The Business Environment B200 Understanding Business Behavior Case Analysis The Business Environment B200 Understanding Business Behavior

Organizations operating environment are affected by: External forces (those factors that an organization has no control over), Internal forces (factors that an organization has direct control over)

SWOT ANALYSIS Understanding Strengths, Weaknesses, Opportunities and Threats

SWOT Analysis Framework ENVIRONMENTAL SCAN INTERNAL ANALYSIS EXTERNAL ANALYSIS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS SWOT MATRIX

Strengths: Questions that should be asked to identify Strengths: What are your advantages? What do you do well? What relevant resources do you have? What do other people see as your strengths? Examples of such strengths include: Patents Strong brand names Good reputation among customers Cost advantages from proprietary know-how. Exclusive access to high grade natural resources. Favorable access to distribution networks.

Weaknesses: Questions asked to identify Weaknesses: What could you improve? What do you do badly? What should you avoid?  Examples of such Weaknesses include: Lack of patent protection A weak brand name Poor reputation among customers High cost structure Lack of access to the best natural resources Lack of access to key distribution channels.

Opportunities : Questions asked to identify Opportunities: The external environment analysis may reveal certain new opportunities for profit and growth. Where are the good opportunities facing you? What are the interesting trends you are aware of?  Useful Opportunities come from such things as: Changes in technology and markets on both a broad and narrow scale Changes in government policy related to your field or loosening of regulations Changes in social patterns, population profiles, lifestyle changes, etc. Local Events Removal of international trade barriers

Threats: Questions asked to identify Threats: What obstacles do you face? What is your competition doing? Are the required specifications for your job, products or services changing? Is changing technology threatening your position? Do you have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business?  Examples of such Threats include: Shifts in consumer tastes away from the firm’s products Emergence of substitute products New regulations Increased trade barriers

The SWOT/TOWS Matrix Strengths Weaknesses Opportunities S – O Strategy W – O Strategy Threats S – T Strategy W – T Strategy S-O strategies pursue opportunities that are a good fit to the companies strengths. W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. W-T strategies establish a defensive plan to prevent the firm’s weaknesses.

PEST/STEP ANALYSIS This is a simple analysis of an organization’s external environment Political, Economical Social and Technological environment.

The PEST Analysis Political Policies Legislations Regulations Likely developments

The PEST Analysis Economic All businesses are affected by economical factors nationally and globally. Typical categories are; Interest rate policy and fiscal policy Economic growth Inflation Market trends Local economic market circumstances

The PEST Analysis Social All businesses are affected by social factors. Typical categories are; Demographics Values Lifestyle Age structure of population Class and income-structure of local population

The PEST Analysis Technological Changes in technology is changing the way business operates. Typical categories are; Equipment available Technologies Products