Case Analysis The Business Environment B 200 Understanding

Case Analysis The Business Environment B 200 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 STRENGTHS WEAKNESSES EXTERNAL ANALYSIS 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