2. What is environment
Environment means the surroundings, external objects,
influences or circumstances under which someone or
something exists.
The environment of any organization is the aggregate
of all conditions, events and influences that surround
and affect it
3. Characteristics of environment
Environment is complex: The environment consist of
number of factors, events, conditions and influences
arising from different sources. All these do not exist in
isolation but interact with each other to create an
entirely new set of influences.
4. Environment is dynamic: The environment is
consistently changing in nature. Due to many and
varied influence operating, there is dynamism in the
environment causing it to continuously change its
shape and character.
5. Environment is multi faceted: What shape and
character an environment assumes depends on
perception of observer. A particular change in
environment or a new development may be viewed
differently by different observers.
Environment has a far reaching impact on
organizations. The growth and profitability of an
organization depends critically on environment in
which it exists. Any environmental change has an
impact on organization in several different ways.
9. Strength: It is an inherent capacity which an
organization can use to gain strategic advantage.
Eg good reputation among customers, resources,
assets, people, experience.
10. Weakness: It is an inherent limitation or constraint
which creates strategic disadvantages.
Eg gaps in capabilities, financial deadlines, low morale
etc
12. Opportunity: It is a favorable condition in
organization’s environment which enables it to
consolidate and strengthen its position.
Eg economic boom, favorable demographic shifts,
arrival of new technologies etc
13. Threat: It is an unfavorable condition in organization’s
environment which creates a risk for, or causes damage
to organization.
Eg economic downturn, demographic shift etc
14. Benefits of SWOT analysis
Simple to use
Low cost
Flexible and can be adapted to varying situations
Leads to clarification of issue
Development of goal alternatives
Useful as a starting point for strategic analysis
15. Environmental sectors
1. Economic environment
2. International Environment
3. Market Environment
4. Political Environment
5. Regulatory Environment
6. Socio Cultural Environment
7. Supplier Environment
8. Technological Environment
16. Economic Environment
The economic environment consists of macro level factors
related to means of production and distribution of wealth that
have on business of organization
Some important factors are
1. Economic stage in which country exists
2. Economic structure adopted like Capitalistic, socialistic or
mixed economy
3. Economic policies such as industrial monetary and fiscal
policies
4. Economic planning such as five year plan, annual budget etc
5. Infrastructural factors such as banks, mode of transportation
etc
17. International Environment
The international environment consists of all those
factors that operate at transnational, cross cultural
and across border level, having impact on business of
organization e.g.
1. Globalization, its process, content and direction
2. Global economic forces, block and forum
3. Global trade and commerce, its process and trend
4. Global financial system, sources of financing
5. Geopolitical situation, equation, alliances and
strategic interests of nations
18. Market Environment
The market environment consist of factors
related to group and other organization that
compete with and have an impact on an
organizations market
Some factors are as below
1. Customer or client factors such as need,
preference
2. Product factors such as demand , image
3. Marketing intermediary factors like delivery
systems
19. Political Environment
The political environment consist of factors
related to management of public affairs and
impact on business organization
1. The political system and its features like nature
of political system
2. The political structure, its goals and stability
3. Political processes like operation of party
system, elections
4. Political philosophy, govt role in business etc
20. Regulatory environment
The regulatory environment consists of factors
related to planning, promotion and regulation of
economic activities
1. The constitutional framework , directive
principles
2. Policies related to licensing, monopolies and
foreign investment
3. Policies related to distribution and pricing and
control
4. Policies related to import and exports
21. Socio Cultural environment
The socio cultural environment consists of factor
related to human relationship within society, the
development, forms and function of such
relationship and learned and shared behavior of
groups of human being having a bearing in
business of organization
22. Some of important factors and influences
operating in social environment
1. Demographic characteristics like
population, density
2. Socio cultural attitudes and values such as
expectation of society from business, social
custom
3. Family structure and changes in it
4. Role and position of men, women, children and
aged in family and society
23. Supplier environment
The supplier environment consists of factors
related to cost, reliability and availability of factors
of production or services that have impact on
business of an organization
Some important factors are
1. Cost availability and continuity of supply of raw
material
2. Cost availability of finance
3. Cost , reliability and availability of energy used
in production
4. Cost ,availability and dependability of human
resource
24. Technological Environment
The technological environment consist of those
factors related to knowledge applied and material
and machines used in production of goods and
services that have impact on business of an
organization
Some important factors are
1. Sources of technology like company source ,
external sources and foreign sources
2. Technological development, stages of
development change and rate of change of
technology
3. Communication and infrastructural technology
in management
25. Environmental scanning
Environmental scanning can be defined as
process by which organizations monitor their
relevant environment to identify opportunities and
threats affecting their business for purpose of
taking strategic decisions
26. Factors to be considered for
scanning
The external environment in which an organization
exists consists of a bewildering variety of factors.
These are as below:
1. Events are important and specific occurrences
taking place in different environmental sectors
2. Trends are general tendencies or the courses
action along which events take place.
3. Issues are current concerns that arise in
response to events and trends.
4. Expectations are demands made by interested
groups in light of their concern for issues.
27. Approaches to environmental
scanning
Kubr has suggested three approaches which could
be adopted for sorting out information for
environmental scanning
These three approaches are
Systematic
approaches
Ad hoc
approach
Processed-form
approach
28. Systematic Approach
Under this approach, information for
environmental scanning is collected
systematically. Information related to markets and
customers, changes in legislation and regulations
that have a direct impact on organizations
activities etc. It could be collected continuously to
monitor changes and take the relevant factors
into account. Continuously updating such
information is necessary not only for strategic
management but also for operational activities
29. Adhoc Approach
Using this approach an organization may conduct
special service and studies to deal with specific
environmental issues from time to time. Such
studies may be conducted for instance when an
organization has to undertake special project,
evaluate existing strategies or devise new
strategies.
30. Processed-Form Approach
For adopting this approach the organization uses
information in processed form, available from
different sources both inside and outside the
organization. When an organization uses
information supplied by Govt. agencies or private
institutions, it uses secondary source of data and
the information is available in processed form.
