SWOT Analysis

Business Environmental Analysis
Asst. Prof. Reet Raheja | M. Phil & NET Management | +91 9835098900
Environmental screening is a process in which an organisation makes assessment or analysis

of all the components of the environment and screens their impact on its functioning, stability,
growth and profits. It is the process of collecting, evaluating, and delivering information for a
strategic purpose is defined as environmental scanning. It requires both accurate and
personalized data on the business environment in which the organization is operating or
considering entering.
Process of Environmental Analysis

Scanning - The process of analyzing the environment to spot the factors that may impact the
business is known as Environmental Scanning. It alerts the enterprise to take suitable strategic
decisions before it reaches a critical situation.
The purpose of scanning is as follows:
• Scanning helps in identifying the possibilities of environmental changes which may
affect the working of an organisation.
• Understanding the present changes in the environment.
Monitoring - The data is gathered from various sources and is utilized to monitor and find out
the trends and patterns in the environment. The main sources of collecting data are spying,
publication talks with customers, suppliers, dealers and employees.
It is necessary to keep monitoring what sort of changes the concerned environment is facing
and what impact it might cause on the normal functioning of the organisation. Constant
monitoring ensures that business-persons are aware, and make responses towards the
possible change in the business environment.
Forecasting - The process of estimating future events based on previously analyzed data is
known as environmental forecasting. It is a complex task which requires brainstorming with
which future predictions are being made. The scope of forecasting is more specific and clearer
than monitoring and scanning. The results of monitoring and scanning are accurate as study of
something present is done. But results of forecasting are contingent in future.
Assessment - In this stage, the environmental factors are assessed to identify whether they
provide an opportunity for the business or pose a threat. The organisation also needs to analyse
what impact it will create on functioning.
Assessment will provide answer to the following questions:
• What strategy needs to be made for the smooth functioning of the organisation?
• What changes might an organisation want to bring in your current strategy?
• What alternatives does an organisation have in case of negative changes in
environment?
• How will an organisation face the coming changes?
Techniques of Environmental Scanning

- SWOT Analysis: SWOT analysis is an acronym for Strengths, Weaknesses,
opportunities and threats analysis of the environment.
- PESTEL Analysis: PESTEL stands for Political, Economic, Social, Technological,

Environment and Legal Analysis of the environment.
- ETOP Analysis: ETOP stands for the Environmental Threat Opportunity Profile. It
helps an organization to analyze the impact of the environment based on threats and
opportunities.
- QUEST Analysis: QUEST stands for the Quick Environmental Scanning Technique.
This technique is designed to analyze the environment quickly and inexpensively so
that businesses can focus on critical issues that have to be addressed in a short span.
SWOT Analysis
SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) –
The SWOT analysis is a business analysis technique that your organization can perform for
each of its products, services, and markets when deciding on the best way to achieve future
growth. The process involves identifying the strengths and weaknesses of the organization,
and opportunities and threats present in the market that it operates in. The first letter of each
of these four factors creates the acronym SWOT. The company has to review its strength and
weakness against the backdrop of environmental opportunities and threats, i.e., to perform
a SWOT analysis for the organisation.
• Strengths—Internal factors that are favorable for achieving your organization’s

objective.
• Weaknesses—Internal factors that are unfavorable for achieving your organization’s
objective.
• Opportunities—External factors that are favorable for achieving your organization’s
objective.
• Threats—External factors that are unfavorable for achieving your organization’s
objective.
These definitions are open to interpretation and a weakness of the SWOT technique is that it
can be highly subjective.
What to look for in sizing up a company’s strengths, weaknesses, opportunities, and threats,
is depicted in the following boxes.
Potential Resources Strengths and Potential Resources Weaknesses and

Competitive Capabilities Competitive Deficiencies
Potential External Threats to Company's

Potential Company Opportunities
Well-being
SWOT Analysis
Strengths (Internal Factors)
• Core competencies: What does your business do exceptionally well?
• Unique selling proposition (USP): What differentiates your business from competitors?
• Brand reputation: Is your brand well-known and respected?
• Financial resources: Do you have sufficient capital to invest in growth?
• Talented workforce: Do you have a skilled and motivated team?
Weaknesses (Internal Factors)
• Limited resources: Do you lack financial or human capital?
• Inefficient processes: Are your operations inefficient or time-consuming?
• Outdated technology: Is your technology infrastructure outdated or hindering growth?
• Weak leadership: Is your management team ineffective or lacking vision?
Opportunities (External Factors)
• Market growth: Is the market for your products or services expanding?
• New technologies: Are there emerging technologies that can benefit your business?
• Changing consumer trends: Are consumer preferences shifting in your favor?
• Government policies: Are there favorable government regulations or incentives?
Threats (External Factors)
• Economic downturn: Is the economy facing a recession or slowdown?
• Increased competition: Are new competitors entering the market?
• Regulatory changes: Are there new regulations that could harm your business?
• Technological disruptions: Could new technologies render your products or services
obsolete?
Example (1): SWOT Analysis for a Hospital

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
Reputation and Outdated Facilities Growing Populations Economic
Expertise Downturn
Infrastructure and Bureaucratic Aging Populations Competition
Facilities Processes
Location Limited Technological Regulatory
Specialization Advancements Changes
Patient Loyalty Dependency on Expanding Services Labor Shortages
Insurance
Reimbursement
Financial Stability High Operating Partnerships and Cybersecurity
Costs Collaborations Risks
This is a general SWOT analysis for a hospital. Specific factors may vary depending on the
size, location, and specialties of the hospital.
Example (2): A Brief SWOT analysis of Pepsi
• Strengths: Branding, diversification and distribution

• Weaknesses: Overdependence on US markets, Low productivity and product recalls
• Opportunities: Broadening the product base, international expansion, and growing
snacks and bottles water market
• Threats: Decline in carbonated drinks sales, impact of government regulations and
competition with Coca Cola.
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Business Environmental Analysis

Environmental screening is a process in which an organisation makes assessment or analysis

Process of Environmental Analysis

Techniques of Environmental Scanning

- PESTEL Analysis: PESTEL stands for Political, Economic, Social, Technological,

• Strengths—Internal factors that are favorable for achieving your organization’s

Potential Resources Strengths and Potential Resources Weaknesses and

Potential External Threats to Company's

Example (1): SWOT Analysis for a Hospital

• Strengths: Branding, diversification and distribution

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