity to sell their products in another country. However, that country is currently experiencing poor economic conditions which might affect sales. The company can then determine whether the number of sales would exceed the cost of expanding its market to another company and whether they could take the financial hit if the endeavor failed.

Common Framework for Measuring Environmental Risk

Environmental scanning is frequently utilized to help organizations scan the landscape of competitors, customers, economic conditions, market conditions, etc. before implementing a new product/service. A commonly utilized project management tool to perform environmental scanning is PESTEL, which refers to the political, economic, social, and technological factors affecting a company. Here are the different components of a PESTEL analysis, by letter. Political Political issues refer to the government's level of intrusion in an organization's operations. Particular issues of concern are taxation, tariffs, regulations, elections, and political stability. For example, different political parties have different stances on increasing the minimum wage. Small businesses may pay attention to an election where one candidate proposes an increase in the minimum wage because it can affect their product/service prices and ability to maintain current employees. Economic Businesses who operate within the United States first focus on the health of the American economy as a whole, including growth, employment, inflation, and interest rates. Organizations that operate outside of the U.S. will focus on exchange rates. For example, a startup may evaluate the current health of the economy to determine whether or not they will be able to sustain themselves, as economic conditions affect a company's long-range revenue and expenses. Social Social issues involve shifts in age, demographical changes, changing attitudes towards safety and health, consumer preferences and technological advancements, or population growth. For example, 86% of millennials utilize social media. As a result, companies who see millennials as their target audience are more likely to run promotional advertisements on social media platforms. Technology Technology includes research and development, robotics, automation, or any type of technological change. Technological disruption refers to innovations that completely change the cast of leading competitors. For example, Facebook's popularity was a technological disruption for Myspace, who was considered a dominating social media platform back in the early 2000s. Environmental Climate change, weather, air quality, and natural disasters are all environmental factors. Some industries are especially at risk from changes in the environment, including agriculture or tourism. To illustrate, farmers may watch the Weather channel or read the Farmer's Almanac because the weather can affect pesticide application, irrigation scheduling, planting dates, or fungicide application. Legal Legal factors include employment, health, and safety policies. Discrimination and consumer protection laws can also affect a company's ability to operate. For example, the 2009 Dodd-Frank Act was passed by Congress after the Great Recession to place strict regulations on banks to protect consumers. Many larger banks were able to cope with the regulations imposed on them, but 90% of small banks claimed that compliance costs increased too dramatically and 81% said Dodd-Frank was too financially burdensome.

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Environmental analysis: How to identify opportunities and threats in strategic planning

It is increasingly important to stay one step ahead to ensure the survival and prosperity of an organization. In this scenario, the ability to adapt and evolve plays a crucial role, and this derives mainly from sound strategic planning, where environmental analysis is an integral part.

Companies can carry out this process to detect internal and external factors and thus identify opportunities and challenges, taking into account elements such as economics and technology.

In this article, we will see what environmental analysis is, what it is for and how you can identify opportunities and threats within strategic planning based on it.

What is an environmental analysis in a company?

Environmental analysis, also known as PESTEL (Political, Economic, Social, Technological, Environmental and Legal) analysis, is a tool that allows organizations to scan and monitor the external environment in which they operate. 

It is not just a data collection process, but an in-depth and comprehensive study that seeks to identify the various external factors and trends that could significantly impact the company's business and performance. 

These elements can include everything from the economic climate and market trends to technological changes and legal regulations that could affect the way a business conducts its activities.

The role of environmental analysis in strategic planning

Environmental analysis plays an essential role in a company's strategic planning by providing a clear and thorough understanding of external business factors and how they may affect the organization in the future. 

There are many ways in which analysis aids strategic planning:

1. Identification of opportunities and threats

Analyzing the environment allows companies to more easily detect the risks and opportunities present.

This is key because the market changes rapidly and abruptly and organizations must be able to adapt to it. 

The process of defining a strategic plan makes it possible to know the current and desired positioning in a specific time frame. From this, leadership, commitment and collaboration are required throughout this process in order to achieve good results. 

2. Strategy development

Once the opportunities and threats have been identified, this information can be used to formulate strategies that exploit the positive areas and mitigate the negative ones. 

For example, if a company identifies a new emerging technology as an opportunity, it can formulate a strategy to adopt and take advantage of it before its competitors.

3. Informed decision-making

Environmental scanning provides companies with the information they need to make informed decisions. 

If the environmental scan reveals that the economy is in recession, a decision can be made to delay expansion until there is a recovery. 

4. Preparing for the future

It also helps organizations prepare for the future. By constantly monitoring the business environment and being aware of emerging trends and changes, businesses can prepare for and adapt to these changes, rather than being blindsided by them.

5. Competitiveness 

Finally, it can help businesses stay competitive in the marketplace. By understanding the environment and adjusting their strategies accordingly, businesses can stay one step ahead of their competitors.

How to identify opportunities and threats in strategic planning?

Identifying opportunities and threats is a fundamental component of strategic planning, which is carried out by taking into account some steps that we at London Consulting Group consider indispensable:

1. Pre-assessment

The current situation of the company must be known; for this purpose, it is important to hold interviews with the company's top management and go deeper into how they are managing the company, in order to know what should change and why, according to their objectives.

Once this is done, it is possible to move on to the next element.

2. Strategic Planning

Strategic planning is not a static process, but a dynamic route that takes the organization from its current situation to its desired future vision. 

Therefore, the strategic roadmap is divided into critical stages that ensure a smooth and effective transition:

This is the starting point and consists of:

First, conduct an environmental analysis (research and analyze market conditions, competition, trends and other external factors that could influence the strategy).

Then, understand the expectations of stakeholders, i.e. all the people involved in a company, and how they relate to the company's objectives.

Finally, the vision and mission must be defined in order to know where the company wants to go and what it wants to achieve.

It is important to know what the weak and strong points of each team or member are in order to strengthen it and get results.

Work sessions should be held to discuss, question and define the key elements of the strategy.

With this, it will be easier to determine the main findings and decide the next steps in the strategy based on what is being achieved or desired.

The final phase is critical to bringing the strategy to life. A follow-up model must be established to monitor and control the implementation of the strategy with any adjustments or decisions made.

The strategy must also be implemented, using available resources and ensuring that the objectives are achieved as planned.

3. Landing model and follow-up

At this point, once the current situation and what should be considered in the strategy have been understood, the action and operation plans must be created and developed, connecting the strategy, in order to follow up the process.

To achieve this, some essential points must be considered, such as:

• Review the strategy
• To thoroughly understand the elements that make up the strategy
• Define the strategic plan
• Seamlessly connect the strategy with the operational
• Define the operational plan
• Monitor and adjust

Environmental analysis, key to business growth

Conducting an analysis of the environment is very important for businesses; otherwise, they will most likely fall behind and will not be able to prosper or achieve ambitious long-term goals.

If you want the benefits of this process, but have doubts, at London Consulting Group (LCG) we have a solid and proven methodology to help you with strategic planning and environmental analysis. 

Our approach is based on a deep understanding of your business, your goals and your mode of operation with all the factors (internal and external).

We offer a pre-diagnosis, where we assess the current state of your business strategic plan through initial interviews with senior management. From this, we develop a Strategic Planning Roadmap, detailing the key stages where we can add value, from exploration to implementation.

Throughout this process, we organize Collaborative Workshops, which are working sessions in which all participants can actively contribute. This not only helps to identify opportunities and threats but also fosters collaboration and shared decision-making.

At London Consulting Group, we not only help you understand your environment and formulate an effective strategy, but we also provide you with the tools and support you need to implement that strategy and achieve your business objectives. Contact us !

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The Environment | Nature | Humans

Environmental Analysis, Types, Techniques, Importance, and Examples

Organizations can find internal and external factors that could have a positive or negative impact on their business by conducting an environmental study.

Through the examination of variables like technology and economics, firms can predict future opportunities as well as risks but developing your environmental analysis skills will enable you to create a corporate marketing plan that works.

This page defines an environmental analysis, explains its use, and walks readers through the environmental analysis procedure.

Table of Contents

What is Environmental Analysis?

A strategic tool for identifying and evaluating the internal and external components of a corporate environment is an environmental analysis, sometimes known as an environmental scan.

It looks at aspects of the industry and organizations that can have a good or bad impact on the company and its success. Anticipating both immediate and long-term effects allows the organization to be ready to react quickly when problems arise.

Organizations can identify elements that may have an impact on their business operations with the use of an environment study. They can predict the future course of their firm under the current conditions by evaluating these factors. They can create a plan that minimizes risks and seizes chances thanks to this method.

Strategic planning sessions benefit from the inclusion of an environmental study, which gives organizations a methodical approach to decision-making. In this manner, businesses can accomplish their objectives and raise the bar on their performance.

The two main parts of an environmental analysis are external variables and internal factors. They will be covered in detail in this section.

1. Internal Factors

These elements require organizations to examine themselves. Based on the organization’s goal and vision, they assess its strong and weak elements. These elements also enable companies to evaluate their goals and course of action after a predetermined amount of time, such as five or 10 years.

2. External Factors

Conversely, external variables are high-level influences that are not part of the organization. Businesses need to assess the potential and risks associated with the following areas, according to SHRM:

• Market and industry developments
• The advantages and disadvantages of the competition
• Clientele—both your clientele and your customer support
• Economic factors that can affect an organization
• Labor supply, labor markets in the regions of operation;
• Technology, technological breakthroughs that help expedite operations;
• Politics, and legal situations

Types of Environmental Analysis

PESTLE and SWOT analyses are the two most used forms of environmental analysis techniques. These methods assist companies in evaluating their strategic positioning in light of several internal and external variables. Continue reading to discover these techniques.

PESTLE Analysis

The PESTLE study, also known as the PEST analysis in short, looks at the external factors that can have a bigger impact on a firm. Based on broad trends in the market, consumers, technology, and other areas, it gives businesses insights into the state of the industry.

Six essential components make up the PESTLE approach, which provides a thorough understanding of the macro environment of the business:

• Technological
• Environmental

1. Political

Political factors examine the country’s current political situation. This frequently entails assessing whether the government is stable or likely to change shortly. Political elements to consider are as follows:

• Government policies
• Trade restrictions

2. Economical

Businesses frequently include economic issues, or the state of the economy at the time, when doing an environmental analysis. This enables them to formulate strategies according to the apparent trajectory of the economy.

For example, a business may believe the economy is doing well and contemplate building another branch if the unemployment rate is low. The following other economic elements should be considered in your review:

• Interest rate,
• Inflation rate,
• Foreign currency rate,
• Credit accessibility.

A nation’s social aspects are its attitudes, which can affect business. For example, people in some cultures follow a diet prescribed by their faith. The sales of particular foods in that area might be impacted by this. Among the social aspects are, for instance:

• Family structure
• Gender roles
• Distribution of wealth
• Education levels

4. Technological

Innovations and technological breakthroughs have the potential to alter how a firm operates. This could have a favorable effect on some businesses’ operations by using automation to expedite creation. But certain jobs may also be replaced by technology. The following technological aspects should be considered in your analysis:

• New product discoveries and launches;
• Rate of technological advancements;
• Consumer access to technology;
• Technology incentives.

Legislative changes that could affect a business’s environment are examined by legal aspects. An industry may be impacted when regulatory organizations impose new rules, as in the case of the healthcare sector. A few legal considerations are:

• Employment laws;
• Health and safety legislation;
• Patent infringements;
• Product restrictions;
• Employment Laws

6. Environmental

Environmental aspects consider the potential effects of a business’s location. A specific area’s conditions may affect trade. Things to take into account when reviewing the environment are:

• Weather conditions
• Waste disposal laws
• Energy consumption regulations
• Environmental policies

SWOT Analysis

The SWOT analysis evaluates an organization’s strategic position by taking into account both internal (strengths and weaknesses) and external (threats and opportunities) factors.

It reveals the benefits and drawbacks of a business based on its strong and weak characteristics. By doing this, businesses may create a plan that minimizes risks and optimizes opportunities.

The following components make up the 2×2 matrix used in the SWOT method:

• What advantages does your business provide?
• What special or affordable resources are available to you that are not available to others?
• In your market, what skills do clients think you possess?
• What qualities lead one to “win business”?
• What could you alter?
• What should you avoid doing?
• What shortcomings is your economy most likely to perceive in you?
• What factors are involved in the downturn of your business?

Opportunities

• What promising opportunities do you see?
• What intriguing patterns are you aware of?
• What difficulties do you face?
• What are your competitors doing?
• Is the rapid advancement of technology putting your employment at risk?
• Do you struggle with the financial flow or bad debt?

SWOT analysis can help a business challenge performance assumptions and reveal dangerous weaknesses. If a firm uses it carefully and cooperatively, it can offer new insights into where it is at and help it create the best plan of action for any situation.

Process of Environmental Analysis

While doing an environmental scan has no set guidelines, following these stages will help you get the most out of the process. An environmental analysis is a methodical approach to identifying the elements that impact your company and its operations.

• Identify the environmental factors
• Gather data regarding these variables
• Check the competitors
• Determine the impacts on the organization
• Create a tactical plan

1. Identify the environmental factors

A list of the variables to be assessed is the most important prerequisite for an environmental study. These variables will vary based on the industry and region of your company.

Micro- and macroenvironmental elements that affect their operations both temporarily and permanently should be on this list. A mining business, for instance, may describe the most recent developments in their sector and local environmental laws.

2. Gather data regarding these variables

The next stage is to collect data about the environmental factors that have been described. To ensure the material is current and relevant, you might consult a variety of sources.

You can look at your factors and conduct some studies here. Written and verbal information are the two primary categories of data that need to be gathered.

People read newspapers or magazines to receive written information, while they listen to radio broadcasts or other spoken forms of communication such as radio broadcasts.

Using the aforementioned example, this would entail looking up any updates to health and safety laws online and in medical periodicals to determine whether they would affect your medical facility.

3. Check the competitors

When doing an environmental scan, you look beyond the financial standing of your company. It’s also important to research the performance of your rivals. A competitor study can assist you in identifying potential risks to your company as well as chances to differentiate yourself from the competition.

4. Determine the impacts on the organization

You can now use the environmental data you’ve gathered to forecast potential effects on your business. By taking this step, you set your expectations and may be ready for whatever may happen should these variables materialize. When evaluating risks and their effects, it’s critical to consider the following:

• What effects does this factor have on your company?
• How much time will this last?
• Will this have a positive, negative, or no effect on the business?
• How significant is this component to the general operations of the business?

5. Create a tactical plan

You can come up with ideas and create strategies for potential changes resulting from these elements in the last phase. It entails evaluating the strategic plans you now have and making necessary adjustments in light of the knowledge you have gained about your company’s surroundings. In addition, you can list actions to reduce risks and increase possibilities.

Example of Environmental Analysis

Think of Mr. X as an analyst for the financial services company ABC Pvt. Ltd. Mr. X decided to perform an environmental analysis in response to the latest happenings in the financial business. Given that technology advancements drive the finance industry, Mr. X decided to conduct a PESTLE analysis.

Mr. X takes into account the political, economic, social, legal, and environmental elements in this analysis. He does, however, pay more attention to the technical details. He makes comparisons between the technological developments occurring in other businesses within the same industry.

The findings demonstrate the new developments in sound technological services. It reveals how reliable chatbots in the financial services industry boost company profitability. Mr. X decided to construct a strong chatbot because ABC Pvt. Ltd. does not currently have one.

According to the analysis’s answer, they must improve their after-sales services by advancing technology. After that is finished, the company’s revenue and profitability increase by 15%. The analysis is therefore considered successful.

Importance of Environmental Analysis

The following are some benefits of conducting environmental analyses for organizations:

• Identify opportunities: Organisations can identify emerging trends and opportunities to enter new markets or develop new goods or services by observing the outside world.
• Identify threats: It assists companies in identifying risks to their operations, such as emerging rivals, altered laws, or a faltering economy.
• Develop strategies that work: When organizations know how the external environment impacts their operations, they can develop strategies that work and align with their aims and objectives.
• Prepare for change: Environmental scanning assists companies in anticipating external changes and developing contingency plans for them.
• Make smarter decisions: By learning more about the external issues affecting their business, organizations can make more informed decisions.

An organization must do an environmental analysis if it hopes to succeed and remain competitive in the ever-evolving commercial world. It assists them in seizing opportunities, reducing risks, and formulating sound plans that result in expansion and prosperity.

Environmental Analysis in Marketing

Business developers and marketers utilize environmental analysis as a strategic tool to pinpoint the internal and external, controllable and uncontrolled aspects that affect an organization’s performance.

The term “marketing environmental analysis” refers to all non-marketing variables that have an impact on a company’s capacity to establish and preserve fruitful customer connections. A company can find opportunities and strengths and lessen threats and weaknesses by performing a marketing environment analysis.

In marketing, environmental study typically comes before any marketing strategy. The results of the marketing environmental study will be taken into account and used as a guide to help develop and improve the optimal business plan.

Through the continuous observation of the variables influencing the marketing landscape, marketers can anticipate shifts, seize opportunities, and fine-tune their business plans to achieve superior outcomes.

Analysis of the marketing environment is essential to a company’s success. This aids in recognizing every component linked to the enterprise and the functions that each of these components fulfills in the enterprise’s triumph.

For every business to succeed in the long run, environmental analysis in marketing is therefore not just necessary but also required.

Business Environmental Analysis

Analysis of a business’s external environment is the study of those external influences. This covers a variety of topics, such as the state of politics, the economy, the technology sector, and more. A business can create strategies to maximize its success in this environment by knowing these aspects.

The organizational and industrial elements that have a positive or negative impact on the firm are examined in this environmental analysis. Organizations can quickly address them when they arise by assessing the short- and long-term effects.

Understanding environmental analysis is a crucial skill for organizations. Businesses can make educated decisions and maintain their competitiveness by assessing external influences and recognizing opportunities and challenges.

Even if it’s not infallible, environmental analysis is nonetheless valuable for keeping up with trends and safeguarding companies against unanticipated disasters.

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Providence Amaechi

A passion-driven environmentalist by heart. Lead content writer at EnvironmentGo. I strive to educate the public about the environment and its problems. It has always been about nature, we ought to protect not destroy.

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PESTLE Analysis

Insights and resources on business analysis tools

How 5 Decisive External Environmental Factors are Affecting Businesses Now

Last Updated: Mar 11, 2024 by Thomas Bush Filed Under: PEST Analysis

Today, we’re going to dive into something fascinating. Trust me, it’s super relevant to the world of business as we know it.

We’re talking about PESTLE analysis , but before you yawn and think, “Not another acronym!” Let me tell you, this one’s a game changer, especially when we zoom into the ‘E’ part—yep, Environmental factors.

So, why are we even talking about this?

Well, in today’s world, businesses are like ships navigating the vast ocean of the market. They encounter storms, calm seas, and sometimes unpredictable weather.

These environmental factors are our metaphorical weather conditions in the business landscape. They can shake things up, and we need to understand them. That’s our compass and map rolled into one.

PESTEL analysis is a framework helping businesses scan the horizon for these conditions. It stands for Political, Economic, Social, Technological, Legal, and Environmental factors.

While each component is crucial, there’s something compelling about the Environmental aspect. This part of the PESTLE analysis is capturing the attention of businesses far and wide.

Why, you ask?

Because, my friends, the environment impacts everything.

From how we do business to what consumers want and even the future of our planet. And no, it’s not about being “green” for the sake of it. It’s about understanding the big picture. It’s about adapting, and thriving in a world that’s changing all the time.

Our goal here is simple but ambitious. We’re going to unpack the ‘E’ of PESTLE. We’re revealing the core environmental factors reshaping the business world.

From climate change to sustainability, regulations to technological innovations, we’re covering it all. And trust me, it’s going to be a ride packed with insights and real-world examples. And we might run into a few surprises along the way.

So, let’s explore together how to interpret these environmental factors. After all, it is about survival and thriving in the ever-evolving business landscape. Ready? Let’s dive in!

Understanding Environmental Factors in Business

Let’s get into the nitty-gritty of what we mean by environmental factors in the world of business.

Imagine you’re setting up a lemonade stand. You’ve got your lemons, sugar, water, and a sunny spot picked out.

But then, bam! A rainstorm hits. Or maybe it’s just way too hot, and no one’s stepping outside. Suddenly, your lemonade stand’s success isn’t just about how good your recipe is. It’s also about the weather, right?

Now imagine these environmental factors affecting real businesses. We’re scaling up this concept to a whole new level.

It’s not just about the weather (though climate change is a huge part of it). It’s about all the external environmental elements that can impact a business. From its operation to its growth and strategy. This includes the physical climate obviously. But it also includes sustainability practices and availability of natural resources. Let’s not forget the shift towards greener, more sustainable ways of doing business.

Now, you might wonder, “Why has this become such a big deal now?”

The answer is pretty straightforward but also a bit complex. Our world is changing – fast.

Climate change is making the weather more unpredictable. Natural resources are becoming harder to come by. And consumers are becoming more environmentally conscious. They care about where their products come from and the impact their purchases have on the planet.

Businesses aren’t passive players in this scenario. They’re at the forefront. They are both contributors to environmental challenges and key figures in driving change.

This shift towards environmental awareness isn’t a moral or ethical consideration. It’s a strategic one, too. Some companies understand and adapt to these environmental factors. They are the ones that carve out a competitive edge in an increasingly conscious market.

Moreover, this evolution in business practices is not happening in a vacuum.

Governments and regulatory bodies worldwide are stepping up. They are implementing policies that encourage, or sometimes enforce, more sustainable business operations.

Business innovation, consumer demand, and regulatory frameworks interact to create a dynamic environment. Understanding these factors is not only beneficial but essential for survival and success.

Environmental factors in business are external conditions. These conditions influence how companies operate, innovate, and provide value to their customers. These factors are becoming increasingly important in decision-making processes. They are important for their immediate impact on operations. They are equally important for their long-term implications on sustainability, reputation, and profitability.

So, as we move forward, remember our lemonade stand. The principles haven’t changed; the scale and stakes just got bigger.

Understanding these environmental factors is about tackling challenges. Seizing opportunities to make a positive impact to thrive in tomorrow’s business landscape. Ready to explore further? Let’s keep going!

What are the environmental factors that affect business?

We’re now stepping into the heart of our journey. The key environmental factors that are reshaping the business world.

This is where we see the real impact of those external factors on businesses, big and small. So, let’s break it down and explore each of these factors more closely.

Climate Change and Its Impact

First up, climate change. It’s not just a buzzword; it’s a reality that’s affecting businesses in many ways.

Extreme weather events disrupt supply chains. Shifts in consumer behavior favor eco-friendly products, and climate change is pushing businesses to rethink their operations.

For instance, a ski resort may face challenges due to shorter winter seasons. Meanwhile, an agriculture-based business might struggle with unpredictable rainfall patterns. The key here is adaptability. Businesses that can pivot and solve these challenges will stay ahead.

Sustainability and Corporate Responsibility

Next, we dive into sustainability and corporate responsibility. It’s all about how businesses manage their impact on the environment. Like reducing waste and using sustainable materials to investing in green technologies.

Companies are increasingly realizing that being environmentally conscious can also be economically beneficial. Consumers are more likely to support brands that align with their values. Sustainability is a big part of that equation. Plus, adopting sustainable practices can lead to cost savings in the long run. In that scenario, resources are used more efficiently.

Regulation and Policy

Regulations and policies are another critical factor.

Governments around the world are implementing laws and guidelines to protect the environment. Businesses need to comply.

This can include regulations on emissions and waste management. They can also include the use of certain materials. While navigating these regulations can be challenging, there’s a silver lining. Companies that are proactive in compliance can often find new opportunities for innovation. An example is developing eco-friendly alternatives to traditional products or processes.

Natural Resources and Their Limitations

The availability and management of natural resources are crucial. Businesses depend on these resources, whether it’s water, minerals, or energy sources.

But many of these resources are finite. Their extraction and use can have significant environmental impacts. This has led to an increased focus on resource efficiency – doing more with less.

Businesses are exploring ways to reduce their reliance on non-renewable resources. They are opting for renewable sources. And they are finding ways to recycle and reuse materials.

Technological Advances in Environmental Management

Lastly, let’s talk technology.

Technological advances are helping businesses reduce their environmental footprint in ways that were unimaginable a few decades ago.

Renewable energy technologies like solar and wind power come to mind. Next, think of innovations in recycling and waste management.

Technology is at the forefront of the environmental movement in business.

It’s not just about mitigation, either. Technology is opening up new business models and opportunities, like the sharing economy. This reduces waste by making it easier for people to share and reuse resources.

So, there you have it. A rundown of the key environmental factors affecting businesses today.

Each of these factors presents its own set of challenges but also opportunities. Businesses navigating this landscape effectively are contributing to a more sustainable future. They’re also building a strong foundation for long-term success.

The message is clear.

Integrating these environmental considerations into your business strategy is good for the planet. It’s also good for business.

Now, let’s look at how some companies are turning these challenges into opportunities. Our next section focuses on case studies and real-world applications.

Examples of Environmental Factors Affecting Real-world Businesses

Alright, let’s apply all this theory to the real world and see how it plays out. It’s one thing to discuss environmental factors and their importance, but it’s another to see them in action.

This part of our journey focuses on case studies and real-world applications. It showcases businesses that have navigated environmental challenges and thrived because of their strategies. These stories aren’t just inspiring; they’re blueprints for what’s possible.

Patagonia: Championing Sustainability

First up, let’s talk about Patagonia , the outdoor clothing and gear company.

Patagonia has long been a pioneer in sustainability. They are integrating environmental consciousness into every aspect of its business. They are sourcing organic cotton and are implementing a repair-and-reuse program. Patagonia has set a high standard for what it means to be a responsible business in today’s world.

They’ve also been transparent about their supply chain and environmental impact. They are encouraging consumers to buy less and consider the longevity of their purchases. The result? A loyal customer base and a brand that’s synonymous with environmental stewardship.

IKEA: Leading in Renewable Energy and Sustainability

IKEA , the global furniture giant, has also made significant strides in environmental management. They are committed to becoming a circular business by 2030. They emphasize on renewable energy, sustainable materials, and product life extension. Their strategy showcases how large corporations can lead in the environmental space.

IKEA has invested in wind and solar farms. It aims to produce as much renewable energy as it consumes in its operations. It’s also exploring new ways to design products that can be repaired, reused, recycled, or resold. In a way, it is transforming the way we think about furniture and home goods.

Tesla: Revolutionizing the Automotive and Energy Markets

Tesla’s impact on the automotive and energy sectors is huge. It is a prime example of how technological innovation can drive environmental change.

They have made electric vehicles (EVs) desirable and mainstream. Tesla has challenged the traditional automotive industry to accelerate its shift toward sustainability. Beyond cars, Tesla’s advancements in battery technology and energy storage are spectacular. They are shaping the future of renewable energy, making it more accessible and efficient.

Tesla’s mission is to speed up the world’s transition to sustainable energy. This mission is reshaping industries. It’s influencing consumer behavior and regulatory policies worldwide.

Beyond Meat: Altering Food Consumption for the Better

The food industry plays a significant role in environmental health. Beyond Meat is at the forefront of this transformation.

Beyond Meat is creating plant-based meat substitutes that taste and feel like real meat. This strategy addresses the environmental issues associated with animal farming. These involves greenhouse gas emissions, water use, and land degradation. Their success has highlighted the environmental benefits of plant-based diets. It has also sparked a shift in consumer habits. It has inspired other companies to explore sustainable food alternatives as well.

Interface: Transforming the Carpet Industry

Interface is a modular carpet manufacturer. It embarked on a journey to eliminate its environmental impact by 2020. It does so through its Mission Zero® initiative.

They’ve tackled this ambitious goal by reducing waste and recycling materials. They are pioneering new manufacturing processes that are kind to the planet. Interface’s approach has revolutionized the carpet industry. They are proving that sustainability can be a core business strategy. This in turn is leading to innovation, efficiency, and profitability.

These case studies highlight the diversity of strategies and sectors where environmental considerations are driving change. They illustrate innovative ways to integrate sustainability into your business model. And these apply whether you’re a small startup or a multinational corporation.

These companies have minimized their environmental footprints. They have also enhanced brand reputation, customer loyalty, and even open up new markets. They remind us that businesses can turn environmental challenges into competitive advantages. It only takes creativity, commitment, and courage!

Let’s carry these insights forward as we explore the challenges and opportunities that lie ahead.

Challenges and Opportunities

Navigating the world of environmental factors in business is a bit like sailing through uncharted waters. It’s thrilling, sure, but it’s not without its share of challenges. Yet, within these challenges lie incredible opportunities for businesses ready to think creatively and act boldly.

• Regulatory Compliance : As environmental regulations become stricter, navigating the complex web of local, national, and international laws can be daunting. The challenge is to not only comply but to excel, turning compliance into a competitive advantage .
• Resource Scarcity : With the depletion of natural resources, businesses face the challenge of finding sustainable alternatives that don’t compromise on quality or cost-effectiveness.
• Consumer Expectations : Today’s consumers are more informed and environmentally conscious. Meeting their expectations for sustainable and ethical products and practices can be a tall order.
• Initial Costs : Investing in green technologies and sustainable practices often requires significant upfront costs. While these can lead to long-term savings and benefits, the initial financial barrier can be a challenge for many businesses.

Opportunities

• Innovation and Differentiation : The drive towards sustainability can spark innovation, leading to the development of unique products, services, and processes that set a business apart.
• Market Leadership : By embracing environmental challenges and leading in sustainability, businesses can establish themselves as market leaders, attracting customers, talent, and investors.
• Operational Efficiency : Sustainable practices often result in greater operational efficiency, reducing waste and lowering costs over time.
• Building Brand Loyalty : Businesses that are seen as environmentally responsible can build stronger, more loyal relationships with their customers, enhancing brand value and customer retention.

The Future of Business in an Environmental Context

As we gaze into the future, it’s clear that environmental considerations are not just passing trends; they’re integral to the future of business. The relationship between businesses and the environment is evolving, with sustainability becoming a core aspect of business strategy rather than an afterthought.

• Sustainability as Standard Practice : In the future, sustainable practices will become the norm. Businesses that fail to adapt will find themselves at a disadvantage, unable to meet regulatory requirements or consumer expectations.
• Technology and Innovation : Technological advances will continue to drive change, enabling businesses to reduce their environmental impact in ways we can only begin to imagine. From AI and big data to renewable energy and material science, innovation will be key to solving environmental challenges.
• Collaboration and Partnerships : Tackling global environmental issues will require unprecedented levels of collaboration. Businesses will increasingly work together, and with governments and NGOs, to drive meaningful change.
• The Circular Economy : The shift towards a circular economy, where resources are reused and recycled, will reshape business models. Companies will find value in what was once considered waste, transforming their operations and reducing their environmental impact.
• Consumer Power : Empowered consumers will continue to drive businesses towards greater transparency and responsibility. Brands that align their values with those of their customers will thrive.

As we look to the future, it’s clear that the businesses that will succeed are those that view environmental challenges not as obstacles but as opportunities. Opportunities to innovate, to lead, and to make a positive impact on the world. The journey ahead is not without its challenges, but for those willing to navigate these waters, the rewards are both vast and fulfilling. As we move forward, let’s remember that in the intersection of business and the environment lies the power to shape a sustainable, prosperous future for all.

As we wrap up our exploration into the environmental factors affecting business within the context of PESTLE analysis, it’s clear that the landscape of business is undergoing a profound transformation. The journey through understanding these factors, examining real-world case studies, and contemplating the future challenges and opportunities has highlighted a pivotal shift in the business world. This shift isn’t just about survival in the face of environmental challenges; it’s about reimagining what it means to do business in harmony with the planet.

Businesses today are at a crossroads. The choices made now will not only determine their own future but also the health and wellbeing of our global community and environment. Embracing sustainability, innovating in the face of challenges, and viewing environmental considerations as integral to business strategy are no longer optional—they are imperative.

Key Takeaways

• Environmental factors are integral to PESTLE analysis , influencing every aspect of business operations and strategy.
• Adaptability and innovation are crucial for businesses facing the impacts of climate change, resource scarcity, and shifting consumer expectations.
• Sustainability and corporate responsibility are not just ethical choices but strategic ones that can drive profitability and brand loyalty.
• Regulatory compliance offers both challenges and opportunities for innovation and market leadership.
• Technological advances provide new tools and opportunities for businesses to reduce their environmental footprint and discover new ways of doing business.
• Real-world case studies demonstrate that businesses of all sizes and sectors can successfully navigate environmental challenges and emerge stronger.
• The future of business will be defined by a deeper integration of environmental considerations into all aspects of operation and strategy, with sustainability becoming standard practice.

Recommendations for Businesses

• Embrace transparency : Be open about your environmental impact and what you’re doing to improve. This builds trust and loyalty with customers.
• Invest in sustainability : Whether it’s through adopting green technologies, optimizing supply chains for sustainability, or innovating in product design, the investment will pay off in the long run.
• Stay informed and adaptable : The environmental landscape is constantly changing. Stay informed about new regulations, technologies, and consumer trends to adapt quickly.
• Cultivate partnerships : Collaborate with other businesses, governments, and NGOs to tackle environmental challenges that no one can solve alone.
• Lead with values : Let your commitment to sustainability and environmental responsibility guide your business decisions. This will resonate with consumers and employees alike.

In conclusion, integrating environmental considerations into business strategy is not just about mitigating risks. It’s about seizing opportunities to innovate, differentiate, and lead in an increasingly complex and interconnected world. By facing these challenges head-on, businesses can contribute to a more sustainable and prosperous future for all. Let’s move forward with the knowledge that the actions we take today shape the world we live in tomorrow.

How to Prepare a Marketing Environmental Analysis

• Small Business
• Advertising & Marketing
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How to Monitor & Control Your Business Plan

How should a business prepare for next year, how to move up in ranking on google local business listings.

• How Do the Functions of a SWOT Analysis Work Together?
• How to Conduct an Impact Study

Preparing a marketing environmental analysis is an essential step in understanding the external local, national or international forces that might affect your small business. These factors are largely outside your direct control, but you can adapt your business and marketing strategy to take advantage of the opportunities they present while minimizing the potential threats. A PESTLE analysis is the most common way of undertaking such a review; PESTLE stands for the Political, Economic, Social, Technological, Legal and Environmental factors you need to consider.

Political Factors Impacting Business

Political factors refer to governmental actions or policies that have an impact on your business and its ability to trade. For example, restrictions on the import or export of certain goods might limit your market or hamper your ability to obtain raw materials. At a local level, restrictions on the types of businesses permitted in certain districts or the kinds of services available might impact your ability to run your business in these areas.

Economic Factors Affecting Business

Economic factors include all the various taxes and duties you are obliged to pay, as well as wider fiscal decisions on things like central bank interest rates and international exchange rate volatility. A thorough analysis of each of the economic factors that impact on your business will help you plan the financial strategy for your business.

Social and Demographic Impacts

The way society changes and adapts over time, and the differences in communities across the country and the world, are all important considerations when planning your business. Aspects to consider and explore include religion, lifestyle expectations, housing standards and population demographics such as age, gender and ethnic origin.

Technological Advances and Opportunities

Technological change has wiped out old businesses and created new businesses over the years. Understanding the impact of the next technological advances could give you a market advantage over your competitors if you are better placed to exploit the opportunities they present. Look at how communications are changing, and try to find a way in which you can take advantage of any emerging channels to reach new or more customers. Don't forget to explore how your business could be more efficient and productive by using new technologies in production or distribution, for example.

Legal and Regulatory Impacts

Every business operates within a strictly controlled legal environment. Identify, and be aware of the impact of, all legislation relating to your business. These might include regulatory obligations, environmental restrictions, import/export limitations and basic health and safety laws.

Ecological and Environmental Factors

Economies across the world are increasingly aware of the environmental factors of their operations. Even as a small business owner, you should consider the environmental aspects relating to your activities, such as its impact on the local and wider environment.

Be aware that attitudes to themes such as ecology and renewable energy can affect consumer behavior. Some believe global warming is changing weather patterns, affecting tourism and farming. Showing that you are a "green" business might attract new customers.

Analysis of Opportunities and Threats

Your PESTLE analysis should provide you with a useful tool to determine the major opportunities and threats facing your business as you plan for its future growth. When taken together with an internal review of your business' strengths and weaknesses, you should be in a strong position to develop a robust strategy and business plan based on well-balanced research.

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Helping you build & grow your brand!

A practical introduction to Marketing Environmental Analysis

The development of your overall marketing strategy has to start with an assessment of your business environment. In order to cover all bases, you can use a mix of several marketing frameworks. You can also use applied theories to evaluate different factors that affect your marketing strategy. So this is what marketing environmental analysis is all about. It can be broadly classified under external and internal factors. A marketing environmental analysis will highlight critical factors. You can use this to your advantage. But it also presents elements that are a risk to your planning and implementation.  

Before you look into the “How”, let’s establish the “Why”. The benefits of doing a marketing environmental analysis vary. Generally speaking, the analysis:

• helps in setting and attaining marketing or organizational objectives
• indicates internal strengths and weaknesses of the organization
• highlights external threats and opportunities
• provides an understanding of trends and insights to gain advantage or improve offering
• clarifies expectations by considering capabilities and resources
• prepares organizations for adversity and changes within their industry
• forecasts possibilities for the future of the offering, brand or organization

There are 2 widely accepted divisions to the marketing environmental analysis. External & Internal environments. The external is split into macro-environment and micro-environment forces. So, let’s take a deeper dive into each of the main classifications. We will be using some popular models and theories to explain them.

Macro-Environment – Marketing Environmental Analysis

The macro-environment factors are external forces indirectly affecting the growth of your business. These affect both the micro and internal factors. Thus, leaving an impact on your brand and organization. One of the most popular models for inspecting the macro-environment is a PESTLE/PESTEL analysis. PESTLE/PESTEL is a business analysis tool that is also useful for marketing strategy. There are 6 major elements to explore here. These are:

• Sociological
• Technological
• Environmental

By examining each of the 6 forces, you will have a clear understanding of external factors that provide opportunities for you, your brand, or your business. It will also prepare you to plan against threats and challenges.

Let’s look at each of the 6 factors of PESTLE/PESTEL now:

The political situation of the region/country you are marketing to needs to be considered. Most industries have regulations in place for trade, taxes, quality, and labor. These and other government policies make up the political external factors that affect you and your business.

The pricing of your offering could be severely affected by demand/supply imbalance. Thus, it is important to analyze economic factors. Some inclusions are direct like interest rates and inflation. There are complex ones too. Such as purchasing power of consumers or regional economic growth.

SOCIOLOGICAL

Also referred to as Social factors. These forces include but are not limited to, demographics by region, and general sentiment towards the industry. These also consider the lifestyle, culture, and values of society and individuals.

TECHNOLOGICAL

The innovation revolution today means an ever-changing technological landscape. Consequently, this can affect Research & Development, resource utilization, and costs. It is important to study the way technology changes industries. Also, to understand the way consumers interact with a brand. As a result, it can exponentially help growth.

ENVIRONMENTAL

Besides general sustainability practices, there are government policies and initiatives. They all hold everyone responsible for their own environmental impact. These factors include climate change and best practices. But there is also alignment with regional and international norms. Finally, corporate social responsibility (CSR) initiatives are a part of these as well.

Despite commonalities between legal and political factors, it is necessary to look at these separately. Since there are international and local government laws that could affect you and your brand. The legal factors may include patents and intellectual property. Or occupational health & safety protocols too. But it’s important to also consider employment and consumer protection laws among others.

There are great examples of how to conduct a PESTEL/PESTEL analysis on pestleanalysis.com . Check these out to gain a better understanding of the model. And surely implement its application!

Micro-Environment – Marketing Environmental Analysis

Unlike macro-environmental external factors, these forces have a direct impact on your organization or brand. There are several classifications for these. But the simplest is Competitors, Partners , and Customers . A thorough analysis of micro-environmental factors is necessary. Since the application of strategy and the success of its execution is connected to these forces. Let’s take a closer look at elements of each category now:

Competitors

In 1980, Harvard Business School’s Michael E. Porter outlined his 5 forces theory. He highlights major forces that shape marketing and organizational strategy. Undoubtedly, he did it in a competitive environment. This we can see in all industries now. These 5 forces can be further explored by looking for answers to the questions under each force below:

COMPETITIVE RIVALRY

Who are your competitors? And, how many of them are there? How do their products compare to yours? Besides, what advantages or disadvantages do you have on them? Lastly, how does your pricing, strategy, marketing, and market share match up to these competitors?

SUPPLIER POWER

How many suppliers do you deal with? Furthermore, what are the benefits and risks of dealing with them? If not them, what are your alternatives? And, how much do they charge you? Finally, how much control do you have in the relationship? 

BUYER POWER

How many buyers do you have? Also, what is the nature of your relationship with them? Are they distributors or direct customers? Moreover, what is the size and frequency of their orders? Because that shows who dictates the terms of the relationship. Consequently affecting… Will they go to a competitor’s offering? And the all-important, what will make them stay?

THREAT OF SUBSTITUTION

Is there another way… to do what you do? Are there alternatives? Or new options coming to the market? Besides, can what you do be outsourced for cheaper? Lastly of course, is there an easier solution to the problem you aim to solve?

THREAT OF NEW ENTRANTS

How easy is it for new brands to enter your domain? Is there a way to protect your market share? How are your brand and its identity positioned in your industry? Are you prepared for new entrants?

Without a doubt, analyzing your prospective and current customers is an essential undertaking. It has the biggest impact on your success. Performing consumer research will help you understand how the “public” feels about your brand. This research can be done with surveys. But also through feedback and analytics. It will aid decision-making for you or your business, as a result.

Successful analysis of your customers will help you:

• Connect with your customers to create meaningful relationships.
• Target high-value segments
• Meet service expectations
• Improve your offering
• Shape your brand image.

Once you have completed an analysis of your customers, you have to channel this into successfully creating Customer Personas. You can use these to serve segments better. And, you can check out how to create Customer Personas in this blog post here. Furthermore, Alexa’s blog has 10 great examples of personas that you can use to understand the inputs you may need to take in. Obviously, by adding value to your customers, you will position your brand as an effective solution to their needs!

Your partners could include a host of affiliates or agencies. Even service providers or consultants. The actual number depends on the nature of your business. It’s vital for these partners to be aligned with your goals. If so, you can be assured of their commitment to mutual success. For example, you could have agencies for your branding needs that uphold your brand image. They do this with quality signage. Additionally, you could be using third-party delivery partners for your e-commerce products. They need to ensure the delivery process is as seamless as an online purchase.

You have to take a deep look at every partnership that can benefit you. Then plan the terms within which you will operate. You have to maintain control processes to uphold your values and standards. Forming the right partnerships propels growth. It can add value for your customers. Further, it can revolutionize the way you and your industry do business. So a periodic examination of your partners will benefit you, your brand, your customers, and all marketing efforts.

Managing Partnerships

According to a 2015 McKinsey survey on managing strategic partnerships , the top 3 essential elements for shared success with partners are:

• Alignment on objectives
• Effective communication and trust
• Constructive leadership and processes

While looking at causes of failure in the same survey above, the factor that replaces leadership and processes is restructuring and evolution. How does this affect a constantly changing business landscape? It is always necessary to be prepared for the future! And ensuring your partners are positioned to join you. As you inevitably grow together. Despite this, do not forget to be agile enough. You have to be able to adapt too. There will be changes that your partners may be experiencing. Obviously, all relationships benefit from mutual understanding. And the way through is to have empathy!

Internal Environment – Marketing Environmental Analysis

Lastly, you have to take a closer look at all internal forces affecting how you operate. Your core mission and vision will address why you are in business, Consequently, it clarifies what you want to achieve. The McKinsey 7S framework is one of the most popularly used methods to analyze the internal environment. Being used since the late 1970s, it helps in assessing the functioning of organizations. It contains tangible elements such as Staff, Systems, Skills, and Structure. It also includes others like Shared Values, Strategy, and Style. Let’s take a look at these now:

Your goal helps you plan how you establish and grow. You do this to remain competitive within your industry. Your strategy has to be readily adaptable to changes in the environment. That’s how you meet your objectives.

Before, hierarchy defined the structure. Things are a little complex now with fluid work teams. But the shape and composition can evolve. The difference is made by communication and the ability to work together. This leads to an ideal situation where you work towards goals together.

Visibly, processes are in place everywhere. It includes all functions such as HR, Finance, IT, Sales, and Marketing. Other procedures also constitute systems like SOPs and guides. This undeniably contributes to how everyone in the organization plans to achieve set goals. Proper allocation of resources is important. But, constant tracking is vital.

The core competencies and capabilities of the entire team equal its skills. It is important to ensure new skills are taught. As well as the development of current skills. This will increase output. Thus making it easier to reach targets.

You have to take a look at each of your employees. Assess their behavior and motivations. Track their progression. Provide training. And engage them to earn their commitment. You have to constantly gauge them to have the best possible group of people. They will help you achieve your goals.

How the heads and managers chose to lead is crucial. It becomes a part of its style. Patterns of behavior will help in the formation of a culture. This culture brings employees together. They are in sync. In turn, this creates alignment with broader goals.

Shared Values

Culture is an accumulation of beliefs and values. Also, includes standards and behaviors. They shape how everyone conducts themselves. This applies to teams and organizations as well. It determines how staff treat each other. The shared values boost work ethic. Corporate culture leads to a direct effect on employee output and agility.

Critically, the framework relies on the integration of the 7Ss. You have to set the right goals. You can follow the SMARTER goals framework to do this. Check out this blog post that sheds light on it. Align your goals with your vision and mission. Your values and culture affect how your team performs. This changes the way your organization works and how others perceive your brand.

It’s directly connected to success for a brand. Assessment of your capabilities will help you play to your strengths. Additionally, the systems and processes you have in place optimize efficiency. This directly affects your bottom line. Your resource management and investment into R&D help you chart a way forward. Lastly, your employees, their capabilities, and continued growth are vital to achieving your goals, so keep that in mind always! This is much like running a content audit for your content strategy ! It is immensely useful and effective.

Above all, understanding how external factors affect your internal environment is crucial. It determines where you stand. You can’t expect to plan for the future without fully grasping your current position. Listing all the forces, directly and indirectly, is essential. It affects you and your business. But it is only part of the process. And connecting the dots to form patterns and trends in the next step. It will show you a way forward. Using the insights gained from the marketing environmental analysis makes the difference. You have to then turn it into an actionable plan in the next step.

A SWOT analysis is the most common, tried-and-tested method to utilize the information from marketing environmental analysis. You can see more about SWOT analysis, which is discussed here, in another blog post.

Clearly, there are several other frameworks, models, and applied theories in marketing. These are often interconnected. You can connect findings from the marketing environmental analysis to: – Choosing your Marketing mix – Selecting a broader marketing strategy such as the Ansoff matrix – Setting and deriving SMARTER goals or establishing OKRs – Understanding internal factors affecting change like the 7S McKinsey framework

Though, all can help you achieve similar results. The takeaway should be that your marketing environmental analysis is essential. How you do it, is up to you. It would be based on your resources and capabilities. Just remember that this isn’t a one-off exercise. You have to repeat it periodically. This is how you prepare for continued growth and success.

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• Environmental Analysis

Table of Contents

Environmental analysis is a critical process that helps organizations assess and understand the external factors that influence their operations and strategies. By conducting an environmental analysis, businesses gain insights into the opportunities, threats, and market dynamics that impact their performance. In this blog, we will delve into the concept of environmental analysis, its purpose, and the key steps involved.

What is Environmental Analysis?

Environmental analysis refers to the systematic examination of the external factors that affect an organization’s ability to achieve its objectives. It involves studying and evaluating the economic, social, technological, political, legal, competitive, and natural factors that shape the business environment. Through environmental analysis, organizations gain a comprehensive understanding of the opportunities and challenges they face.

Purpose of Environmental Analysis

The primary purpose of conducting environmental analysis is to make informed decisions and develop effective strategies that align with the external environment. Here are some key reasons why environmental analysis is important:

• Identify Opportunities: Environmental analysis helps organizations identify emerging trends, market gaps, and potential opportunities. By understanding the external factors, businesses can leverage these opportunities to gain a competitive advantage and drive growth.
• Anticipate Threats: Environmental analysis enables organizations to identify potential threats and risks in the external environment. This helps in mitigating risks, preparing contingency plans, and minimizing negative impacts on the business.
• Assess Market Dynamics: By analyzing the external factors, organizations can gain insights into market trends, customer behavior, and demand-supply dynamics. This information helps in developing effective marketing strategies, product positioning, and pricing decisions.
• Inform Strategic Decision-Making: Environmental analysis provides valuable information and insights that support strategic decision-making. It helps organizations evaluate different options, prioritize initiatives, and allocate resources based on the external factors that are likely to have the most significant impact.
• Monitor Industry Competitiveness: Through environmental analysis, organizations can assess the competitive landscape, understand the strengths and weaknesses of competitors, and identify areas for differentiation. This knowledge helps in developing strategies that enhance competitiveness and market positioning.

Steps in Environmental Analysis

Environmental analysis involves a systematic approach to examining the external factors. While the specific steps may vary depending on the organization and industry, here are some common steps in the process:

• Identify the Factors: Start by identifying the key external factors that are relevant to your organization. These may include economic conditions, market trends, technological advancements, regulatory changes, and competitive forces.
• Gather Data: Collect data and information related to each identified factor. This can be done through market research, industry reports, government publications, surveys, and other relevant sources.
• Analyze the Data: Analyze the collected data to understand the current state and trends related to each factor. Look for patterns, correlations, and potential cause-and-effect relationships that can inform your decision-making.
• Evaluate Implications: Assess the implications of the external factors on your organization. Consider how these factors may impact your operations, strategies, customers, suppliers, and other stakeholders.
• Identify Opportunities and Threats: Based on the analysis, identify the opportunities that arise from the external factors and potential threats that may pose challenges to your organization. This helps in developing strategies to capitalize on opportunities and mitigate risks.
• Develop Action Plans: Translate the insights from the environmental analysis into actionable plans. This may involve adapting existing strategies, exploring new markets, investing in technology, or making organizational changes to align with the external environment.

Environmental analysis is a crucial process that allows organizations to assess the external factors that impact their operations and strategies. By conducting a comprehensive environmental analysis, businesses can identify opportunities, mitigate risks, and make informed decisions. It provides a foundation for developing effective strategies that align with the dynamic and ever-changing business environment.

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Business Environment

1. Introduction to Business Environment

• Business and Environment
• Basic Propositions
• Nature and Scope of Business Environment
• Types of Business Environment
• Importance of Business Environment
• Basics of Macroeconomics

2. Economic Growth and Development

• Theories of Economic Growth
• National Income

3. Socio-Cultural and Politico Legal Environment

• Social Environment
• Elements of Social Environment
• Cultural Environment
• Elements of Cultural Environment
• Political Environment
• Elements of Political Environment
• Legal Environment
• Elements of Legal Environment
• Government Framework for Promoting Business
• Understanding the Legal Environment of Business

4. Business Ethics and Corporate Social Responsibility (CSR)

• Business Ethics
• Sources of Ethics
• Importance of Business Ethics
• Ethical Issues in Business
• Corporate Governance and Corporate Sustainability
• Corporate Social Responsibility (CSR)
• Benefits of CSR
• Drivers of CSR
• CSR Initiatives in Indian Companies

5. Indian Financial System

• Financial System and Working of Financial Markets
• Structure of Money Market
• Banking Structure in India
• Reserve Bank of India
• Scheduled Banks in India
• Structure of Capital Market

6. Industrial Policy Framework

• Industrial Policy Framework and Features
• Stages of Industrial Policy Prior to 1991
• New Industrial Policy 1991
• Analysis of the New Industrial Policy
• State Specific Industrial Policies
• Other Important Policies Focusing on Industrial

7. Agri-business Environment

• Trends in Agricultural Production, Sales and Exports
• Evolution of Farm Policies in India
• Farm Reforms 2020
• Key Players in the Agriculture Sector
• Role and Importance of Agricultural Marketing

8. New Economic Policy

• New Economic Policy 1991
• New Economic Policy 2014
• New Economic Policy 2020
• Other Economic Initiatives

9. Financial Sector and Fiscal Sector Reforms

• Banking Sector Reforms 1991
• Reforms in Financial Sector
• Reforms in the Insurance Sector
• Tax Reforms 1991
• Fiscal Sector Reforms

10. International Financial System

• International Monetary Fund (IMF)
• The World Bank
• World Bank Group Institutions
• Difference between IMF and the World Bank
• International Monetary System

11. Balance of Payments (BoP)

• Importance of Balance of Payments (BoP)
• Components of Balance of Payments (BoP)
• Basic BoP Accounting Rule
• Equilibrium in Balance of Payments (BoP)
• Balance of Trade (BoT) and Balance of Payments BoP)
• Factors Affecting the Balance of Payments BoP)
• Balance of Payments (BoP) and the Central Bank
• Trends in India’s Balance of Payments (BoP)

12. Foreign Trade

• Brief Historical Overview
• Need for International Trade
• Advantages and Disadvantages of International Trade
• Theory of Absolute and Comparative Advantage
• Intra- Industry Trade among Similar Economies
• Types of Barriers to International Trade
• Measures to Reduce Barriers to International Trade
• India’s Foreign Trade: Recent Trends

13. Sources of Global Financing

• Foreign Direct Investment (FDI)
• Foreign Portfolio Investment (FPI)
• External Commercial Borrowings (ECBs)
• International Money Markets
• Foreign Aid
• Trade Financing
• American Depository Receipts (ADRs)
• Global Depository Receipts (GDRs)
• Trends in India’s Global Sources of Financing

14. Technological Environment

• Trends in Technological Environment
• Impact of Technological Environment on International Business
• Trends in Technological Advancements

Environmental – Environmental management plan examples

Environmental Management Plan examples

What are environmental management plans used for.

Environmental management plans are increasingly important documents for construction and site based companies. As the planet becomes an increasingly important component of project delivery to almost all stakeholders, so does environmental management become increasingly important for your company and projects.

In order to meet the increasing pressure and scrutiny on environmental practices, companies are turning to their environmental strategy and documents. At the core of this project specific strategy and continuous environmental improvement mantra are environmental management plans.

The premise of these plans is to provide companies with a period of time and conscious thought where they can put their heads together and come up with a good environmental plan.

The purpose of this environmental management plan is to describe and outline and this specific project will ideally avoid but at least mitigate its effects on the surrounding areas and overall environment.

What's in this outline and description? That depends on the structure the company has used in the past as well as the scope of their project work. A contractor with a large scale mega project will need to be meticulous in their environmental plan whereas a smaller subcontractor will only have to address their smaller but potentially still tangible impact.

The questions and document fields will remain largely the same for most companies, but the body of the project specific plan will vary depending on the which legislative requirements, policies, and environmental standards the project is being held to. This will inform the measures the company outlines in the plan - as well as the implementation of the plan too.

An example environmental management plan for construction and industrial projects

When preparing your environmental plan framework or template, and when documenting it and working on it, it's important to remember the purpose of what you are doing - both from an internal and external perspective.

Some of the reasons for this document are precautionary and protectionairy:

• Highlight stakeholder requirements to ensure you are falling in line with the expectations of all stakeholders and preserving your own reputation
• Ensure that your development and works are compliant with current environmental legislation (so you don't get in trouble)

While other reasons are process and operations based:

• Detail how your actual processes will be implemented to enable you to reach the goals and requirements set out in the plan
• Describe site specific methods statements which will be required

While finally, the plan is intended to help ensure the environment is protected - and to mitigate the effects of your work on a fragile environment.

You can preview the entire environmental management plan example below by hovering over the document and clicking the button. Open the document and flick through the pages, observing key sections about the scope of works, the environmental controls put in place and how these plans and implementations will be communicated.

Use and edit this environmental management plan example for yourself.

Example of a hazardous waste management plan.

Outside of the general environmental management plans, many projects and companies are big enough and their activities diverse enough to split their environmental management plans into specific plans - like a hazardous waste management plan.

You'll find an example of a hazardous waste management plan below (you can learn more about hazardous waste as a category here ).

Companies create and document these plans because it's simply not possible to include all of your environmental management activities into a single plan. The plan focuses on environmental management at a high level - and connects your operations with a specific code or requirement.

But in order to execute day-to-day activities in line with these requirements, companies usually need a number of environmental plans including a hazardous waste management plan (for companies who deal with hazardous waste).

Although these environmental plans may seem like a lot of work, it is very normal to create one comprehensive template which can then be tweaked and cloned from project to project based off unique requirements or aspects of the new project.

So you can normally deploy these master templates to a new project to save time, increase consistency and ultimately learn from past mistakes and make constant improvements.

Use and customise this hazardous waste management plan for free.

Working towards better environmental outcomes for your projects.

Environmental management and control are important parts of project management and delivery. Making the environment a priority will improve stakeholder relations and help you build a more sustainable business (from an environmental and financial standpoint).

Creating and managing environmental plans like these can really help you to create better environmental practices and outcomes which will stand your company and project in good stead.

You can start this environmental improvement process by using a digital plan below, or you can work on creating and maintaining your environmental management plans with an environmental planning app .

Environmental Management Plan (EMP) template

See the template →

Hazardous Waste Management Plan template

 It has been excellent. We have been able to digitise our HSEQ and commercial processes and engage with our clients and partners on the platform.

See how you can easily streamline your systems and processes with Sitemate today

About Lance Hodgson

Lance is VP of Marketing at Sitemate. His aim is to bring awareness to a brighter future for the Built World where industrial workers and companies work smarter.

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More Like this

PESTLE Analysis Examples

Before We See PESTLE Analysis Examples, Let’s Recap on the Basics.

A PESTLE analysis looks at the macro trends in the surrounding environment of a certain business or organization. It examines the political, economic, social, technological, legal, and environmental elements of the operating market that may have either positive or negative effects on your company or organization.

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A PESTLE analysis is often used as an extension of a SWOT analysis . Remember that the external matrix of the SWOT evaluates and creates awareness about the opportunities an organization should take advantage of, as well as the threats it should avoid. This external analysis is part of evaluating your organization’s strategic position within its market, industry, and larger operating environment.

Here, we will take a deep dive to examine what you should feature in your own PESTLE analysis. We’ll examine some PESTLE analysis examples from some of the most successful companies of our time.

Definitions and General PESTLE Analysis Examples:

A PESTLE analysis will look different for each industry, and it must be approached differently as well. Consider your organization’s unique position, market, and needs when conducting a PESTLE analysis.

It is easiest to begin with a SWOT analysis and then use your PESTLE as a companion piece to dig deeper into the external megatrends—both threats and opportunities—that the market and operating environment will present to your organization.

From our PESTLE analysis examples, here are some factors you may consider using:

Examples of Political Forces

These are the external forces affecting your organization that are brought on by government. They may include laws, policies, regulation or de-regulation trends, governing bodies and leadership, foreign trade and foreign relations, political issues and trends, tax policy—any political factors that could influence your organization’s opportunities or threats.

Examples of political forces include:

• Changes in government/election cycles: Will the possibility of shifting party majorities in upcoming or recent elections affect regulation or de-regulation in your industry or a related industry? Does this create a threat or an opportunity?
• Fiscal policies: How might changes in tax codes affect your budget and profits? How can you prepare for this?
• Wars and conflicts: What recent or current conflicts might affect foreign relations and/or trade in your industry? What can you do to create stability?
• Legislation changes: Is there legislation (proposed or passed) that would substantially affect your operations or your customers?
• Trade agreements: Do you see any upcoming opportunities in the form of new foreign markets? Or conversely, do you see any threats to your foreign markets?
• Political movements: What issues are becoming increasingly important to the people in your target audience? How does this affect their relationship with your brand?

Examples of Economic Forces

The economic environment you operate in includes several factors to consider, such as general economic climate, taxation, and globalization. Inflation rates, shifts in consumer spending, supply chain issues, demand curves, and global economic health may all be a part of your economic analysis.

Examples of economic forces include:

• Employment rates and compensation: Do you have a ready labor market, or are good team members hard to come by? Which direction is the trend heading? What do you need to consider in terms of compensation to bring on and keep talent in your industry?
• Inflation: How is inflation affecting the price of your materials? How is it affecting your customers and their spending?
• Currency devaluations: How is your currency—and the currency of your customer base—performing? How might this affect your costs and revenue?
• Stock market and market values: What recent or predicted trends in the stock market do you see impacting your industry and your organization?

Examples of Social Forces

Social forces focus on the opinions and attitudes of consumers that relate to your product, as well as the changing population and demographics of your operating market. Your analysis might consider social justice movements and other trends, both in your immediate environment and in the broader environment your customers are coming from.

Examples of social forces include:

• Demographic changes: What are the ages, experiences and backgrounds, and racial and gender identities of your customer base? Have any of these shifted or are they projected to shift? If so, how and why? What do you need to do to accommodate customers coming in?
• Religious beliefs: Are there religious or spiritual beliefs that intersect with your organization or your product? How can you be sensitive to those?
• Consumer opinions: How do consumers feel about your product (or products like yours)? Are there positive or negative changes in this general sentiment?
• Purchasing patterns: Due to economic or other factors, are your customers spending less in your market? More?
• Popular media: What current events, celebrity opinions, or other media influences will your consumers be tuned into? Are there any that might affect thoughts, ideas, and feelings about your organization, product, or brand?

Examples of Technological Forces

This focus area considers how technological forces may be impacting your organization. Changes in technology can affect your positioning as an organization. Some recent examples are the rise of cryptocurrency, the emergence of work-from-home technology, AI developments, and even concerns over cyber security.

Examples of technological forces include:

• Increased emergence of AI: What capabilities do you see as opportunities for your organization?
• Energy usage: What new technologies would allow you to save on energy costs (both to your organization and to the environment)?
• Cloud software: What developments have been made to cloud storage to make it more effective, and are you taking advantage of those developments? Conversely, are there security threats to be aware of in this software for your organization’s data?
• Internet: What improvements are available to maximize speed and reliability for the online work of your team?
• Technology usage incentives: Are there incentives available to encourage certain technology use?
• New machinery or tech: Are there emerging industry-specific technologies or equipment that would improve the quality, cost, or efficiency of your organization’s work?

Examples of Legal Forces

While similar to the political aspects, the legal elements in your PESTLE analysis examine the practical application of those political factors into rules and regulations that impact your organization’s business or customers. Depending on your business, you may need to consider local and state laws as well as federal laws.

Examples of legal forces include:

• Patent and intellectual rights laws: How might developments or decisions in intellectual property law affect you and/or your competitors?
• Protection laws: Are there consumer protection laws that would affect the way you interact with and do business with your customers?
• Occupational safety laws: What occupational safety laws do you need to be aware of to conduct business in a way that protects both your employees and your organization?
• Import and export laws: What legal parameters are there for ordering goods from other countries, as well as for selling your product in other countries?
• Licenses: What licenses do you, your employees, and your organization need in order to fill the roles that are needed?

Examples of Environmental Forces

Environmental factors are affected by weather, geography, climate change, and health crises. In addition to the public health crisis caused by the pandemic, the world has also been impacted by wildfires and other natural disasters across the globe. As an organization, you ought to consider the short-term and long-term impacts of these accelerating changes.

Examples of environmental forces include:

• Climate change: How might short- and long-term effects of climate change, including rising sea levels and increasing frequency of extreme weather, impact your organization and customers?
• Consumption of non-renewable resources: What necessary resources could become limited or depleted in the future that would impair your business?
• Energy alternatives:
• Gas emissions: How does your organization contribute to, and how is it affected by, gas emissions? What steps could be taken to reduce emissions and to prepare against the effect of emissions?
• Natural disasters: What natural disasters pose a threat in your area, or in the areas where many of your customers are located? How can you be prepared for these threats?
• Environmental hazards: What other hazards in your environment could prove threatening to your organization?

*Bonus: Ethical Factors to Consider

Over the last few years, business and marketing strategy experts have added a third ‘E’ to the PESTLE analysis – the ethical factor . This can include things such as fair-trade practices, child labor issues, increasing demand for conscious business models, and corporate social responsibility. As these issues come to your attention, examine the megatrends and take the opportunity to evaluate them within your organization’s environment.

Examples of ethical forces include:

• Workers’ rights: What strides can your organization make (or what strides is your organization already making) to take care of those who work for you?
• Fair trade laws: Especially concerning overseas trade, what issues do you need to be aware of in order to promote ethical and responsible practices?
• Human rights issues: How far have you followed the organizations you partner with, contract with, buy supplies from, and do other business with? Are there any organizations whose relationships need to be reconsidered due to human rights violations?
• Corporate social responsibility:
• Diversity, equity, and inclusion: What practices and attitudes are being adopted successfully to promote diverse, equitable, and inclusive workplaces? Conversely, are there practices and attitudes that are backfiring? Which might you best adapt for your organization?

6 Real-World PESTLE Analysis Examples from 8 Successful Companies:

Food and beverage industry pestle analysis examples:, starbucks pestle analysis example.

For Starbucks, lowering costs and staying aware and sensitive to the issues that are important to its customer base are two courses of action that become clear after an environmental analysis.

• Sourcing raw materials and following fair trade practices , which has gained a lot of attention from politicians in the West.
• Keeping up with laws and regulations in other countries from which Starbucks buys its raw materials.
• Economic recession , which has led many customers to seek cheaper alternatives.
• Rising labor and operational costs due to inflation.
• Retiring of the Baby Boomer generation, along with changing family patterns and lowered birth rates leading to fewer spending customers.
• Changing workstyles and lifestyles, including increased remote work .
• Enabling mobile payments , which increases the potential customer base.
• Agricultural developments that might impact raw material production.
• Introduction of caffeine consumption-related policies by health organizations.
• Industry licensing regulations.

Environmental

• Natural disasters in countries that produce coffee beans .
• Environmental laws and regulations related to packaging and waste .

Beyond Meat PESTLE Analysis Example

A California-based producer of plant-based meat substitutes, Beyond Meat is poised to take advantage of many environmental trends that could provide an opportunity to expand.

• Animal farming is receiving political pressure to cut back on expansion.
• Laws and regulations about greenhouse gas emissions.
• Vegan meat is projected to grow from 1% to 10% of meat consumption by the end of the decade.
• Vegan meat has the potential to be cheaper than animal meat , but would need drastic changes to its efficiency to realize this.
• Rise of veganism in developed countries.
• Increasing awareness and vocality of environmentally conscious citizens.
• An extensive amount of technology in R&D for this industry.
• Social media and other technological platforms for advertising and brand-building .
• New food safety standards to classify plant-based meat products.
• Soy farming has raised some concerns about deforestation and soil degradation.
• Plant-based products shown to be much more environmentally friendly than animal meats.

Retail Industry PESTLE Analysis Examples:

Walmart pestle analysis example.

Due to its size and profitability, Walmart has a uniquely competitive edge , yet its growth and continued profitability are sensitive to several external factors .

• Global differences in government regulations , such as banned products in some countries.
• Emergency curfews closing stores early.
• Inflation raising costs; brand appeal is based on low prices.
• Supply chain issues. Continued pressure on the supply chain and inflation is causing increased overhead costs.
• Business model rejected in some places, such as Germany.
• Increased trend toward online shopping , especially post-pandemic.
• Consumer push for same-day delivery of products.
• Adoption of automation for basic tasks.
• Expansion of mobile app and online services.
• Expansion of available technology in distribution and warehouse centers.
• Proposed legislation to raise minimum wage .
• Recent labor lawsuits open doors for further litigation.
• Call to reduce waste and use of nonrenewable energy.
• Weather and climate considerations in a wide number of locations.

Amazon PESTLE Analysis Example

The technology and online retail giant has many opportunities to capitalize on , with a few threats to monitor .

• Government pressure on anti-trust and monopolies for major corporations.
• Pressure from the federal government and local government about employment practices .
• Governmental regulations on cybersecurity and privacy protection.
• Increasing disposable incomes in developed countries.
• Inflation and supply chain issues impacting online stock.
• Macro-trend for organizations to seek and purchase cloud computing products and solutions.
• Increasing consumerism in developed economies and emerging economies.
• Increasing demand for same-day delivery of products to consumers.
• Increasing dependence on technology , cloud computing, and AI.
• Expansion of robotic automation for picking, packing, and delivery of the product.
• Expansion of AI to serve Amazon Web Services.
• Unionization and labor laws impact Amazon’s workforce.
• Changing import and export regulations .
• Import and export tax on goods sold.
• Increasing energy costs increase the cost of supply chain delivery.
• Environmental impact of plastic and plastic packaging .
• Carbon emissions and new fuel options as an organization.

Tech Industry PESTLE Examples:

Apple pestle analysis example.

Like other big tech companies, Apple stands to gain from growing reliance on digital technologies and movement toward energy efficiency—but so do its competitors .

• Trade disputes , especially between the U.S. and China.
• Pressure from federal regulators on antitrust .
• Increasing political pressure on consumer privacy protection and data.
• Changing economic tides and changing economic forecasts create uncertainty in the tech sector.
• Supply chain scarcity and resource constraints on product production.
• Stagnant changes to income of Apple’s buyer pool for luxury products.
• Rapid growth in emerging markets for entry-level products.
• Rising global use of mobile access across the globe.
• Increasing global dependence on digital ecosystems.
• Anti-Apple sentiment due to exclusivity and price.
• Growing technological and development capabilities of the competitive set .
• Pressure from cybercriminals threaten the data security of Apple products.
• Increasing privacy regulations and protections.
• Legal challenges to Apple’s policies and practices related to the app store .
• Ethically and efficiently recycling broken and unused electronic devices , especially those containing lithium batteries.
• Environmental impacts of manufacturing products in China.
• Climate change impacting shipping and supply chain routes .

Airbnb PESTLE Analysis Example

The unique matchup business model of Airbnb, as well as companies like Uber and Lyft, have taken the market by storm—but have also incurred significant legal battles .

• Housing laws and vacation rental bans in some markets conflict with business model.
• Varying tax rates from counties and countries.
• The housing crisis and crunch in the housing market.
• Varying prices and availability of hotels as a primary competitor.
• Increase access and desirability of travel .
• Resistance from locals about the impact of vacation rentals in residential areas .
• Social acceptance of ridesharing and travel sharing business model.
• Increased reliance on mobile apps and other digital solutions .
• Increasing security of online payment systems.
• Legal challenges in some states and countries.
• Environmental impact of single-use products for hospitality .

What is the purpose of conducting a PESTLE analysis? 

A PESTLE analysis can help you understand where your organization stands in the external market and assess the macro-trends that could potentially affect your business/product.

What are all the components of a PESTLE analysis?

A PESTLE analysis looks at six aspects of the environment that could impact your organization: Political, Economic, Sociological, Technological, and the two newly added — Legal and Environmental. Some PESTLE analyses even incorporate ‘ethics.’

What does PESTLE stand for?

Two things you should always consider as you’re going through each aspect of the PESTLE analysis are: where am I now, and where do I want to go? These two questions will guide you in figuring out your current state in the macro environment and your ideal state. Next, it’s important that with each factor or event you outline in your PESTLE, you also consider whether they pose an opportunity or a threat.

Thanks for sharing….extremely useful

Thank you for sharing ..it has helped

Thanks very helpful for understanding the concept of PESTLE analysis.

Very insightful and pratical. Helpful indeed Thank you

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An External Environmental Analysis, Business Plan Example

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Carrying out an external environmental analysis helps us in understanding various societal, industrial and competitive implications. The classification of external environmental factors includes different components like political, legal, economic, social, cultural and demographic variables and following sections provide an in-depth analysis of those features. Furthermore, the porter forces of analysis together with the financial ratio analysis assist us in assessing the financial status of the chosen company under study. The crucial illustrations outlining the company’s developmental features along with the corporate resources were clearly presented.

Key words: Competitive advantages, External environment, Financial Ratios, Industrial environment, Freight-Brokering companies and Porter 5 Forces,

External Environment

• A. Societal Environment

The external environment within, which an organization carries out its operations, presents various threats and opportunities. Development or declines in the international trade, National Protectionism and, Regional Trading Blocs are certain examples of the political and economic environment that exert a significant impact on the marketing of freight brokering and other maritime industries. The comprehensive classification of the external environment (also referred as macro-environment) includes- political and legal, technological, economic, technological and demographic components and, analyzing these components help in understanding the similarities and, variations with the trading in different countries. Competition would prevail amongst the different ports, even those which may not be located in proximity as much as it would be freight forwarders and shipping lines (Shin, 2005)..

• Political : Government Stability, Taxation Policy, Foreign Trade regulations and Social Welfare policies are some amongst prime components under political climate.
• Economic : Business cycles, Interest rates, money supply, Inflation, Unemployment, Disposable income and trends with the gross national product influence the shipping industries in developing its brand image in New Mexico region.
• Socio-Cultural: Population demographics, Income distribution, Social mobility, Changes in Life styles, Work and Leisure attitudes, Consumerism and Levels of education exert considerable impact on shipping or freight brokering companies.
• Technological: Government spending on the research activities, industrial and government concentration on the technological efforts, innovations, new discoveries as well as developments, technological transfer speed and obsolescence rates are some of the technological implications.
• Environmental and Legal: Laws governing the competition, employment, health and safety, product safety, environmental protection are the legal factors affecting the organizational development. Besides, the waste disposal, presence of gases, pollution and energy consumption are other environmental implications.

Amongst the above mentioned components, sociocultural factors in the macro environment impinge more upon consumer goods and services, when compared to other industrial services. Enhancing encouragement, privatization and legislation and deregulation may result in increasing awareness for the strategic planning and marketing necessity.

• B. Industrial Environment

Freight Brokers, as middle men for raw mineral material industry, had known to be involved in establishing relationships with the carriers specialized in unique cargo (Gibson, 2008):

• Threat of Competitor Entry: Gaining success in theglobal transportation business necessitates the firm in possessing large network of distribution centers, efficient and effective parceling hubs sorting around the world and possessing access towards reasonably large fleet of air planes, ships, trucks and, trains. Besides, certain companies possess strongest overnight delivery market (like other shipping and parcel distribution systems (UPS). However, most of the major rivals of shipping companies had extended their services to provide their customers the one-stop shopping convenience. A potential and new entrant at this point, who is interested to gain an entry in to the market by specializing in the sub-market system delivery, may not be able to hold a competitor  One of the most significant issues can be the long term contracts and commitments that significant companies possess are other significant issues. With the brand name, experience and relations, companies need to position themselves to grab an advantage of global trade agreements amongst countries and world trade regulations.
• Threat of Substitutes: It may not seem likely that substitutesoffer a potential threat to the freight brokering or transportation industry. Whilst, embracing the one-stop shopping procedure and providing the possible transportation answers, the rivals ensure market share even if the customer chooses to substitute the air-freight transaction with other means of systems. Nonetheless, freight brokers within the delivery market had known to experience considerable threat from the emails and facsimiles in the dot-com age. Internet Service Providers had involved in educating more and more individuals about the e-mail benefits, document digitization and online forms. Most of the organizations and firms are welcoming more and more than ever to agree with the online signatures in saving time and money. Numerous customers substituted their paper statements with the online ones with the banks starting to deploy the online checking accounts.
• Supplier Power: The changing fuel prices severely exertimpact on the profitability of transportation business. The determination of these prices is dependent upon the political and economic issues that place the fuel suppliers in an immense bargaining position. However, most of middle transportation industries tackle this complexity by gathering surcharges for fuel at times of increased fuel prices. As a consequence, this caused straining in the relationship with the customers. Suppliers of service, particularly catering and maintenance, airport services and, trucks possess high power of bargaining. Partially, this can be attributed to the enhanced switching costs and commitments for on-time delivery. These systems are high time and price efficient and possess tremendous advantage that they run the firm by themselves.
• Buyer Bargaining Power: Freight Brokering Companies as middle men transportation systems,experience fierce competition to offer delivery services for large corporations and firms. With the rapid developments of e-commerce, one may order the product or book a shipping service online to be delivered globally. Many of such corporations may not offer flexibility to their consumers in selecting their transportation providers. Switching to other relatively cheaper modes of transportation may eventually place such corporations in immense bargaining position. Alternatively, developing more distribution centers and warehouses and teaming up with some transportation firms provides the individual customers with little bargaining power.

III. A. Internal Analysis-Competitive Advantages

Organizational Structure for any organization is a formal system of roles and authority associations, which govern how managers and other relevant associates mingle with one another (Gibson, 2008). The culture and structure of companies includes the values and norms distributed by managers and associates that prejudice behaviour. As a powerful force in an organization, the consistency in freight broker’s culture helped effectively in defining the key elements of organizational dimensions, corporate strategies, competing-values, socialization, cultural audits, sub-cultures and significance of fit amongst individual values. Presence of effective structural characteristics (fundamental organizational structure element) aids in estimating the shape and appearance of organizational hierarchy. Policies, approaches and strategies used to explain manager and associate behaviour make up the consistent and efficient organizational structure for the freight brokering services. Besides, the well-defined organizational culture shipping companies with minimal environmental constraints and enhanced technological advancements assisted effectively accomplishing the freight brokering organizational objectives and mission values. The technological superiority developed with the introduction of electronic shipping solutions, adaptations to the new Internet era, wide variety of automated shipping solutions together with the convenience of sending global shipments, preparing airway bills, offering necessary documents, estimating shipping costs and reaching international resources are some of the prime corporate resources that aid companies in gaining competitive advantage over others middle men transportation companies. The use of this logistic technology had played a crucial role in increasing the speed and efficiency of sorting the packages and minimizing human error factors. Presence of wide transportation arrays, e-commerce business, and a minimal number of misplaced packages, rapid customer services, and accessibility for immediate address change, sophisticated tracking systems, timely delivery and quality service help the company in building strong-brand image and competitive advantage (Cleland and Ireland, 2006).

III.B. Financial Status

Financial ratios, calculated for the company, help in providing valuable information about financial structure and turnover (Troy, 2008).

• Profitability ratio: The Company’s profitability ratios indicated an alarming increase from 2009 over its competitors like UPS and DHL. Though the company recorded a decline in its profits at various times, owing to its long term investments, it can be considered as an income generation in future.
• Investment ratio : Decreased Price/Earnings (from 207.32 to 19.12), Price/Sales (0.94 to 0.16) and Dividend Pay-out percentage (139.80 to 10.41) indicate reductionin their levels of shares and, stock market pricing. Besides, it shows that the market possesses less interest in investing its share in shipping companies and this was found to be higher for its competitors.
• Debt or Equity ratio : indicated a progressive decline from 0.16 in 2007 to 0.11 in 2011. This indicates the percentage of the company assets, provided in the form of debts and total assets had found to be decreased. Decreased values signify minimal risk linked with operational abilities of the firm.
• Interest Coverage: Increased values of interest coverage from 21.42 in 2006 to 66.82 in 2011 indicate the ease of company in paying interest expenses on outstanding debts. Higher ratio signifies the company’s burden through debt expense.
• Book value: Increased price to book value ratio rom 37.73 in 2006 to 48.22 in 2011 represents the rise in the closing price of the stock through its latest quarter book value. Increased ratio values ascertain the over-value of stock and presence of fundamental importance to the company.
• Price-Earnings (P/E) ratio: Decreased earnings from 6.34 in 2006 to 3.12 in 2011 signifies reduction in the present share price of the company and investors assuming least earnings growth in future when compared to other competitors like UPS and DHL that possessed higher P/E values.

Cleland, D and Ireland, L. (2006). Project Management: Strategic Design and Implementation. Auflage Press, United States of America.

Gibson, C (2010). Financial Reporting and Analysis: Using Financial Accounting Information. SAGE Publications, United States of America.

Shin, N (2005). Strategies for generating e-business returns on investment.  United States Routledge Publishers, United States of America.

Troy, L (2008). Almanac for Business and Industrial Financial Ratios. Heinemann Publishers, United States of America.

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