ENVIRONMENTAL APPRAISAL

Presentation By:

Ditty GargLecturer, MBA Department

Presented by Ditty Garg

Business Environment/ Environment

Environment refers to those aspects of the surroundings of

business enterprise which affect or influence its operations

and determine its effectiveness. The environment of business

is always changing and it is uncertain. It is complex and

dynamic. Environment carries with it both opportunities and

risks or threats which can make or mark the future of

business.

Presented by Ditty Garg

Internal & External Environment

Internal Environment

• Strength• Weakness

External Environment

• Opportunity• Threat

Presented by Ditty Garg

Internal Factors

Vision Mission Goals & Objectives Human Resources Company Image R&D Financial Factors Marketing Practices

Presented by Ditty Garg

External Business Environmental

Micro Environment Macro Environment

External Factors

Presented by Ditty Garg

Micro Environment

Suppliers

Customers

Labor

Business Associates

Competitors

Marketing Intermediaries

Presented by Ditty Garg

Macro Environment

Economic Environment: Economic conditions, economic system,

economic policies such as budget, industrial regulations, economic

planning, import & export regulations, control on price and wages,

economic growth, currency exchange rates.

Political & Government Environment: Legislature, Executive,

Judiciary.

Socio-Cultural Environment

Demographical Environment: Population size, growth rate, age

composition, family size, educational levels, language, caste, religion.

Presented by Ditty Garg

Natural Environment: Natural Resources, weather & climatic

conditions, location aspects in global context etc.

Technological Environment

International Environment

Presented by Ditty Garg

Environmental Scanning

Environmental scanning means to carefully analyze the various factors

influencing the business. Environmental scanning/ analysis is the process

by which strategists monitor the environmental factors to determine

opportunities for and threats to their firms. Environment analysis also

consists of managerial decisions made by assessing the significance of

the data thus gathered.

Presented by Ditty Garg

Need of Environmental Scanning

Effective Utilisation of Resources

Constant Monitoring of the Environment

Strategy Formulation

Identification of Threats & Opportunities

Useful for the Managers

Prediction of Future

Presented by Ditty Garg

Environmental Scanning Techniques

ETOP Analysis

QUEST Analysis

SWOT Analysis

TOWS Matrix

PEST Analysis

Presented by Ditty Garg

ETOP ( Environmental Threat and Opportunity Profile)

1. The first step involves dividing the environment into different factors.

2. Analysing the impact of each factor on the organisation.

3. Sub-dividing each environmental factor into sub-factors for a

comprehensive ETOP.

4. Analysing the impact of each sub-factor on the organisation in the form

of a statement.

5. Preparing a summary to show the major factors for the sake of

simplicity.

Presented by Ditty Garg

QUEST (Quick Environmental Scanning Technique)

1. Strategists make observations about the major events and trends in their

industry.

2. Then they speculate on a wide range of important issues that might affect

the future of their organisations by scanning the environment broadly and

comprehensively.

3. The QUEST director prepares a report summarising the major issues and

their implications and 3-5 scenarios incorporating the major themes of the

discussion.

4. The report and scenarios are reviewed by a group of strategists who identify

feasible strategic options to deal with the evolving environment. The

options are ranked and teams are designated to develop strategies.

Presented by Ditty Garg

SWOT Analysis(Strength, Weakness, Opportunity & Threats Analysis)

Identify the Strengths of, Weakness of, Opportunities for and

Threats to the organisation by appraising internal & external

environment.

Strengthen the Strengths

Remove the Weakness

Harness the Opportunities

Tackle and combat the Threats

Presented by Ditty Garg

TOWS Matrix

SO Strategy: Maxi-Maxi

WO Strategy:

Mini-Maxi

ST Strategy: Maxi-Mini

WT Strategy: Mini-Mini

Strengths (S) Weaknesses (W)

Opportunities (O)

Threats (T)

Presented by Ditty Garg

PEST Analysis( Political, Economic, Social & Technological Analysis)

It involves scanning of external political, economic, social

and technological environmental analysis.

Some analysts added Legal analysis and re-arranged to

SLEPT.

Inserting Environmental factors expanded to PESTEL

Further, adding Education and Demographic factors

extended it to STEEPLED