BA 27

Strategic Management
ASSESING THE ORGANIZATION’S
EXTERNAL ENVIRONMENT

Mariano Marcos State University

College of Business Economics and Accountancy
Business Administration Department
A. Frameworks in Assessing the Organization’s External Environment:
1. SWOT Analysis
2. PESTLE ANALYSIS
B. The General Environment an Organization
C. Industry Analysis: The Competitive Environment: Assessing Industry
Attractiveness Porter’s Five Force Model of Industry Competitiveness
DEFINITION

SWOT (strengths, weaknesses, opportunities, and threats)

analysis is a framework used to evaluate a company's
competitive position and to develop strategic planning.
SWOT analysis assesses internal and external factors, as well
as current and future potential.
DEFINITION

A SWOT analysis is designed to facilitate a realistic, fact-

based, data-driven look at the strengths and weaknesses of
an organization, initiatives, or within its industry. The
organization needs to keep the analysis accurate by avoiding
pre-conceived beliefs or gray areas and instead focusing on
real-life contexts. Companies should use it as a guide and not
necessarily as a prescription.
STRENGTHS

Strengths describe what an organization excels at and

what separates it from the competition: a strong brand, loyal
customer base, a strong balance sheet, unique technology,
and so on.
WEAKNESSES

Weaknesses stop an organization from performing at its

optimum level. They are areas where the business needs to
improve to remain competitive:
OPPORTUNITIES

Opportunities refer to favorable external factors that could

give an organization a competitive advantage.
THREATS

Threats refer to factors that have the potential to harm an

organization.
SWOT TABLE
Strengths Weaknesses
1. What is our competitive advantage? 1. Where can we improve?
2. What resources do we have? 2. What products are underperforming?
3. What products are performing well? 3. Where are we lacking resources?
Opportunities
Threats
1. What technology can we use to improve
1. What new regulations threaten operations?
operations?
2. What do our competitors do well?
2. Can we expand our core operations?
3. What consumer trends threaten business? 3. What new market segments can we explore?
STRENGTH
• STRONG BRAND EQUITY
• STRONG BRAND RECOGNITION
• HAS RECOGNIZABLE PRODUCT LINE
• AVAILABILITY OF THE BRAND ALL OVER THE WORLD
• SUPPERB SUPPLY CHAIN MANAGEMENT
• GOOD AMBIANCE AND CONDUSIVE FOR LEARNING (ENVIRONMENT)
• STRONG MARKETING COMMUNICATIONS CAMPAIGN

WEAKNESS
• HIGH EMPLOYEE TURNOVER
• STORE HOURS
OPPORTUNITIES
• DEMAND OF COFFEE FROM INTERNATIONAL TOURIST
• MARKET EXPANSION AS MALLS ARE EVERYWHERE

THREAT
• HEALTHIER LIFESTYLE TREND
• LOCAL COFFEE BEANS / LOCAL FARMERS
• GOVERNMENT RESTRICTIONS
A. Frameworks in Assessing the Organization’s External Environment:
1. SWOT Analysis
2. PESTLE ANALYSIS
B. The General Environment an Organization
C. Industry Analysis: The Competitive Environment: Assessing Industry
Attractiveness Porter’s Five Force Model of Industry Competitiveness
PESTLE ANALYSIS
- Is a tool used to gain a macro picture of an industry environment. PESTLE
stand for POLITICAL, ECONOMIC, SOCIAL, TECHNOLOGICAL, LEGAL AND
ENVIRONMENTAL factors.

- It allows a company to form an impression of the factors that might impact a

new business or industry. Some factors will be more important to different
types of business, an a PESTLE Analysis will help identity risk factors for
SWOT analysis.
WHEN TO USE

• WHEN LAUNCHING YOUR VERY OWN BUSINESS

• WHEN YOU ARE FACING TROUBLES WITH YOUR
BUSINESS
• WHEN YOUR ANALYST IS WORKING OUT THE
ANGLES FOR YOUR BUSINESS
CONCEPTS OF
 POLITICAL
- This relate to government controls and influences over
economy or industry. Government factors may be
legislation or economic policies. The Political
environment can affect an industry through a range
factors including:

- Trade Tariffs (tax levied upon goods as they cross national

boundaries, usually by the government of importing country)
- Conflicts
- Taxation
- Fiscal Policies (use of government spending and tax policies to
influence economic conditions. Revenue collection.)
 ECONOMIC
- Economic factors have a direct impact on a company’s
long-term prospects in a market. The economic
environment may affect how a company prices their
products or influence the supply and demand model.
Economic Factors include:

- Inflation Rate
- Disposable Income
- Unemployment Rate
- Interest Rates
- Foreign Exchange Rate
- Economic Growth Patterns
 SOCIAL
- Social factors, such as demographic and culture can impact
the industry environment by influencing peak buying periods,
purchasing habits, and lifestyle choices.
- Society is important as people’s culture and lifestyle can
influence when, where, and how they are likely to engage
with products and services. Social factors include.

- Religion and ethics - Consumer Buying

patterns
- Demographics - Health
- Opinions and Attitudes - Media
- Brand Preference - Education
 TECHNOLOGICAL
- Technological factors may have a direct or indirect influence on an
industry. While some industries will be more affected by technology
than others, innovations in technology may affect the market and
consumer choices and buying power. Technological factors can include:

- Automation - Technological Development

- Patents - Licensing
- Communication - Information Technology
- Research and Development - Technological Awareness
LEGAL
- Legal factors may affect both the internal and external
factors of a company. The legal and regulatory
environment can affect the policies and procedures of an
industry, and can control employment, safety, and
regulations. Legal factors can include.

- Employment Laws - Consumer Protection

- Industry specific regulations - Regulatory bodies
- Environment regulations
ENVIRONMENTAL
- Environmental factors include all those relating to the physical
environment and to general environment protection
requirements. While the environment is more important to
some industries, such as tourism, agriculture or food
production, these factors may influence a range of different
industries and are worth being aware of. Environmental factors
include

- Climate - Geographical Location

- Stakeholder and consumer values - Environmental offsets
- Weather - Global Climate Change
PESTLE ANALYSIS EXAMPLES
POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL LEGAL ENVIRONMENT
• Presidential The cost of The • Internet The laws • Climate Change
Election diesel/gasoline convenience of Connectivity governing the • Traffic
in the pick up and • Advancement TNVS industry
New Political international drop to of Technology is young.
appointee with market destination. particularly on
different views mobile Applicable laws
and rules and • Minimum wage • A new mode of need to be
regulations per region transportation interpreted by
SC
The • Safety
computation of
fare

- Base Fare
- Distance
- Time
- Surge Charge
 REFERENCE
KENTON, W. (2021). Investopedia: Strength, Weakness, Opportunities, and Threats (SWOT) Analysis. Retrieved from
https://www.investopedia.com/terms/s/swot.asp

https://libguides.library.usyd.edu.au/c.php?g=508107&p=5994242&fbclid=IwAR1J27eUZC_jcXwp-
zapiZCGC03YkmRPFNPwIhOfjJGD23lc_qg1jGSrJH0#:~:text=A%20PESTLE%20analysis%20is%20a,a%20new%20business%20or%
20industry

https://pestleanalysis.com/pestle-analysis-for-hotel-
industry/?fbclid=IwAR1CofuzVKkMrPxZ2kEOcNcOOF4nuuZUS4spojiwICPcgDAwRbtPGCwCDJ8

https://www.mindtools.com/pages/article/newSTR_98.htm

https://www.edrawmax.com

DESS, G. G. (2017). Strategic Management. McGraw-Hill International Edition.

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