LESSON 4: ENVIRONMENTAL SCANNING:

SWOT AND PEST ANALYSIS

Group 3
Major Problems Faced by Businesses
Mariss Refamonte
Major Problems Faced by Businesses

Based on extensive research and a series of interviews with

top management of top companies all over the world, here are
some of the significant problems that companies face today.
Major Problems Faced by Businesses
UNCERTAINTY All human beings, but it seems business leaders
in particular, find great discomfort in
uncertainty. Uncertainty in the global economy,
uncertainty in the credit markets, uncertainty
in how new regulations will affect business,
uncertainty about what competitors are doing,
and uncertainty about how new technology will
affect the business – these are jut the start of a
never-ending list. The bottom line is that
uncertainty leads to a short-term focus.
However, this may prove to be less rewarding
since it can offset the potential profitability that
a long term goal may provide.
Major Problems Faced by Businesses

GLOBALIZATION
Globalization is a concern for top
company executives because of
the changes it brings. The
changes may require costly
adjustments to cope with the
challenges of serving new
markets and new trends and to
penetrate new markets with
existing products and service.
Major Problems Faced by Businesses

INNOVATION Companies should build a more

innovative culture in their respective
organizations. However, top company
executive fear that giving employees
more freedom to develop more
products or services may cause them
to prioritize individual goals over
company objectives. The challenge is
to become more innovative while still
maintaining a sense of control with in
the organization.
 Major Problems Faced by Businesses
GOVERNMENT POLICIES
Companies should adhere to the new
government regulations and policies
on environmental, financial,
marketing and other aspects of
business. It is essential to understand
the government policy in business
industry, so the company could
develop the skills necessary to deal
with it.
Major Problems Faced by Businesses
TECHNOLOGY
Technological advancements happen fast
and companies have to cope by investing in
new technology to take advantage of their
benefit before they become obsolete. The
competitive business environment requires
companies to stay informed of changes and
make appropriate adjustments in their
operations. Investing in new technologies
enables a company to take advantage of the
next technological development and
smoothly transitions to future innovation.
Major Problems Faced by Businesses
DIVERSITY
Diversity adds value to products and
services since different ideas and
perspectives are utilized in the
process. However, there is a challenge
for companies to bring together a
diverse group of employees and work
for a single goal. Thus, managers
need to make the proper adjustments
in their communication with
employees, suppliers, customers,
investors and business partners.
Major Problems Faced by Businesses
COMPLEXITY
Globalization and information
technology have led to the emergence
of a complex business environment.
Business transactions have become
more complex because of the diverse
cultures of people across countries.
Managers are challenged to develop
management protocols that minimize
the complexity of different tasks.
Major Problems Faced by Businesses
INFORMATION OVERLOAD

Innovation in information technology

have led to fast-paced communication
and the availability of a large amount
of information on the internet. How to
deal with the vast information
available online is something that
business executives should consider.
Effective information management is
a good investment since the result can
provide valuable insights especially
for marketing and strategic planning.
The Environment of the Firm
Neil Nette S. Reynaldo
The Environment of the Firm
• The business firm’s environment refers to
the conditions and elements that define its
operation and determine its success. There
are two type of the firm’s environment.
These are the internal and external
environment
The Environment of the Firm

Internal and External Environment

The Environment of the Firm

• The internal environment consist s of elements that have a direct

impact on the business operations. These include the employees, the
board of directors, and the managers. The elements of the internal
environment are directly controlled and can be freely modified by the
firm itself.
The Environment of the Firm

• The external environment consists of factors that have indirect but

significant influence on the operations of the business. These factors,
however, cannot be controlled by the firm. There are two types of
external environment:
The Environment of the Firm

External Environment
• Microenvironment is also known as the “operating environment”. It
consists of the Customers, suppliers, regulatory agencies, and
competitors. The factors in this environment have a direct relevance to
the business operations but are uncontrollable to a certain extent.
• Macroenvironment is also known as the “general environment”. It
consists of the economic, political, social, legal, and technical
environment of the business organization. The factors in this
environment are beyond the control of the firm but are important
determinants of success.
The Environment of the Firm

• A successful business understands the changes

in its external environment to take advantage
of opportunities provided by these changes.
Companies gather information on the external
environment scanning and strategic analysis.
Environmental Scanning

Nathan John K. Rosales

Environmental Scanning
Environmental scanning is the actual monitoring and evaluation of information from
the external or internal environment of a business organization. The information is
then provided to the key people to guide the organization in its business operations and
in preparing for target market operations.

There are three modes of environmental scanning as follows:

1. Ad hoc scanning is not often done and is usually applicable only during a crisis
situation. The firm does ad hoc scanning to determine whether a problem is either
external or internal.

2. Regular scanning is usually done at least once a year or at regular intervals.

3. Continuous scanning refers to the continuous collection of data on a broad range of

environmental factors. It also referred to as continuous learning done to monitor
the components of an organization’s internal environment.
Environmental Scanning

Types of Environmental Scanning

1. Centralized scanning – if some specific environmental components

are only analyzed, is called centralized scanning.

2. Comprehensive scanning – if all the components of environment are

analyzed in a detailed and micro way, it is called comprehensive
environmental scanning.
Environmental Scanning
Process of Environmental Scanning
Study the forces and nature of the Environment:

In the first step of environmental scanning, the forces of the

environment that have hot significant bearing in the growth and
development of the business should be identified.

Determine the sources of information:

After studying the process and nature of the environment, the

sources of collecting information from the environment should be
determined.
Environmental Scanning

Process of Environmental Scanning

Determine the sources of information:

• Secondary sources
• Mass media
• Internal sources
• External agencies
• Formal studies
Environmental Scanning

Process of Environmental Scanning

Determine the Approach of Environmental Scanning:

• Systematic approach
• Ad-hoc approach
• Processed form approach
• Scan and assess the Trend
Environmental Scanning

Techniques/Methods of Environmental scanning:

• Executive opinion method

• Expert opinion method
• Dephi method
• Extrapolating method
• Historical analogy
• Intuitive reasoning
• Scenario building
• Cross-impact matrix
Environmental Scanning

Importance of Environmental Scanning:

• Customer needs
• Capitalize opportunities
• Qualitative information
• Intellectual simulation
• Image
Environmental Scanning

Process of Environmental Analysis:

• Scanning – Environmental scanning involves the study of the general
environment.
• Monitoring – monitoring involves observation of environmental changes to see
the trend.
• Forecasting – scanning and monitoring are concerned with events and trends
in the general environment at a point in time
• Assessing – assessing determines the timing and significance of the effects of
environmental changes and trends that have been identified.
Environmental Scanning

Importance of the study of Business Environment:

• First move advantage

• Strategy formulation
• Competitive analysis
• Strategic control
• Adaptation
• Stability and sustainability
• Dynamism
• Lobbying
• Public image
Strategic Planning: SWOT
and PEST Analyses
Marygwen Gementiza and Jervey Zeravla
Strategic Planning: SWOT and PEST Analyses
• To adequately deal with the forces of the external environment,
managers and decision makers apply certain techniques in gathering
and analyzing information and subsequently conducting strategic
planning.
• SWOT analyses is primarily used to analyze the microenvironment.
• SWOT analysis is a technique that identifies the Strengths and
Weaknesses of a company, as well as the Opportunities and Threats it
faces.
• Strengths and Weaknesses are part of the company’s internal
environment while opportunities and threats are part of its external
environment.
 Strategic Planning: SWOT and PEST Analyses

Strengths (What does your company do better than others?)

Weaknesses (What aspects of your company need to be improved?)

Opportunities (What trends/conditions can positively impact your company?)

Threats (What trends/conditions can negatively impact your company?)

 Strategic Planning: SWOT and PEST Analyses

Strengths – include company’s attributes that give a competitive edge over

others.
- (strength of a company) contribute to it’s goal performance and a
positive reputation.
- include being a market leader, having a good brand image,
providing quality products and services, & having a good
reputation in the business.
- also includes good credit standing, competent and highly skilled
staff, excellent distribution channels, outstanding communication
and network systems & and a good number of patents.
 Strategic Planning: SWOT and PEST Analyses

Weaknesses - attributes of a company that need to be improved or change.

- it hinders the company’s growth and performance.
- examples of this are lack of access to technology, limited
distribution channels, poor location, lack of facilities and
equipment, and poor transportation system.
 Strategic Planning: SWOT and PEST Analyses

Opportunities – factors/events that can give a positive impact to the company

if properly addressed.
- it come in different forms like new markets, potential
profits, additional sources of raw materials, increased
purchasing power of consumers, better location and new
users of customers.
 Strategic Planning: SWOT and PEST Analyses

Threats – external factors that/which may negatively impact the company.

- these are trends, changes or movements over which the company
has no control.
- some examples are increase in the price of resources, entry of
new competitors and high inflation rates.
Strategic Planning: SWOT and PEST Analyses

SWOT MATRIX
Internal/external Opportunities (external) Threats (external)
Strengths (internal) Strengths – Opportunities (SO) Strengths – Threats (ST)
strategies strategies
• Which of the company’s • How can the strengths be used
strengths can be used to take to minimize the threats that
advantage of the opportunities were identified?
identified?
Weaknesses (internal) Weaknesses – Opportunities Threats – Weaknesses (WT)
(WO) Strategies Strategies
• How can the identified • How can the weaknesses be
opportunities be used to minimized to avoid the
address the company’s impending threats identified?
weaknesses?
Strategic Planning: SWOT and PEST Analyses

SWOT analysis – a quick and easy technique in analyzing

business situations.
- a versatile that can be applied on the
different levels of the company.
- more effective if managers use clear and
accurate data and analyze the factors in an
objective manner.
Strategic Planning: SWOT and PEST Analyses

ADVANTAGES: DISADVANTAGES:

• It enables managers to understand • Not very effective when dealing with

their business better, particularly in more complicated issues and factors
forms of how the company’s internal because such factors may be both
environment aligns with the external considered a strength and weaknesses
environment. of the company.
• It helps the company figure out its
advantage in the industry/market.
The Benefits of Strategic
Planning Using SWOT and PEST
Analysis
Mark Hubac
The Benefits of Strategic Planning Using
SWOT and PEST Analysis
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Summary/ Highlights in General
Alona Kilario Payot
Summary/ Highlights in General
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