1. Lesson 4 - Environmental Scanning: SWOT and PEST Analysis
Objectives:
Define environmental scanning,
Identify the various forces of the firm’s environment,
Discuss SWOT and PEST analysis,
Identify common elements and differences between the two techniques, and
Employ SWOT and PEST analysis in analyzing the business environment of a firm and in other situations.

2. Major Problems Faced by Businesses
Uncertainty
Globalization
Innovation
Government policies
Technologies
Diversity
Complexity
Information overload

3. Major Problems Faced by Businesses
Which among these problems present businesses with the biggest obstacle for growth? Explain your answer.
Which among these problems can result in huge benefits if addressed effectively? Why do you think so?
If you were a manager of a business company, to which of these problems would you give primary consideration? What means will you employ to address this problem?

4. Major Problems Faced by Businesses
Uncertainty strikes fear in company executives because its effect can result in staggering costs. Uncontrollable external factors like political, economic, technological, and social forces are always at work.

5. Major Problems Faced by Businesses

6. Major Problems Faced by Businesses

7. Major Problems Faced by Businesses

8. Major Problems Faced by Businesses

9. Major Problems Faced by Businesses

10. Major Problems Faced by Businesses

11. Major Problems Faced by Businesses

12. The Environment of the Firm
External Environment
Microenvironment
(operating environment)
Customers
Suppliers
Regulatory Agencies
Competitors
Macroenvironment
(General Environment of the firm) economic, political, social, legal, and technology
Internal Environment
Employees
Board of Directors
Managers

13. Three modes of environmental scanning
Ad hoc environmental scanning – not often done and is usually applicable only during a crisis situation.
Regular scanning – usually done at least once a year or at regular interval
Continuous scanning – continuous collection of data on a broad range of environmental factors. It is also referred to as continuous learning done to monitor the components of an organization’s internal environment.

14. Strategic planning: SWOT & PEST Analysis
Considers the elements of a firm’s internal and external environment in formulating business plans and decisions. SWOT is primarily used to analyze the microenvironment, while PEST analysis is conducted to address the firm’s macroenvironment.

15. SWOT Analysis
STRENGTHS (What does your company do better than others?)
WEAKNESSES (What aspects of your company need to be improved?
OPPORTUNITIES (What trend/conditions can positively impact your company?)
THREATS (What are trends/conditions can negatively impact your company?)

16. SWOT matrix INTERNAL/EXTERNAL OPPORTUNITIES(EXTERNAL) THREATS(EXTERNAL
STRENGTHS (INTERNAL)
Strengths – Opportunities
(SO) strategies
Which of the company’s strengths can be used to take advantage of the opportunities identified?
Strengths-Threats ST strategies
How can the strengths be used to minimize the threats that were identified?
WEAKNESSES(INTERNAL)
Weaknesses – Opportunities WO strategies
How can the identified opportunities
Be used to address the company’s weaknesses?
Weaknesses-Threats (WT) strategies
How can the weaknesses be minimized to avoid the impending threats identified.

17. PEST Analysis
Political Factors – tax policies, labor laws, environmental laws, trade restrictions & tariffs
Economic factors-economic growth, interests rates, exchange rates & inflation rate
Social factors –demographic aspects
Technological factors – R&D activities, automation, licensing, patenting, technological shifts, and outsourcing decisions

18. SWOT vs. PEST analysis Strengths Political Weaknesses Economic Social
Opportunities
Technological
Threats

19. (External or Internal) SWOT
CONDITIONS
ENVIRONMENT
(External or Internal)
SWOT
(strengths, weaknesses, opportunities, and threats)
1. High inflation rate
External
Threat
2. Lack of mgt. skills of middle managers
3. Good corporate integrity
4. Eco-friendly products
5. More sources of raw materials
6. New competitors
7. Lack of advertisement and other forms of promotion.
8. Poor brand image
9. Unpredictable weather conditions
10. Poor customer service