use of environmental analysis in business plan

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• Environmental Analysis, Types, Techniques, Importance, and Examples

Organizations can find internal and external factors that could have a positive or negative impact on their business by conducting an environmental study.

Through the examination of variables like technology and economics, firms can predict future opportunities as well as risks but developing your environmental analysis skills will enable you to create a corporate marketing plan that works.

This page defines an environmental analysis, explains its use, and walks readers through the environmental analysis procedure.

Table of Contents

What is Environmental Analysis?

A strategic tool for identifying and evaluating the internal and external components of a corporate environment is an environmental analysis, sometimes known as an environmental scan.

It looks at aspects of the industry and organizations that can have a good or bad impact on the company and its success. Anticipating both immediate and long-term effects allows the organization to be ready to react quickly when problems arise.

Organizations can identify elements that may have an impact on their business operations with the use of an environment study. They can predict the future course of their firm under the current conditions by evaluating these factors. They can create a plan that minimizes risks and seizes chances thanks to this method.

Strategic planning sessions benefit from the inclusion of an environmental study, which gives organizations a methodical approach to decision-making. In this manner, businesses can accomplish their objectives and raise the bar on their performance.

The two main parts of an environmental analysis are external variables and internal factors. They will be covered in detail in this section.

1. Internal Factors

These elements require organizations to examine themselves. Based on the organization’s goal and vision, they assess its strong and weak elements. These elements also enable companies to evaluate their goals and course of action after a predetermined amount of time, such as five or 10 years.

2. External Factors

Conversely, external variables are high-level influences that are not part of the organization. Businesses need to assess the potential and risks associated with the following areas, according to SHRM:

• Market and industry developments
• The advantages and disadvantages of the competition
• Clientele—both your clientele and your customer support
• Economic factors that can affect an organization
• Labor supply, labor markets in the regions of operation;
• Technology, technological breakthroughs that help expedite operations;
• Politics, and legal situations

Types of Environmental Analysis

PESTLE and SWOT analyses are the two most used forms of environmental analysis techniques. These methods assist companies in evaluating their strategic positioning in light of several internal and external variables. Continue reading to discover these techniques.

PESTLE Analysis

The PESTLE study, also known as the PEST analysis in short, looks at the external factors that can have a bigger impact on a firm. Based on broad trends in the market, consumers, technology, and other areas, it gives businesses insights into the state of the industry.

Six essential components make up the PESTLE approach, which provides a thorough understanding of the macro environment of the business:

• Technological
• Environmental

1. Political

Political factors examine the country’s current political situation. This frequently entails assessing whether the government is stable or likely to change shortly. Political elements to consider are as follows:

• Government policies
• Trade restrictions

2. Economical

Businesses frequently include economic issues, or the state of the economy at the time, when doing an environmental analysis. This enables them to formulate strategies according to the apparent trajectory of the economy.

For example, a business may believe the economy is doing well and contemplate building another branch if the unemployment rate is low. The following other economic elements should be considered in your review:

• Interest rate,
• Inflation rate,
• Foreign currency rate,
• Credit accessibility.

A nation’s social aspects are its attitudes, which can affect business. For example, people in some cultures follow a diet prescribed by their faith. The sales of particular foods in that area might be impacted by this. Among the social aspects are, for instance:

• Family structure
• Gender roles
• Distribution of wealth
• Education levels

4. Technological

Innovations and technological breakthroughs have the potential to alter how a firm operates. This could have a favorable effect on some businesses’ operations by using automation to expedite creation. But certain jobs may also be replaced by technology. The following technological aspects should be considered in your analysis:

• New product discoveries and launches;
• Rate of technological advancements;
• Consumer access to technology;
• Technology incentives.

Legislative changes that could affect a business’s environment are examined by legal aspects. An industry may be impacted when regulatory organizations impose new rules, as in the case of the healthcare sector. A few legal considerations are:

• Employment laws;
• Health and safety legislation;
• Patent infringements;
• Product restrictions;
• Employment Laws

6. Environmental

Environmental aspects consider the potential effects of a business’s location. A specific area’s conditions may affect trade. Things to take into account when reviewing the environment are:

• Weather conditions
• Waste disposal laws
• Energy consumption regulations
• Environmental policies

SWOT Analysis

The SWOT analysis evaluates an organization’s strategic position by taking into account both internal (strengths and weaknesses) and external (threats and opportunities) factors.

It reveals the benefits and drawbacks of a business based on its strong and weak characteristics. By doing this, businesses may create a plan that minimizes risks and optimizes opportunities.

The following components make up the 2×2 matrix used in the SWOT method:

• What advantages does your business provide?
• What special or affordable resources are available to you that are not available to others?
• In your market, what skills do clients think you possess?
• What qualities lead one to “win business”?
• What could you alter?
• What should you avoid doing?
• What shortcomings is your economy most likely to perceive in you?
• What factors are involved in the downturn of your business?

Opportunities

• What promising opportunities do you see?
• What intriguing patterns are you aware of?
• What difficulties do you face?
• What are your competitors doing?
• Is the rapid advancement of technology putting your employment at risk?
• Do you struggle with the financial flow or bad debt?

SWOT analysis can help a business challenge performance assumptions and reveal dangerous weaknesses. If a firm uses it carefully and cooperatively, it can offer new insights into where it is at and help it create the best plan of action for any situation.

Process of Environmental Analysis

While doing an environmental scan has no set guidelines, following these stages will help you get the most out of the process. An environmental analysis is a methodical approach to identifying the elements that impact your company and its operations.

• Identify the environmental factors
• Gather data regarding these variables
• Check the competitors
• Determine the impacts on the organization
• Create a tactical plan

1. Identify the environmental factors

A list of the variables to be assessed is the most important prerequisite for an environmental study. These variables will vary based on the industry and region of your company.

Micro- and macroenvironmental elements that affect their operations both temporarily and permanently should be on this list. A mining business, for instance, may describe the most recent developments in their sector and local environmental laws.

2. Gather data regarding these variables

The next stage is to collect data about the environmental factors that have been described. To ensure the material is current and relevant, you might consult a variety of sources.

You can look at your factors and conduct some studies here. Written and verbal information are the two primary categories of data that need to be gathered.

People read newspapers or magazines to receive written information, while they listen to radio broadcasts or other spoken forms of communication such as radio broadcasts.

Using the aforementioned example, this would entail looking up any updates to health and safety laws online and in medical periodicals to determine whether they would affect your medical facility.

3. Check the competitors

When doing an environmental scan, you look beyond the financial standing of your company. It’s also important to research the performance of your rivals. A competitor study can assist you in identifying potential risks to your company as well as chances to differentiate yourself from the competition.

4. Determine the impacts on the organization

You can now use the environmental data you’ve gathered to forecast potential effects on your business. By taking this step, you set your expectations and may be ready for whatever may happen should these variables materialize. When evaluating risks and their effects, it’s critical to consider the following:

• What effects does this factor have on your company?
• How much time will this last?
• Will this have a positive, negative, or no effect on the business?
• How significant is this component to the general operations of the business?

5. Create a tactical plan

You can come up with ideas and create strategies for potential changes resulting from these elements in the last phase. It entails evaluating the strategic plans you now have and making necessary adjustments in light of the knowledge you have gained about your company’s surroundings. In addition, you can list actions to reduce risks and increase possibilities.

Example of Environmental Analysis

Think of Mr. X as an analyst for the financial services company ABC Pvt. Ltd. Mr. X decided to perform an environmental analysis in response to the latest happenings in the financial business. Given that technology advancements drive the finance industry, Mr. X decided to conduct a PESTLE analysis.

Mr. X takes into account the political, economic, social, legal, and environmental elements in this analysis. He does, however, pay more attention to the technical details. He makes comparisons between the technological developments occurring in other businesses within the same industry.

The findings demonstrate the new developments in sound technological services. It reveals how reliable chatbots in the financial services industry boost company profitability. Mr. X decided to construct a strong chatbot because ABC Pvt. Ltd. does not currently have one.

According to the analysis’s answer, they must improve their after-sales services by advancing technology. After that is finished, the company’s revenue and profitability increase by 15%. The analysis is therefore considered successful.

Importance of Environmental Analysis

The following are some benefits of conducting environmental analyses for organizations:

• Identify opportunities: Organisations can identify emerging trends and opportunities to enter new markets or develop new goods or services by observing the outside world.
• Identify threats: It assists companies in identifying risks to their operations, such as emerging rivals, altered laws, or a faltering economy.
• Develop strategies that work: When organizations know how the external environment impacts their operations, they can develop strategies that work and align with their aims and objectives.
• Prepare for change: Environmental scanning assists companies in anticipating external changes and developing contingency plans for them.
• Make smarter decisions: By learning more about the external issues affecting their business, organizations can make more informed decisions.

An organization must do an environmental analysis if it hopes to succeed and remain competitive in the ever-evolving commercial world. It assists them in seizing opportunities, reducing risks, and formulating sound plans that result in expansion and prosperity.

Environmental Analysis in Marketing

Business developers and marketers utilize environmental analysis as a strategic tool to pinpoint the internal and external, controllable and uncontrolled aspects that affect an organization’s performance.

The term “marketing environmental analysis” refers to all non-marketing variables that have an impact on a company’s capacity to establish and preserve fruitful customer connections. A company can find opportunities and strengths and lessen threats and weaknesses by performing a marketing environment analysis.

In marketing, environmental study typically comes before any marketing strategy. The results of the marketing environmental study will be taken into account and used as a guide to help develop and improve the optimal business plan.

Through the continuous observation of the variables influencing the marketing landscape, marketers can anticipate shifts, seize opportunities, and fine-tune their business plans to achieve superior outcomes.

Analysis of the marketing environment is essential to a company’s success. This aids in recognizing every component linked to the enterprise and the functions that each of these components fulfills in the enterprise’s triumph.

For every business to succeed in the long run, environmental analysis in marketing is therefore not just necessary but also required.

Business Environmental Analysis

Analysis of a business’s external environment is the study of those external influences. This covers a variety of topics, such as the state of politics, the economy, the technology sector, and more. A business can create strategies to maximize its success in this environment by knowing these aspects.

The organizational and industrial elements that have a positive or negative impact on the firm are examined in this environmental analysis. Organizations can quickly address them when they arise by assessing the short- and long-term effects.

Understanding environmental analysis is a crucial skill for organizations. Businesses can make educated decisions and maintain their competitiveness by assessing external influences and recognizing opportunities and challenges.

Even if it’s not infallible, environmental analysis is nonetheless valuable for keeping up with trends and safeguarding companies against unanticipated disasters.

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Providence Amaechi

A passion-driven environmentalist by heart. Lead content writer at EnvironmentGo. I strive to educate the public about the environment and its problems. It has always been about nature, we ought to protect not destroy.

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What is Environmental Analysis? Steps, Benefits & Tools

Organizations can use an environmental analysis to uncover both internal and external factors. This could have a beneficial or negative impact on their company. Businesses can identify possible opportunities and challenges by analyzing factors such as the economy and technology.

Several factors come to mind when analyzing what makes a business successful. It’s all about the resources. However, the environment in which the business operates or exists also has a significant impact.

In this article, we look at what environmental analysis is, why it’s useful, how to do one, the analytical research process, and the tool’s analysis.

Content Index

What is environmental analysis?

Importance of environmental analysis, environmental analysis process, environmental analysis tools, environmental analysis techniques, benefits of environmental analysis.

An environmental analysis is a strategic technique used to identify all internal and external factors that could affect a company’s success. Internal components reveal the strengths and shortcomings of a company, while external components represent the opportunities and risks. This exists outside of the company.

Trends and high-level factors are considered in it; another name for this is environmental scanning.

Interest rates, for example, and how they may affect a company’s operations. These analyses can help businesses achieve attractiveness in their market.

Organizations need to do environmental analysis because it helps them:

• Find opportunities: By looking at the outside world, organizations can find new trends and chances to enter new markets or make new products or services.
• Identify threats: It helps businesses find threats to their business, such as new competitors, changes in regulations, or a slowing economy.
• Create effective strategies: Organizations can create effective strategies that are in line with their goals and objectives when they understand how the outside world affects their business.
• Anticipate change: Environmental scanning helps organizations plan ahead for changes in the outside world and create strategies to deal with them.
• Make informed decisions: It helps organizations learn more about the outside factors that affect their business so that they can make better decisions.

Organizations that want to stay competitive and successful in a business world that is changing quickly need to do environmental analysis. It helps them take advantage of opportunities, lower risks, and come up with good plans that lead to growth and success.

Environmental analysis is the process of assessing and evaluating the internal and external factors that can have an effect on an organization’s performance and strategy. This analysis aims to find opportunities, threats, strengths, and weaknesses so that the organization can make a good workforce strategy that fits its goals and objectives.

The environmental analysis process usually involves the following steps:

1. Determine the effects on the environment

To begin a business environmental analysis procedure, select environmental factors evaluating. Your industry determines this. 

For example, if you work in a medical facility, you might want to think about legal implications. Regulations managing healthcare experience and safety, for example. Choose factors that have the potential to influence how you make deals.

2. Obtain information

Collect information about your chosen environmental factors once you decide which ones to evaluate. You can observe your factors and conduct research here. There are two types of information to gather: verbal and written data. Hearing is how people obtain verbal information.

As an example, consider listening to a radio broadcast. They obtain written information from sources such as newspapers and magazines. 

Using the preceding example, this would involve conducting research online and in medical magazines.

It will assist you in determining whether or not there have been any changes to health and safety regulations because this may have an impact on your healthcare facility.

3. Consider your competitors

You may want to gather information about your competitors. To see if they pose any threats. You can accomplish this by employing a technique known as spying. This involves unusually gathering information.

Using the same example, you could spy on a nearby health facility to learn about recent activity.

4. Examine your strategies

Finally, evaluate your present and prospective strategies to determine how future environmental changes will impact your organization. This assists you in resolving potential issues. These factors could have been to blame.

For example, the health facility may wish to develop a new strategy. It will clearly show how they aim to deal with the decrease in clients caused by their competitor’s new branch.

Environmental analysis is frequently used to assist businesses. It is used before launching a new product or service. 

For example, survey the landscape of competitors, customers, economic conditions, market conditions, and so on. PESTEL is a popular project management tool for performing this analysis.

It refers to the factors that are political, economic, social, and technological. The various components of a PESTEL analysis are listed alphabetically below.

Political issues refer to the level of government intrusion into an organization’s operations. Primary concerns include taxes, tariffs, regulations, elections, and political stability. 

For example, different political parties hold divergent viewpoints on raising the minimum wage. Small businesses may be affected by an election.

When one candidate proposes raising the minimum wage, it may impact their product/service prices and ability to retain current employees.

LEARN ABOUT:   Workforce Planning Model

Businesses in the United States first consider the overall health of the American economic factors. Growth, employment, inflation, and interest rates are just a few examples. Organizations operating outside of the United States will concentrate on exchange rates. 

A startup, for example, may assess the current state of the economy to determine whether or not it will be able to survive. The long-term revenue and expenses of a company are affected by economic conditions.

Shifts in age, demographic changes, changing attitudes toward safety and health, customer preferences, and technical improvements. All are examples of social challenges. 86 percent of young people, for example, use social media.

As a result, of successful business strategies, millennials are more likely to run promotional ads, especially on social media platforms.

The technology involves research and development, robotics, automation, and any other type of technological advancement. New technologies are referred to as “technological disruption.” It has the ability to change the cast of leading competitors dramatically.

For example, the popularity of Facebook was a technological challenge for Myspace. It was once the most popular social media network in the early 2000s.

Environmental

Climate change, weather, air quality, and natural disasters are examples of environmental factors. Changes in the environment threaten some industries more than others.

Farmers, for example, could watch the Weather Channel or read the Farmer’s Almanac. Because pesticide treatment, irrigation schedule, planting dates, and fungicide application are all affected by the weather.

Legal factors involve employment, health, and safety policies. Customer safety and discrimination laws can also have an impact on a company’s capacity to operate.

Congress, for example, passed the Dodd-Frank Act in 2009. Following the Great Recession, banks were subjected to strict requirements to protect customers.

A corporation can use environmental analysis techniques in a variety of ways. But some are more frequent. The PESTLE study is the most widely used tool for conducting a complete business or industry environment analysis.

PESTLE Analysis

This is essentially a bird’s eye view of corporate behavior. Because we take a broad look at some macro issues that significantly impact the health of a particular business or industry, this study is used by managers and strategists to determine where their market is right now. It also assists in evaluating the company’s future position.

The PESTLE study considers several factors that have an impact on the business environment. It is a macroeconomic instrument that is used to understand the external environment through more extensive environmental analysis. 

Each letter in the acronym represents a different component. These factors can directly or indirectly impact any sector or organization.

SWOT Analysis

SWOT stands for strengths, opportunities, weaknesses, and threats, in case you didn’t know. These four factors are utilized to determine where a company stands regarding strategy.

These four elements are divided into two groups. We must talk about them a bit to see how they can assist us in conducting an environmental study.

• Internal Factors

Internal factors in this type of analysis are strengths and weaknesses. Because they can be affected and even controlled by the organization, they are referred to as internal analysis if a corporation has a firm brand name.

This is a strength because it was made possible by the organization’s efficient use of resources. As a result, this is an internally generated element that highlights one of the causes of the company’s success.

• External Factors

External considerations in this type of environmental assessment include threats and opportunities. Unlike the elements listed above, the company cannot control them in any way. In fact, these circumstances frequently occur on their own.

Competition is a concern to all businesses since it is impossible to eliminate it. As a result, external factors function in this manner.

Now that you know how to do a SWOT analysis , you can include your findings in your environmental study. Strengths may be enhanced, weaknesses can be eliminated by taking advantage of opportunities when they arise, and threats can be minimized by remaining vigilant.

Environmental evaluations help organizations in detecting potential effects. That could pose a hazard or an opportunity. This assists them in anticipating changes in their environment.

The internal insights from the environmental analysis are used to evaluate things like how well employees are doing their jobs, how happy customers are, how much maintenance costs, etc., so that corrective action can be taken where needed.

Also, the external metrics help the organization positively respond to its environment and ensure its strategies align with its goals.

This helps to find threats early on, which helps the organization come up with plans for how to stay alive. On top of that, it looks for opportunities, like potential customers, new products, segments, and technologies, so that it can take up the most market share possible compared to its competitors.

Using environmental factors analysis has several advantages, including the following

• Predicting the future
• Recognizing threats and allowing them to develop a response strategy
• Assisting in the achievement of business goals
• Increasing organizational effectiveness

The analysis examines revenue, profitability, and company success in depth analysis . An environmental analysis can help you make the best decisions for your company. The nature of your business determines the type of environmental analysis you should perform.

It helps companies uncover opportunities, minimize risks, and create successful strategies that meet their goals. 

SWOT, PESTEL, and Porter’s Five Forces analyses are used to evaluate an organization’s performance and strategy.

Environmental analysis helps organizations anticipate change, make informed decisions, and stay competitive in today’s fast-changing business environment. Environmental scanning has several benefits and is vital for today’s businesses.

QuestionPro can help with environmental analysis by giving you tools for gathering, analyzing, and displaying data. It can also help you target specific audiences and work together as a team.

QuestionPro makes it easier for businesses to learn about environmental factors that affect their business and make decisions based on that information.

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What is an environmental analysis in marketing?

Last updated

27 April 2023

Reviewed by

Marketing is a crucial component in any business. For businesses to succeed in any industry, they must be aware of various challenges, like competition, trends, new technology, and regulatory changes. 

That’s where environmental analysis comes in. It evaluates the opportunities and threats in a business environment, allowing businesses to make informed decisions. 

This article will explore environmental analysis, its purpose, and its techniques.

• What is an environmental analysis?

An environmental analysis is a strategic tool that businesses use to evaluate the internal and external factors that impact their operations. 

An analysis looks at factors like: 

Technological

This provides businesses with vital information that influences their marketing strategies.

Another important factor is social trends. Businesses need to be aware of changes in societal values and attitudes toward certain issues. For example, a beauty company may need to adjust its marketing strategy in response to the growing trend toward natural, organic products.

Technological advancements are also a crucial element in an environmental analysis. We saw the rise of e-commerce and mobile devices shift the business landscape, so it’s crucial to be aware of emerging technologies that could impact operations. 

They also need to consider how they can use technology to their advantage, such as developing new products or improving their supply chain management.

Legal and political factors are another critical consideration. Regulation changes can significantly impact businesses, particularly those operating in highly regulated industries such as healthcare or finance. 

Companies need to stay on top of legislation changes and adapt their operations accordingly.

Considering economic, social, technological, legal, and political forces means companies can make informed decisions about their marketing strategies and overall business operations.

• What is the purpose of environmental analysis?

An environmental analysis primarily aims to evaluate a business's external environment to identify opportunities and threats. With this information, a business can create a roadmap with strategies that take advantage of the opportunities and mitigate the threats. 

An environmental analysis also allows businesses to remain competitive by identifying technology, consumer, and market trends .

Environmental analysis is a critical component of strategic planning. It helps businesses understand their current position in the market and identify potential risks and opportunities. Analyzing the external environment means businesses can develop effective strategies to achieve their goals and objectives.

As we mentioned earlier, businesses must consider several factors when conducting an environmental analysis:

Political factors may include policies and regulations that impact the business.

Economic factors may include inflation, interest rates, and exchange rates.

Social factors may include cultural norms, beliefs, and demographic trends, such as population growth and aging.

Technological factors may include advancements in technology and innovation. 

Legal factors may include laws and regulations that impact the business.

Environmental factors may include climate change and natural disasters.

A comprehensive understanding of the external environment can help businesses implement effective strategies to achieve their goals and objectives.

• Environmental analysis techniques

Businesses can use several techniques to conduct an environmental analysis, which we can broadly categorize as quantitative and qualitative. 

Quantitative techniques involve mathematical models, surveys , and statistical methods to collect and analyze data. 

Qualitative techniques use interviews , focus groups , and expert judgment to gather opinions, attitudes, and perceptions.

Quantitative techniques

One of the most common quantitative techniques for environmental analysis is statistical analysis. Statistical analysis involves using mathematical models to analyze data and identify patterns and trends. This technique is handy for analyzing large data sets and identifying correlations between variables.

Another quantitative technique for environmental analysis is surveys. They’re a powerful tool for collecting data from many people. Businesses can conduct surveys online, over the phone, or in person. Survey data can identify trends and patterns in the external environment.

Qualitative techniques

One of the most common qualitative techniques for environmental analysis is expert interviews. Expert interviews involve gathering the opinions and perceptions of experts in a particular field. This technique is particularly useful for identifying emerging trends and potential threats.

Another qualitative technique in environmental analysis is focus groups. These involve gathering a small group of people to discuss a particular topic. The data from focus groups can identify attitudes and perceptions toward a particular product or service.

PESTLE analysis

PESTLE analysis is a commonly used technique for environmental analysis. 

PESTLE stands for: 

T echnological

E nvironmental

PESTLE analysis involves delving into these factors to identify potential opportunities and threats in the external environment.

SWOT analysis

SWOT analysis is another common technique for environmental analysis. 

SWOT stands for: 

W eaknesses

O pportunities

SWOT analysis involves identifying the strengths and weaknesses of a company and the opportunities and threats in the external environment.

Industry analysis

Industry analysis looks at the external environment of an industry. This technique is particularly useful for identifying potential opportunities and threats in the external environment. Industry analysis involves analyzing factors such as competition, market size, and market trends.

Competitor analysis

Competitor analysis involves analyzing the external environment of a company's competitors. This technique is beneficial for identifying potential threats in the external environment. Competitor analysis involves analyzing factors such as market share, product offerings, and pricing strategies.

Competitor analysis templates

What is an environmental analysis example.

For instance, if a business sells environmentally friendly products, it may conduct an environmental analysis to determine how government regulations may impact its operations. 

The business may evaluate the political forces to determine whether the government intends to tighten regulations or introduce new ones. It may also investigate the legal forces to check the existing regulations related to environmental issues. 

Benefits of environmental analysis

An environmental analysis offers numerous benefits to businesses:

Gaining a clear understanding of their market position and strengths and weaknesses

Identifying emerging trends and acting before their competitors gain an edge

Remaining competitive by understanding the ever-changing business environment

Limitations of environmental analysis

However, it's worth noting that environmental analysis has its limitations, including: 

It’s impossible to predict the future with certainty, so there’s always a risk of unforeseen events affecting business operations, regardless of a detailed environmental analysis.

The cost and time to conduct an environmental analysis may be challenging for businesses that lack resources.

Environmental analysis is an important tool that businesses need to master. Evaluating external forces and identifying opportunities and threats means businesses can make informed decisions and remain competitive. 

While not foolproof, environmental analysis is still worth conducting to stay ahead of emerging trends and protect businesses from unforeseen events.

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Beginners Guide For Environmental Analysis: Tips, Tools, And Benefits

• Author Survey Point Team
• Published January 10, 2023

Environmental analysis is used to analyze internal and external factors impacting a business. Internal factors include inherent strengths and weaknesses. External factors include threats and opportunities. Businesses can use environmental analysis to reduce threats or take advantage of opportunities in the future. It helps business leaders anticipate and plan the trajectory of business growth and development accordingly.

Businesses also use environmental analysis to plan marketing and product development strategies. Factors such as regulatory control, interest rates, competition, employee performance, internal management, etc., play a huge role in determining business success. In order to remain viable and relevant in the market, a business needs timely and extensive information about these factors.

Table of Contents

Steps For Conducting An Environmental Analysis

• Identify relevant factors

One needs to identify relevant environmental factors depending on industry and market trends. For example, regulatory control over the finance and the pharma industry majorly determine the success and failure of businesses. 

However, software products do not face the same level of regulatory control. That’s why factors like regulatory control and interest rates have a varying impact on businesses depending on the industry. Depending on the industry and business model, relevant factors should be identified.

• Collect information

Once relevant factors are identified, one must collect information about the chosen characteristics. This stage aims to gather verbal and written data about the factors. 

Reading newspapers, blogs, magazines, books, and other written materials can provide verbal data as well as written data. From the preceding example, if one has to collect data about regulatory control, one can listen to interviews of regulators and government officials to gather verbal data and read newspapers to gather written data about policy changes.

• Evaluate Competitors

Competitors are businesses targeting the same market and customer base as one’s own business. The biggest threats to businesses often come from new and emerging competitors. 

Competitor research can help a business anticipate and plan for such challenges so that they don’t lose its market share to competitors. Analyzing the business activity of competitors can significantly help a business plan its future strategy.

• Predict factor impact

Some factors impact a business more than others. As long as one is aware of relevant factors and competitors, one can predict how these factors will affect the business. 

For example, if a competitor is expanding their businesses aggressively, they may gain a greater market share in a shorter time. As inflation rises, capital costs and interest rates may also increase. The business should anticipate the effects of these factors in advance.

By using all relevant data and insights from the impact forecast, one can finally devise a coherent strategy. You can access your current strategy by analyzing your environment and making appropriate changes.

Benefits of Environmental Analysis

• Future Prediction

Businesses are subject to volatility because of internal and external changes. But environmental analysis can help predict future threats and opportunities for businesses to prepare for. Thus, businesses can be in a better position to deal with volatility.

• Threat Recognition

Running a business is challenging, but even more so if unexpected threats arise. Threat prediction and recognition become vital parts of keeping a business afloat. Using environmental analysis is a valuable tool for companies to predict the danger and prepare for it in advance to mitigate it.

• Achieving Goals

If you want to know if your firm is successful, you must set and meet realistic goals. Analysis of the surrounding environment helps company executives set meaningful objectives and reasonable targets. Having accurate goals in place and working toward them on time is greatly aided by this.

• Increasing Efficiency

Analysis of internal factors helps a business identify weaknesses and work on remedial measures to improve efficiency. Inefficient work increases the cost of operations, and delays desired results. Therefore, environmental analysis can revolutionize any business by increasing efficiency.

Tools Of Environmental Analysis

Environment analysis can be conducted using a variety of tools or frameworks. Below are a few of these tools.

PESTEL Analysis

Basically, it’s a macro-level analysis of different factors affecting a business in a specific industry. It is mainly concerned with external factors of environmental analysis. PESTLE analysis consists of the following components:

• P olitical 
• T echnological
• E nvironmental

Political 

Transformations in a government’s leadership can have far-reaching effects on the economy. Businesses may be affected by alterations in tariffs, taxes, compliance standards, etc. Foreign investment and trade in a country are both affected by its political stability, which in turn affects the businesses operating there.

Businesses operating in a particular country are affected by the country’s economic climate and the government’s economic policies. When deciding whether or not to conduct business in a particular nation, companies must consider the state of their economy.

With each generation, demographic and preferential changes occur in society. Businesses must consider these changes if they want to stay viable and relevant.

Technological

Developments in technology have a huge impact on businesses. Businesses need to learn and embrace new technologies to stay ahead of their competition and improve efficiency.

Environmental

Climate and weather changes can drastically affect a business’s logistics and supply chain. Taking environmental factors into account thus becomes essential.

Legal 

Compliance laws change in states and countries from time to time. Legal challenges should always be considered as a business plans to expand or if there are changes in political leadership.

SWOT Analysis

SWOT analysis considers a business’s S trengths, W eaknesses, O pportunities, and T hreats. Strengths and Weaknesses include internal competence and problems. In contrast, Threats and Opportunities include external problems and potential chances of profit or growth. 

SWOT analysis gives a comprehensive picture of what a business lacks and should focus on to mitigate threats and benefit from opportunities. 

To a large extent, the company’s success is influenced by external forces in its industry. In order to understand the impact of external influences on your company, you must do an environmental study. A company can examine external effects by doing a PESTLE analysis. Tools like this are used by many businesses, large and small, before embarking on strategic shifts like horizontal integration or even just exploring new areas of business.

Thanks to analytics, revenue, profitability, and overall business success can all be better understood. Using environmental analysis, you can better assess potential outcomes for your business. A business’s nature will determine what kind of environmental study you should conduct.

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What is an Environmental Analysis? All Your Questions Answered

Lauren Christiansen

Because market research is based on ever-changing variables, businesses must always consider varying factors and the changing environment in their data analysis. Part of the challenge in adapting to changing variables is knowing how to adequately prepare for it and identify them. Mapping out a response to each potential external and internal environmental disuption by writing an optimized environmental analysis is an effective way to adapt to change. Here's what to know about the external environmental conditions businesses face and how they can cope by utilizing an e nvironmental assessment.

What is an External Business Environment?

An external environment is composed of all of the external factors that affect the operation of a business. Two aspects of an external environment are- The Operating Environment This refers to the company's suppliers and customers, as well as the marketers who promote or sell a company's products and services to customers and the public. The General Environment This includes an array of external influences that affect a company, such as technology, economic conditions, international trade agreements, demographics, politics, and the legal environment. The operating and general environment can either provide opportunities for increased growth and revenue, or they can generate uncertainties and risks that companies have to adapt to. Provided are some examples of how operating and general environmental factors can impact a business.

The Operating Environment

Positive - A retailer's marketing department ran a successful online advertising campaign for 6 months. The campaign targeted prospective and current customers, leading to an increased amount of online purchases, many from new users. Negative - A restaurant's change in management has lowered the quality of customer service, leading to a decreased level of customer satisfaction. Customers have made several complaints, and there have been fewer patrons frequenting the restaurant.

The General Environment

Positive - Strong economic conditions and lower property taxes have allowed an auto shop to open up an additional location. Negative- The FDA has issued a warning that a supplement is unsafe. Several states have banned the sale of that particular supplement. A vitamin shop that continues to sell it has lost many of its customers due to the FDA warning.

What is the Purpose of an Environmental Analysis?

An environmental analysis is a strategic analysis tool to identify all of the external and internal factors that can affect a company's performance. The purpose is to assess the level of risk various environmental factors pose as well as the business opportunities they present. The analysis considers the company's strengths and weaknesses and how they affect the ability to handle external threats/opportunities. Successful businesses can usually modify their internal business strategy and operating procedures to adapt to external circumstances. For example, Google is working with China on building a censored search app that could serve over 99% of queries. This move has been criticized by many who believe that it conflicts with Google's mission to organize the world's information and make it universally accessible and useful. However, it demonstrates that companies can find a way to expand even when confronted by political or legal challenges.

Environmental Analysis Process

Creating a strategic analysis is a 3-step planning process- 1. Identify Factors The company must first determine which internal and external factors may affect a business. More often than not, there is a combination of different elements at stake. For example, Toys R Us went out of business due to increasing competition from discount stores such as Target and Amazon. They were also saddled with debt from a buy out in 2005. The two environmental factors that affected Toys R Us were internal financial problems and external competing markets. 2. Gather Information The company then gathers information about the identified internal and external conditions that impact business operations. For example, some localities regulate or prohibit the usage of digital billboards due to environmental concerns. A company that utilizes digital billboards to run advertisements across many locations has heard that new regulations may affect their ability to run ads during certain hours. The company would then review the local ordinances and regulations to see if they can continue running their campaigns in each of their locations, or if they need to change their advertising strategy. 3. Determine Impact The gathered information predicts how environmental factors will affect the business. Internal operational and financial processes need to be reviewed to determine how the company will be able to respond to each risk. For instance, a company has an opportunity to sell their products in another country. However, that country is currently experiencing poor economic conditions which might affect sales. The company can then determine whether the number of sales would exceed the cost of expanding its market to another company and whether they could take the financial hit if the endeavor failed.

Common Framework for Measuring Environmental Risk

Environmental scanning is frequently utilized to help organizations scan the landscape of competitors, customers, economic conditions, market conditions, etc. before implementing a new product/service. A commonly utilized project management tool to perform environmental scanning is PESTEL, which refers to the political, economic, social, and technological factors affecting a company. Here are the different components of a PESTEL analysis, by letter. Political Political issues refer to the government's level of intrusion in an organization's operations. Particular issues of concern are taxation, tariffs, regulations, elections, and political stability. For example, different political parties have different stances on increasing the minimum wage. Small businesses may pay attention to an election where one candidate proposes an increase in the minimum wage because it can affect their product/service prices and ability to maintain current employees. Economic Businesses who operate within the United States first focus on the health of the American economy as a whole, including growth, employment, inflation, and interest rates. Organizations that operate outside of the U.S. will focus on exchange rates. For example, a startup may evaluate the current health of the economy to determine whether or not they will be able to sustain themselves, as economic conditions affect a company's long-range revenue and expenses. Social Social issues involve shifts in age, demographical changes, changing attitudes towards safety and health, consumer preferences and technological advancements, or population growth. For example, 86% of millennials utilize social media. As a result, companies who see millennials as their target audience are more likely to run promotional advertisements on social media platforms. Technology Technology includes research and development, robotics, automation, or any type of technological change. Technological disruption refers to innovations that completely change the cast of leading competitors. For example, Facebook's popularity was a technological disruption for Myspace, who was considered a dominating social media platform back in the early 2000s. Environmental Climate change, weather, air quality, and natural disasters are all environmental factors. Some industries are especially at risk from changes in the environment, including agriculture or tourism. To illustrate, farmers may watch the Weather channel or read the Farmer's Almanac because the weather can affect pesticide application, irrigation scheduling, planting dates, or fungicide application. Legal Legal factors include employment, health, and safety policies. Discrimination and consumer protection laws can also affect a company's ability to operate. For example, the 2009 Dodd-Frank Act was passed by Congress after the Great Recession to place strict regulations on banks to protect consumers. Many larger banks were able to cope with the regulations imposed on them, but 90% of small banks claimed that compliance costs increased too dramatically and 81% said Dodd-Frank was too financially burdensome.

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Environmental analysis (or PEST)—an element of your startup’s strategic plan

Researching a market? Our free online course Introduction to Market Sizing offers a practical 30-minute primer on market research and calculating market size.

An  environmental analysis , or PEST analysis, categorizes the changes and forces that affect your startup either directly or indirectly through your customers, suppliers and competitors. PEST is an acronym that stands for the Political, Economic, Social and Technological market forces. This type of analysis is usually conducted in the process of preparing a strategic plan, with the goal being to identify  threats and opportunities  for your business.

PEST is a common framework for conducting this macro-environmental scan that summarizes high-level trends as they relate to your  target customers ,  markets and technology. To perform an environmental, or PEST, analysis, answer the following questions:

1. What key political and regulatory developments are taking place now? How do these changes affect your market and customers? How do these trends affect your industry, suppliers,  partners  and customers? Focus your analysis on:

• tax regulations
• trade rules
• environmental legislation

2. Are economic changes affecting your company, your customers or your suppliers? Does this create opportunities, or does it threaten your market potential or your customers’ economy? Focus your analysis on:

• economic growth rate
• interest rates
• currency changes

3. What social and cultural changes are occurring? Focus on shifts in the demographic profile, any broad attitudinal changes, and any cultural trends that may impact the potential of your startup in the short and long term. Look for movement in:

• demographic trends such as birth rates, aging, and migration patterns
• attitudes towards healthy lifestyles, organic foods, the environment, and so forth
• attitudes on issues such as security, executive compensation, and anti-terrorism

4. What key technological trends impact your business? Consider also technology advances that affect your customers and suppliers. Do any of these changes create opportunities or threaten your potential? Focus your analysis on:

• specific technological breakthroughs
• the launch of innovative new products
• areas that undergo much research and development
• patents  that receive publicity

Schewe, C.D. & Hiam, A. (1998).  The Portable MBA in Marketing.  New York: Wiley.

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Environmental Analysis: Steps, Examples & Benefits

A business environment refers to all the external and internal factors that affect its operation. It comprises economic, social, political, financial, and institutional elements. 

Environmental analysis helps a business identify its strengths, weaknesses, threats, and opportunities so organizations can operate efficiently.

What Is Environmental Analysis?

Environmental analysis refers to the study of external factors that impact a business. In this analysis, analysts study the economic conditions, financial position, political landscape, technical advancements, etc. 

Companies develop strategies after studying external factors. This improves business performance and optimizes operations. Analysts examine external factors, identify issues, and derive solutions.

Environmental Analysis Techniques 

1- pestle .

PESTLE analysis is the study of macroeconomic factors that impact a business. It helps enterprises make decisions after analyzing the external environment. Through PESTLE analysis, businesses can understand the overall industry sentiment. It provides future predictions about where the business is headed. 

It consists of six elements:

• Political factors that analyze a country’s political environment. It studies international relations, geopolitics, national and international politics. This helps the business understand how the country’s political environment can affect the business. Government policies and regulations are also studied in this analysis. 
• Economic factors study the economy. It provides businesses with information about where the economy is leading. It explores economic factors like GDP, unemployment, and the forex rate. A positive economic condition is beneficial for business operations. 
• Social factors such as values, people’s mindsets, norms, and traditions impact the business. The business’s sales, revenue, and income depend on human beings. Hence, social factors directly impact them. This includes wealth distribution, lifestyle, gender, and more.
• Technological factors refer to the advancement of industry or country. Advanced technology positively affects a business. The environmental analysis investigates discoveries, innovative technologies, etc., and increases operational efficiency.
• Legal factors such as regulations change over time. A business is impacted by the laws put in place by the government. If not, they can be sanctioned for violating the rules. Unfortunately, as regulations are stricter, the business process is weakened and slowed down. 
• Environmental factors like weather, climate, location, and waste disposal impact all businesses. How companies use a certain resource or product defines the implications of environmental analysis. 

2- SWOT 

SWOT analysis helps businesses understand their strengths, weaknesses, opportunities, and threats. These factors help understand where the business stands and where it is headed. It provides the analysts with a framework for what needs to be done next. 

It consists of two elements:

• Internal factors , aka strengths and weaknesses, are influenced by the business and can control these factors. A business’s strength can be the brand name or a lack of substitute products. A weakness can be inadequate product development. Both these factors are caused internally. 
• External factors , aka opportunities and threats, are outside of the business influence. The business has no control over them, and the factors occur independently. For example, a business threat is the presence of several competitors. An opportunity can be a drop in tariffs for import/export. Hence, the business has no control over the factors but is impacted by them.

Benefits of Environmental Analysis 

1- helps in forecasting .

Environmental analysis helps businesses understand where they stand and where they can be. This helps in forecasting future trends and market conditions. By doing this, businesses can make decisions that benefit them in the long term. 

2- Enables Achieving Business Objectives 

When a business adjusts its strategies based on environmental analysis, it moves closer to success. They can attain their goals by formulating strategies based on the analysis. 

3- Makes Business Aware of the Market 

With environmental analysis, businesses are in constant touch with the market. This helps businesses understand what is happening in the industry, allowing them to react and adjust to market demands and achieve corporate objectives. Additionally, businesses change their stages based on market requirements. 

4- Anticipate Opportunities and Threats

The environmental analysis makes organizations aware of business opportunities and threats. Companies can then respond to the opportunities and manage threats. This helps the firms gain a competitive advantage in the market. 

5- Understand the Causes of Disequilibrium

With the fast-changing environment and dynamic industry, a business can witness disequilibrium. Environmental analysis helps firms to identify the reasons behind this disequilibrium. Thereof, analysts can devise solutions to bring the business back into equilibrium. 

Limitations of Environmental Analysis 

1- does not warn against unforeseen events.

The environmental analysis does not warn businesses against unforeseen or adverse events. It does help businesses forecast future trends. However, it does not help eliminate the uncertainty. Through this analysis, businesses cannot avoid unexpected events that occur during analysis. Though, it does decrease the frequency of such shocks to occur. 

2- Does Not Follow a Strategic Approach 

Businesses can build strategies based on environmental analysis. However, the analysis itself does not follow a strategic risk-taking approach. This means it leads the businesses to operate cautiously and has no rigid strategy. 

3- Not Independently Reliable

The environmental analysis provides businesses with solutions but is not independently reliable. This means that businesses must conduct other analyses as well to confirm solutions. If an analyst only decides based on environmental analysis, it may or may not work in the business’s favor. However, when an environmental analysis is combined with other strategic approaches and analyses, the results are more reliable. 

4- Does Not Guarantee Effectiveness 

Environmental analysis is conducted to improve business effectiveness and operations. However, it does not guarantee the same. The analysis acts as an input in the strategy to develop an output. Hence, it is not advised to trust a single study to build organizational effectiveness critically. The data’s verifiability and accuracy must be confirmed to ensure ideal outcomes. If the data is not accurate, reliable, and verified, it may lead businesses to make wrong decisions. 

5- Creates Confusion

The environmental analysis focuses on too much business information at once. It considers both the advantages and disadvantages of a business. This may lead to confusion amongst analysts. The more information on hand, the more challenging to derive a solution. Hence, the abundance of information acts as a hindrance to solving issues. 

Steps To Conduct Environmental Analysis 

1. identify factors .

The first step in conducting an environmental analysis is to select the factors needing evaluation. These factors can be legal, social, technical, economical, or more. The factors for analysis depend on the industry the business belongs to. For example, an IT business focuses more on technical aspects. A healthcare business would want to analyze its legal factors. When analysts select the factors they plan to anatomize; they ensure the ones impacting the business are chosen. 

2. Critically Examine the Factors 

After choosing the factors, analysts examine them. Information is collected related to all these factors. Analysts research and observe the factors. They can either collect information verbally or in writing. 

Verbal information is collected through observation and note-taking. In contrast, written information is collected by reading and examining. Analysts can use online resources or read print magazines, journals, and books to research what will impact the business. 

3. Scan Competitors 

Analysts then scan the competitors and evaluate their position in the industry. This helps them determine threats and opportunities for the business. Analysts collect information about competitors in traditional or nontraditional ways. 

The traditional way of collecting information is through primary or secondary sources. A non-traditional way of collecting information is through spying. They learn the new events with competitors, so they implement the same in their businesses. Businesses also learn from other business mistakes and avoid them. This helps in increasing business effectiveness and efficiency. 

4. Evaluate Organizational Impacts

Once analysts know what other rival firms are doing, it is time to evaluate organizational impacts. This is done through forecasting. With forecasting, they can predict how certain factors impact a business. This helps in identifying threats, opportunities, weaknesses, and strengths. 

Analysts use brainstorming, surveying, and more to forecast the impact. Forecasting can also be done based on competitors and how they may impact the business. Decisions are taken based on such impacts for the betterment of the business. 

5. Devise A Plan

After evaluating organizational impacts, analysts devise a plan after surveying all environmental factors. The plan consists of problem statements and solutions focusing on bettering business operations and productivity. Through this plan, businesses can achieve their core objectives. 

6. Implement the Strategy 

After the analysts devise the plan, it is finally time to implement the strategy. The plan consists of solutions that the business must use to enhance efficiency. These solutions are factor-driven, meaning there is a specific solution for each problem concerning a particular factor. Once the strategy is implemented, businesses can use the opportunities and avoid threats. 

Example of an Environmental Analysis 

Consider Mr. X an analyst at ABC Pvt. Ltd., a financial services firm. The recent developments in the financial industry lead Mr. X to conduct an environmental analysis. Since technological advancements drive the financial sector, Mr. X decides to do a PESTLE analysis. 

In this analysis, Mr. X considers the political, economic, social, technological, legal, and environmental aspects. However, he focuses on the technical aspects more. He compares the technological advancements happening in other companies in the same industry. 

The results show the emerging technical sound service advancements. It shares that robust chatbots in financial services help increase business profitability. Since ABC Pvt. Ltd. does not have a powerful chatbot yet, Mr. X decides to build one. The solution from the analysis states that strengthening their after-sales services through technical advancements is needed. Once that is done, the business witnesses a 15% jump in revenue and profitability. Hence, the analysis is deemed successful.

Final Words

Environmental analysis helps organizations understand internal and external factors affecting the business. The strategic tool successfully assesses all factors affecting the business. It identifies problems and what needs to be done to solve them. This results in attaining business objectives. 

The environmental analysis process is lengthy and requires much time. However, the solution derived from the process improves organizational performance. Businesses can benefit from efficient strategies that help in enhancing operations. This results in increased revenue and business profitability.

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What is Environmental Analysis: Model, Process & Benefits

Fahad Usmani, PMP

April 4, 2023

Environmental analysis plays a crucial role in determining the success of a business. Companies cannot thrive in isolation and must remain sensitive to the factors that influence their environment. In today’s dynamic market, uncertainty reigns supreme, fueled by fierce competition and globalization.

These environmental elements form an intricate web of interconnectedness known as an ecosystem, encompassing internal and external factors. By conducting an environmental analysis, businesses can understand this ecosystem and use this knowledge to plan effective strategies and manage their organizational portfolios.

What is Environment Analysis?

An  environmental analysis  can provide businesses with invaluable insights into the various factors that impact their operations. These factors can be positive or negative; businesses must identify and manage them accordingly. Positive factors represent opportunities that should be seized upon, while negative factors pose threats that must be mitigated or eliminated.

For instance, consider the case of a refining business experiencing a drop in crude oil prices. This presents an opportunity to produce products at a lower cost and sell them at a higher profit margin. Conversely, inflation represents a negative factor that increases the cost of production inputs while decreasing the purchasing power of customers.

Businesses that fail to remain sensitive to their environment risk missing out on potentially lucrative opportunities and becoming reactive when threats arise. By conducting an environmental analysis, companies can strike a balance between intuition and evidence-based decision-making, positioning themselves for sustained success in the long run.

The Influence of Competition on Environmental Analysis

Competition is a crucial factor in business that can make or break a company. It catalyzes driving efficiency and innovation, pushing businesses to their limits and compelling them to deliver their best to stay afloat. With the constant threat of competitors lurking around every corner, businesses must be at the top of their game to survive and thrive in this fiercely competitive landscape.

Environmental Analysis Model

There are many models for environmental analysis, such as   

• Porter’s Five Forces
• PESTLE Analysis
• SWOT Analysis

1. Porter’s Five Forces

Porter’s Five Forces framework  is a powerful tool for analyzing business competitiveness. It was first introduced by the eminent Harvard Business School professor, Michael E. Porter, in his seminal 1979 book, “How Competitive Forces Shape Strategy.” 

This groundbreaking framework is designed to identify and evaluate the five key forces that shape competition within an industry, ultimately determining the potential for profitability of businesses operating in that space. 

With this invaluable framework in hand, businesses can gain critical insights into the dynamics of their industry and develop effective strategies to stay ahead of the game.

Porter’s five forces are:

#1. The Threat of Substitutes

During environmental analysis, businesses evaluate alternative products or services that could replace their own. If customers find better value in these alternatives, they may switch, causing the business to lose market share. 

Therefore, businesses must strive to make their products or services more valuable to customers by offering competitive pricing, high quality, and innovative features.

#2. The Threat of New Entrants

New entrants represent a potential threat to existing businesses, driving them to increase brand awareness and improve their products and customer services to remain competitive. Ignoring new entrants can result in a loss of market share before realizing the threat. 

For instance, low-cost carriers like Southwest Airlines and Ryanair broke into the highly competitive American airline industry by developing innovative cost-cutting models.

#3. Buyer’s Bargaining Power

In today’s globalized market, customers are informed and empowered, can compare prices and values, and easily shift loyalty. 

To counteract this, businesses must consider loyalty programs, product differentiation (unique features that competitors cannot replicate), and other strategies to retain customers and build brand loyalty.

#4. Supplier’s Bargaining Power

Suppliers are key stakeholders in the business process, and businesses must analyze the supplier market carefully. 

While having more suppliers can provide more choices, proprietary or few suppliers can be challenging to replace. Therefore, businesses should choose standardized inputs for multiple suppliers, ensuring continuity and profitability.

#5. Rivalry Among Competition

The industry’s competition level is determined by the number of competitors, their size, and product similarity. Businesses must differentiate their products as much as possible to stay ahead of the competition. 

By analyzing Porter’s five forces, businesses can understand their competitive environment and develop effective strategies to increase competitiveness and profitability.

2. PESTLE Analysis

Harvard Business School professor Francis J. Aguilar developed the  PESTLE analysis . He first introduced ETPS analysis (Environmental, Technical, Political, and Social) in his book “Scanning the Business Environment” in 1967.

Later, the ETPS analysis model grew and included additional factors, such as Economic, Legal, and Environmental, and became PESTLE analysis. The origin of PESTLE is not documented, but it is popularized in the 1990s.

These factors are coined in the acronym as follows:

#1. Political

Businesses operate in an environment subject to government policies, regulations, and interests. Therefore, businesses should monitor their country’s political environment for potential threats and opportunities. 

Free trade agreements, bilateral relationships, and political stability are key factors that can create a conducive business environment.

#2. Economic

Economic factors such as inflation, interest, and unemployment trends directly impact businesses. 

Lower and moderate inflation rates create a more attractive business loan market. In contrast, a high unemployment rate can lead to lower profits as fewer people will have the resources to purchase goods or services.

The community’s and consumers’ demographics and values determine the social environment businesses operate in. Businesses must analyze factors such as the population’s age distribution and educational levels to effectively target customers with clear product differentiation.

#4. Technology

Technology can be a great differentiator or leverage that competitors could harness. Technological infrastructure, such as high-speed mobility and the Internet, can help businesses improve efficiency and market penetration. 

A company can either build or buy technology, and environmental analysis must evaluate this investment in research and development for long-term cost reduction, increased efficiency, and production maximization.

Businesses must consider the legal provisions they operate within, as ignoring or avoiding these laws can lead to fines, disrupt business operations, and lower profitability. An environmental analyst should also study fiscal provisions to identify opportunities such as tax incentives.

#6. Environmental

Businesses must consider their impact on environmental sustainability by evaluating their operations’ effect on pollution, energy usage, and waste. 

An environmental analyst must evaluate opportunities to shift from fossil fuels to electric and renewable energy sources for a cleaner and more sustainable environment.

3. SWOT Model

SWOT analysis is an essential management tool to evaluate a business’s strengths, weaknesses, opportunities, and threats. This framework identifies internal factors (strengths and weaknesses) and external factors (opportunities and threats) that can impact a business’s success.

Albert Humphrey, a consultant at the Stanford Research Institute, developed the SWOT analysis model in the 1960s. Originally developed as part of a research project to identify why corporate planning failed, Humphrey analyzed data from hundreds of companies and developed a framework to help identify the key internal and external factors affecting a business’s success.

Strengths, such as staff strength, a strong customer base, and a good brand, give an organization a competitive advantage. Weaknesses place an organization in a disadvantageous position, such as a low customer base or inexperienced staff.

When harnessed, opportunities are external factors that can provide promising returns or value, such as new markets or changing customer needs. Thomas Edison famously said, “Most people miss opportunity because it is dressed in overalls and looks like work.” Therefore, businesses must meet changing customer needs to gain customer loyalty and reap opportunity rewards.

Threats are negative external influences that can cause business trouble, such as dissatisfied employees, staff attrition, debt position, competitors, and new technology. By conducting a SWOT analysis, businesses can identify these threats and develop effective strategies to mitigate them.

What is the Environmental Analysis Process?

The business environmental analysis process requires the following steps:

• Define the Scope:  Clarify the scope of the environmental analysis by identifying the specific business units, markets, and geographic areas that require analysis.
• Gather Information:  Acquire relevant data and information from internal and external sources. Internal sources may include financial reports and performance metrics, while external sources may include market research reports, customer feedback, and industry trends.
• Evaluate Competitors:  Assess the competitive landscape and determine whether any competitors pose a threat to the business. If so, conduct additional research to understand the competition better.
• Identify Internal Factors:  Evaluate the business’s strengths and weaknesses, including its resources, capabilities, technological advancements, and operational processes.
• Identify External Factors:  Assess the opportunities and threats presented by the external environment, such as market trends, regulatory changes, and competitive pressures.
• Analyze and Prioritize:  Analyze the internal and external factors and prioritize them based on their potential impact on the business.
• Develop Strategies:  Use the business’s strengths to achieve its goals and objectives.
• Monitor and Adjust:  Regularly monitor the business’s performance and adjust strategies and processes as needed to ensure the business remains competitive and responsive to environmental changes.

The environmental analysis is an iterative process and requires continuous monitoring and adjustments to ensure the business alignment with the organizational goal.

Benefits of Environmental Analysis

• Identifies Opportunities and Threats:  Environmental analysis enables businesses to identify opportunities and threats, reducing risks proactively and increasing profits.
• Provides Competitive Advantage:  Environmental analysis gives businesses a competitive advantage by better understanding the market, consumer behavior, and competitors’ products and operations. This allows businesses to develop differentiated products and dominate the market.
• Improves Decision-Making:  Environmental analysis provides decision-makers valuable data and information to make better-informed decisions.
• Optimizes Resource Utilization:  By understanding market behavior and consumer preferences, businesses can invest their resources wisely, improving efficiency and optimizing resource utilization.
• Facilitates Strategy Formulation:  Environmental analysis is a crucial tool in formulating effective business strategies, as it provides insight into market trends, consumer behavior, and competitors’ strengths and weaknesses.

Conclusion 

Environmental analysis is a critical factor in achieving business success. By comprehending the market, competitors, consumer behavior, and other relevant factors, businesses can position themselves advantageously, capitalize on opportunities, and mitigate risks. This, in turn, can enhance profitability and drive long-term success.

I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.

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What Is an Environmental Analysis for a Business?

by Billie Nordmeyer MBA, MA

Published on 5 Aug 2019

Business leaders can control aspects of the internal environment that can positively or negatively affect a company's operating and financial results. However, the greatest challenges to business success may be a consequence of the external environment over which company leaders have little, if any, control. To address these challenges, business leaders often conduct an environmental analysis and develop policies and processes that adapt company operations and products to this environment.

An environmental analysis looks at the industry and the political, economic, technical, cultural and other environments in which the business operates. The aim is to identify challenges facing the business, and opportunities it could exploit.

What is an External Environment?

The external environment consists of a general environment and an operating environment. The general environment consists of the economic, political, cultural, technological, natural, demographic and international environments in which a company operates.

The operating environment consists of a company's suppliers, customers, market intermediaries who link the company to its customers, competitors and the public.

Both the general and operating environments provide business opportunities, harbor uncertainties and generate risks to which a business must adapt.

For example, countries with large populations may coincide with a large market size for particular products. However, to offer its products in these markets, a company may be required to contend with a government that erects obstacles to trade in the form of tariffs, product standards and customs procedures.

Purpose of Environmental Analysis

Successful businesses adapt their internal environment – including human and financial resources, policies, technologies and operations – to the external environment. The company performs an environmental analysis to identify the potential influence of particular aspects of the general and operating environments on business operations.

This analysis identifies the opportunities and threats in a business environment in terms of a company's strengths and weaknesses.

For example, a company may consider the impact of operating in a communist country and the threats posed by government-controlled resources. A company might also consider the opportunities of a government-controlled market in terms of competing products, the implications of well-educated and well-paid consumers to product development and sales and the impact of the location of its primary suppliers in a country in economic crises.

Environmental Analysis Process

An organization relies on strengths to capture opportunities and recognize weaknesses to avoid becoming a victim of environmental threats. A company performs an environmental analysis to gain an understanding of these strengths, weaknesses, opportunities and threats.

The environmental analysis then influences corporate planning and policy decisions.

An environmental analysis is a three-step process in which a company first identifies environmental factors that affect its business. For example, the company might consider if a market is “difficult” because of its remote geographic location or the area's unfavorable economic conditions.

The company then gathers information about the selected set of environmental factors that are most likely to impact business operations. For example, the company might review government and industry reports and surveys that relay information about trade barriers that companies face in particular countries.

This information serves as input to a forecast of the impact of each environmental factor on the business. For instance, a company might project the volume of products likely to be sold in a country in light of existing poor economic conditions and significant trade barriers.

Limitations of Environmental Analysis

An environmental analysis reviews current environmental conditions to forecast a future business environment.

The static nature of the analysis ensures that unexpected environmental changes cannot be considered in a company's business projections. In addition, the environmental analysis is but one source of information that's evaluated as a company develops a strategic plan.

The benefit of the analysis is also limited by the reliability and timeliness of data used in the analysis. As a result, the analysis does not guarantee business success.

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Environmental Analysis

Internal and external environmental forces.

By the Mind Tools Content Team

Most organizations work within a business environment of constantly changing forces that guide (and sometimes hinder) their overall strategic direction. This article examines these environmental influences in more detail.

The business environment can be separated into the internal and external environment as shown in the diagram below. Both of these environments have a huge impact on an organization, and the strategic decisions it makes.

The Internal Environment

Environmental analysis begins with an examination of internal factors and how these help or hinder organizational performance. An organization will wish to carry out an internal analysis that examines the strengths and weaknesses of its:

• Physical resources, including its products
• Financial resources
• Human resources
• Intellectual resources
• Operational capacity and efficiency
• Strategic capabilities/competence
• Organizational structure
• Organizational culture

The results of this analysis can then be fed into a SWOT analysis (see later). Porter’s Value Chain can also help the organization to pinpoint strengths contained within the organization by examining which of its activities create value for the company.

The External Environment

Organizations need to identify the key opportunities and threats that are likely to arise from the external environment. The external environment can be split into two areas, the near environment and the far environment.

The Near Environment

This comprises the industries and sectors, competitors and markets where the organization competes for resources and consumers (it is sometimes referred to as the ‘competitive’ environment). All organizations need to be aware of the factors and conditions that impact on their particular industry or sector. For example, the boundaries between separate industries may change, resulting in convergence, such as is the case with the computing, telecoms and entertainment industries. Key to making sense of the near environment is an awareness and understanding of the competitive forces that exist. Porter’s Five Forces model was devised to help organizations to do exactly this by assessing:

• The threat of entry of new rivals
• The bargaining power of buyers
• The bargaining power of suppliers
• The threat of substitute products

Despite being devised in the 1980s, Porter’s Five Forces is still a favored method of industry analysis today. As well as analyzing its industry, an organization will wish to carry out market segmentation in order to understand customers and satisfy their needs better than the competition.

Many organizations segment consumer markets differently from industrial markets.

Consumer markets tend to be segmented along differing customer characteristics such as:

• Geographic: e.g. country, region, neighborhood.
• Demographic: e.g. age, gender, occupation, race, religion.
• Psychographic: e.g. interests, values, opinions.
• Behavioral: e.g. brand loyalty, readiness to buy, user status (first-time buyer, regular buyer, etc.).

Industrial markets tend to be segmented by:

• Location: e.g. distance from vendor.
• Company type: e.g. size, product or service offered.
• Behavioral characteristics: e.g. buyer status, purchasing methods.

By segmenting its industry and markets, an organization can gain a better understanding of its customers and potential customers, and therefore tailor its products and services to match customer needs as closely as possible.

The Far Environment

The six main pressures and influences on organizations in the ‘far’ external environment are represented by the acronym PESTLE which represents the following external forces:

• Political: the existing and potential influences that government places on organizations, via government agencies, pressure groups, etc.
• Economic: the impact that the national and international economy has on all types of organizations. For example, when bank interest rates are low, people have more disposable income to spend on a range of goods and services; but when interest rates are high, consumer spending will reduce.
• Social: changes in society have a considerable impact on how organizations set strategies. When analyzing the external environment, organizations should consider demography, i.e. the impact that the size and structure of the population has on customer demand and on the workforce, e.g. an aging population. Social culture will also affect the demand for goods and services, e.g. increasing environmental awareness has created a demand for eco-friendly products.
• Technological: advances in technology probably have the most profound effect on organizational strategy. The arrival of the internet, for instance, has transformed the way that organizations sell their products, and how they communicate with customers and employees across the globe.
• Legal: organizations need to be aware of existing and upcoming local, national and international legislation that affects their business, including employment law, competition law, and health and safety regulations.
• Environmental: factors such as environmental protection laws and regulations, and social attitudes to energy consumption and waste disposal can all affect organizations and the way they do business.

A PESTLE analysis is a popular technique that can be used to examine the many different external factors affecting an organization, in order to help organizations systematically identify any threats. Once an organization has identified the main characteristics of the external environment in which it operates, it should look for ways to minimize any possible threats and exploit new opportunities.

Spotting The Opportunities

Johnson and Scholes point out that if organizations consistently compete with market rivals that have the same or similar products or services, then everyone will find the market tough and unattractive. This can be countered if an organization can spot a strategic gap in the market.

Strategic gap: ‘An opportunity in the competitive environment that is not being fully exploited by competitors.’ [1]

Johnson and Scholes suggest the following areas in which organizations may find such opportunities: [2]

• Opportunities in substitute industries: e.g. a software company substitutes paper encyclopedias for online versions.
• Opportunities in other strategic groups: [3] e.g. privatization of the rail network in the U.K. means that bus operators can apply for rail franchises.
• Opportunities for complementary products: e.g. people go to the gym to stay in shape and look good, so some private gyms also have beauty salons on site.
• Opportunities in new market segments: e.g. Starbucks has turned coffee into an experience, not just a drink, by providing customers with the opportunity to customize their beverage, and enjoy it in a relaxing atmosphere.
• Opportunities over time. Where an organization anticipates a change in the competitive environment, it can gain first-mover advantages, e.g. eBay anticipated that the internet could revolutionize the ‘small ads’ business, which it has turned into a multi-million dollar enterprise.

SWOT Analysis

The combination of outputs from the analysis of both the internal and external environment is a SWOT analysis, which helps organizations analyze their overall Strengths, Weaknesses, Opportunities, and Threats. These are often set out in table form as shown below. The example shown is for a small pharmaceutical company.

This approach, however, does not put the strengths, weaknesses, opportunities, and threats in context. In particular, it does not relate them to one another, or illustrate how a particular strength will allow an organization to exploit an opportunity or counter a threat. Nor does it highlight whether acknowledged weaknesses might leave the organization vulnerable to a threat or unable to exploit an opportunity.

To develop strategies that take into account the SWOT profile, therefore, it is a good idea to carry out a matching process, by constructing a TOWS matrix as shown below.

• S-O Strategies represent opportunities that are a good fit with the organization’s strengths.
• S-T Strategies indicate ways for the organization to use its strengths to counter external threats.
• W-O Strategies help the organization to overcome its weaknesses to pursue opportunities.
• W-T Strategies help the organization to prevent its weaknesses from rendering it vulnerable to external threats.[4]

In addition, an organization should consider its SWOT profile in terms of how it compares to those of its competitors.

The Importance of Scenario Planning

Given the rapid pace of political, environmental and technological change in today’s society, strategic decisions can be increasingly difficult to make. Scenario planning can be a very useful way to analyze the environment in this regard.

‘Scenario planning is a discipline for rediscovering the original entrepreneurial power of creative foresight in contexts of accelerated change, greater complexity, and genuine uncertainty.’ [5]

It differs from conventional market research or financial forecasting techniques by depicting alternative ‘futures’ instead of projecting forward current trends. [6] This enables organizations to model a series of potential futures and to modify their future plans according to the most feasible scenarios. Scenarios are not predictions, then, but plausible, well-illustrated hypotheses of various ‘what if’ possibilities.

In order for organizations to make informed and appropriate strategic choices, they must first develop a clear understanding of both their internal and external environment.

Internal analysis of the organization involves a thorough examination of the firm’s strengths and weaknesses.

External analysis looks at the opportunities and threats posed by competitors in the organization’s industry and markets, and by existing and potential opportunities and threats that exist in wider society.

The results of internal and external analysis can be brought together and summarized in a SWOT analysis, which can then be used to inform future strategic development.

[1] Johnson and Scholes, Exploring Corporate Strategy (FT Prentice Hall, 2005) p 99.]

[2] Ibid pp 99-100.

[3] Strategic groups are industry subgroups that compete directly for the same customers, or for similar resources. For example, grocery retailing has several strategic groups, including supermarkets, minimarts and corner shops.

[4] www.quickmba.com (May 25, 2005).

[5] Pierre Wack, Royal Dutch/Shell, 1984. GBN Global Business Network, Scenarios.

[6] 'Scenario Planning' http://www.economist.com/node/12000755

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The Implications of Environmental Analysis on Strategic Plan

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Accurate evaluation of environmental factors could be the difference between success or failure when starting a business. An effective environmental analysis can have a major impact on the strategic plan for a business. Once you identify threats and opportunities, it helps you focus your business efforts where they need to be focused.

Environmental Analysis

A business environmental analysis is a process in which you look at the outside factors that can have an impact on your business. Some of the items that could have an impact on your business are political, economic, social and technical. You examine each one of these components individually, and then see how it could affect the success of your business. For example, if the government has many restrictions in place, it could negatively impact your ability to do business.

Strategic Plan Impact

Creating a strategic plan helps guide your actions as a new business. When you create a strategic plan, you have a specific set of steps that you plan on taking in order to make your business successful. When developing a strategic plan, you have to look at the outside environmental factors that can have an impact on your business. For instance, if the economy is weak when you launch your business, you may need to spend more on advertising or offer more sales to get people in the door.

Focusing on Growth

When doing an environmental analysis as part of a strategic plan, you have to keep an eye out for growth opportunities. Even if the environmental factors look discouraging, you may be able to find opportunities to grow the business. For example, if technology outside your business is improving, you may be able to use these technological advances to improve your own business operations. Lowering your energy costs with improvements in these areas could allow you to focus more resources on the important areas of your business.

Considerations

After doing an environmental analysis for your business, you may have to make some tough decisions. If the environmental analysis is overwhelmingly negative, it may force you to scrap the idea of starting the business. If the environmental analysis has some positive factors, it could encourage you to pursue your business. In other situations, it may simply alter your original plan because of the factors that were discovered. Use this as one of several tools to evaluate your business concept overall.

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Luke Arthur has been writing professionally since 2004 on a number of different subjects. In addition to writing informative articles, he published a book, "Modern Day Parables," in 2008. Arthur holds a Bachelor of Science in business from Missouri State University.

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Environmental Analysis: Meaning, Types, Importance and Limitations

Meaning of environmental analysis.

Environmental analysis refers to process of identifying and examining all potential environment variables that can either directly or indirectly affect the performance and profitability of business organization. It is also termed as environmental scanning that is a strategic tool to find out all internal and external elements having capability of influencing the efficient and effective functioning of organization. Internal elements comprise of strengths and weakness of business enterprise, whereas external element represent the opportunities and threats outside the organization. The environmental analysis takes into consideration the trends and high-level factors such as interest rates, economy and manner how these are going to change firm’s business. Under it, the firm pertaining data is collected and utilized by management in order to determine the best strategies for capitalizing opportunities and generate large returns. 

In today’s time, the business environment is quite dynamic that keeps on changing frequently with time. Therefore, it becomes crucial to analyse environment for identifying each and every factor of business environment that can affect its operations. Once these factors got identified and their impact got understood, then it becomes easy to frame plan and policies accordingly. The internal insights from environmental analysis help businesses in assessing the employee’s performance, maintenance cost, customer satisfaction etc, so that required corrective actions can be taken timely. External metrics, on other hand, assists in responding to environment in positive manner and also aligning all policies as per the objectives of business organization.

Process of Environmental Analysis

The environmental analysis process comprises of following steps: – 

Identify environmental factors

The first step in environmental analysis involves identification of all such environmental factors or forces that influence the functioning of business entity. This identification is carried out at distinct levels such as company level, market level, country level and international level. Only relevant environmental factors are figured out under it, so that irrelevant, vague and ambiguous data can be avoided. Generally, the identification step includes competitor’s strategies, market factors, government policies etc. that affect the working of business entity.

Gather information

Once the factors to be examined are decided, then start gathering information concerned with selected environmental factors. Research needs to be carried out for collecting information that is of two types: verbal and written information. The verbal information is gathered via hearing such as listening to radio podcast, whereas written information is gathered by reading sources such as magazines, journal and newspaper. 

Evaluate your competitors

Here in this step, information is collected regarding competitors to find out if there are any threats from them or not. A technique called spying is utilized for gathering information in non-traditional way.  

Forecast the impact

Forecasting is an important step for identification of threats and opportunities in future and framing the plans and strategies accordingly. This step predicts about future events and their impacts on business entity on the basis of data gathered with regard to past and present events. Forecasting covers every aspect of business environment such as economic, technological, political etc. The methods used for forecasting include surveying and brainstorming.   

Assess your strategies

Finally in last step, each of environmental factor that is identified in previous steps are evaluated on the basis of their impact on organizational functioning and profitability. The degree of impact is variable from one factor to another. Some of the factors provide opportunity while other pose threat to business enterprise. Proper knowledge on impact of environmental factors assists in resolving the potential challenges that may arise from them. 

Types of Environmental Analysis

Environmental analysis is of different types based on the technique used for reviewing and evaluating information regarding internal and external environment. These techniques are as summarized below: – 

SWOT Analysis

SWOT refers to internal strengths and weaknesses of business enterprise as well as external threat and opportunities surrounding that business. The swot analysis assists managers in knowing the strategic situation of firm and determining whether it is a perfect fit in between internal resources, values and external environment. A good fit is one that maximizes the strengths and opportunities of entity and minimizes its weakness and threats. 

The primary role of SWOT analysis is to identify key internal as well as external forces that are crucial for attaining the desired goals and objectives. One of the effective utilization of SWOT analysis for good effect can be exploiting market opportunities through leveraging the firm’s strengths. 

TOWS Matrix

TOWS matrix is an environmental analysis technique used for strategic planning and facilitate marketers in identifying opportunities and threats and comparing them against internal strengths and weakness. It can be simply defined as variant of SWOT analysis paying more attention on opportunities and threat that are external to business organization and counting them with organization’s internal strengths and weakness. Therefore, TOWS and SWOT are simply acronym for distinct arrangements of words: strength, weakness, threat and opportunity. Both of them utilize same forces for carrying out analysis but are at sometimes used interchangeably without regard to order that strengths, weakness, threats and opportunities are evaluated. 

WOTS-UP Analysis

WOTS-UP analysis is also similar to above mentioned TOWS and SWOT analysis and are used interchangeably during business analysis for conveying the same thing. It serves as tool of planning for examining the strengths, weakness, threats and opportunities of organization. Its main motive is to do evaluation of both internal as well as external environment of business enterprise that helps in summarizing supportive and unsupportive factors by business. WOTS-UP analysis enable business in thinking strategic wise and utilizing their capabilities with full efficiency towards attaining better growth.    

BCG matrix was formed by Boston Consulting Group, a strategic management consulting enterprise, in order to examine the product’s performance. This matrix carries out comparison of distinct businesses in an organizational portfolio on the basis of market growth rate and relative market share. Relative market share means the ratio of business market share to market share of large rival existing in market. Whereas, market growth rate refers to market growth during previous year relative to economy growth as a whole. 

Importance of Environmental Analysis

The importance of environmental analysis can be well-understood from points given below: – 

Identify opportunities, threats, strengths and weakness

The primary benefit provided by environmental analysis is identification of both internal and external environment of business enterprise. Internal environment includes strength and weakness of firm, whereas external environment includes its opportunities and threats. Proper awareness on these forces that influence business both directly and indirectly, helps in framing right strategies for attaining desired goals in timely manner.  

Understanding the environmental changes

Environmental analysis help companies in developing the right understanding on present business environment and probable changes in future. These changes include change in legal environment, market demand, technology etc. Businesses, if not taking cognizance of changing market forces at right time, face difficulties in their market survival for long term.      

Provide inputs for decision making

The process of environmental analysis collects and provide information to organization regarding different aspects of business environment. This information is very crucial and from basis of decision making by managers. Various type of capital as well as investment decisions are taken on the basis of such information. 

Formulation of appropriate strategy

Environmental scanning assist in formulation of right strategies by companies for dealing with future events in appropriate manner. It analyses and examine all present strengths and weaknesses, or opportunities or threats and then accordingly the right future plans and policies are created. All plans and policies are formed with the motive of minimizing business threat via utilizing present strengths and to overcome business weakness via capitalizing the present opportunities.   

Identification of international events and their business impacts

The impact of international events on business organization has increased to a large scale due to globalization. In all such scenarios, analysis of environment assists in identification as well as understanding of global events and their impact on business. 

Limitations of Environmental Analysis

Various limitations of environmental analysis are: – 

Unexpected and Unanticipated events

The future forces and events that can influence organization are uncertain and unpredictable. Therefore, quantification and prediction of such factors can’t be done in accurate manner. 

Involves money and cost

Environmental analysis process involves a lot of cost and time. It is lengthy approach comprising of distinct steps such as scanning, monitoring, forecasting and assessment. The performing of all these steps by business in appropriate manner brings high expenses as well as consumes large time.  

Inaccurate data

The entire process of environmental analysis is based on data collected for same purpose. If in case, the data collected is inaccurate then whole activities of forecasting and predicting future events may go wrong.  

Based on assumptions

Process of forecasting in environmental analysis is based on distinct assumption that may or may not be true. There is a basic forecasting assumption that there is pattern of event happening. Such type of assumption may not hold true in all cases. 

Part of strategy formulation process

It is only a part of strategy formulation process that rely on distinct inputs. Therefore, it does not guarantee the organizational effectiveness.   

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What is Environment Analysis? Objectives, Theories and Examples

What is Environment analysis in modern-day businesses?

Environmental analysis is a dynamic process that uses a 360-degree holistic approach to analyze the variables that affect the company environment rather than sticking to just one section. With a study on business environmental analysis, organizations can uncover internal and external factors that may negatively or positively affect their company. Businesses can foresee future opportunities and challenges by considering variables like the economy and technology. This might help them create a successful marketing plan by learning how their day-to-day activities are taking place using the study from the business environmental analysis.

Environmental study is one of the most extensive methods for strategically determining all internal and external aspects that impact a business’s future. This analysis is important because external components reflect possibilities and threats, while internal components show a company’s advantages and disadvantages. The environmental analysis also considers trends and major elements, for instance, changing fashion interest and how it could impact an apparel business . These evaluations can aid companies in becoming more appealing to customers.

Such measures considerably impact effectiveness, competitiveness, administration, judgment, and the company’s overall success. They also considerably contribute to the creation of successful business plans. Companies can develop plans that align with the shifting aspects of the company’s environment by studying the components. The internal wisdom furnished by environmental analysis is also used by businesses to improve their workforce capabilities, performance , client satisfaction, preservation cost, etc. Further, the external measures help in reacting to the context favorably and aligning the blueprints according to the ideas of the association.

An exercise in scenario planning is only concerned with examining the potential effects of unknowable factors or “ambiguity” just on an organization’s future and is better employed in conjunction with an environmental analysis. To benefit from environmental analysis, it is required for a company to transform the data into a form that can be used to set goals and create a plan for accomplishing them.

Components of environment analysis

Internal and external factors are the two main parts of an environmental analysis. Since we now know that an organization’s internal environment consists of things like its value system, goals, structure, culture, workforce, labor unions, technical capabilities, etc. On the other hand, various external elements have an impact on how a firm operates. These elements make up an organization’s external environment. Let us look at these components thoroughly below:

• Internal Component : These elements demand that businesses examine themselves. Based on the organization’s objective and vision, they assess its strong and weak elements. These elements also allow companies to reflect on their strategy and intentions for a predetermined time, like five or ten years. Many internal problems in a company are analyzed internally. The environmental analysis must address the following significant challenges based on the organization’s makeup;
• Financial standing
• Roles for products and services
• Product and service excellence
• External components : External factors, on the other hand, relate to important variables outside the organization. Businesses need to assess the challenges and opportunities in the following areas, Performance management:
• Market and industry trends
• Advantages and disadvantages of competition
• Your customers, including customer service
• Economic activities that may affect the organization
• Technology advancements in technology that can simplify processes
• Supply of workers and local labor markets
• Legal as well as political environment

The objective of conducting an environmental analysis

Despite knowledge about environmental analysis, entrepreneurs still wonder why it matters to their companies. Now that it is most likely clear why conducting an environmental analysis is crucial after reading the explanation above. If we conduct this study properly, we will understand how well businesses can draw in favorable environmental elements and reduce unfavorable ones. For the following reasons, environmental analysis is needed in all businesses:

• A company’s response to variations in important environmental factors is determined by environmental analysis. 
• Businesses use this study to determine how potential changes impact their worth or market position.
• Through risk mitigation, environmental analysis may help businesses examine and monitor possible risks to your company.
• By identifying adjustments that can be made in a company to boost the competitiveness of its asset base, enhance client satisfaction, or increase performance , environmental analysis helps them find new opportunities.
• The environmental analysis informs management about the connections between an organizational framework and its operations.
• An organization can determine how the internal environment of the business is changing using environmental analysis.
• Because the environment changes so quickly, an institution’s harmony with its surroundings could be quickly upset. An environmental analysis can assist a company in identifying the root reasons for disharmony. The equilibrium point can then be achieved by making the needed modifications.
• Environmental analysis assists businesses in reducing the number of potential solutions and eliminating those manifestly incompatible with anticipated possibilities or risks. The analysis enables the removal of inappropriate options, allowing the focus to be placed on more effective alternative solutions.

An industry or business might develop efficient marketing plans and tactics to boost its competitive advantage. Doing several instances of studies based on inputs from managers, such as business plans and predictions, economic indicators on rivals and consumers, market analysis, and a range of other elements, is one technique to perform an environmental analysis. To learn more about such techniques from seasoned trainers, check out this comprehensive course on Business environmental analysis by XLRI.

Popular theories in environment analysis

For sound marketing decisions, the company’s future planning, product abandonment, new product launches, and strategic management depend on effective environmental analysis. Some of the main models used in the environmental analysis are:

• PESTLE Analysis : When we look broadly at macro issues that greatly affect the health of a particular industry or sector, this is effectively a bird’s eye perspective of business activity. This environment analysis helps entrepreneurs and strategy developers understand where their market is. It also aids in protecting the organization’s future state. Pestle analysis includes several variables that affect the workplace. It’s a macroeconomic technique utilized to grasp the external reality of a larger environmental investigation. Each letter in the acronym denotes a different element. Every industry or organization could be impacted by these elements, either directly or indirectly. PESTLE (also spelled as PESTEL) stands for the following terms:
• Political aspects – The political environment describes how the activities of the government impact corporate operations. Businesses must remain vigilant about political issues because they are typically out of control. Thus it becomes all the more important to prepare to accept its impact on their day-to-day activities. The political environment examines the following elements:
• Rules Regarding Entrance
• Tariffs and tax laws provide stability in the country.
• Rules And regulations
• Economic factors – The type and pace of economic activity in which a firm competes or conducts business are addressed. It’s crucial to take into account variables like GDP, the rate of unemployment, the exchange rate, and others. The following are a few economic factors you should research:
• Exchange rate for other currencies
• Fiscal as well as monetary policies
• Accessibility to Credit and Rate Of Unemployment
• Income Available to Prospective Clients
• Inflation Rate
• Percentage of inflation
• Social influences – Businesses must pay special attention to the rules, values, practices, culture, skills, language, tastes, and preferences of the people in this environment. The following are some of the important social and economic factors;
• Money Distributed
• Visitors’ level of education
• Domestic Organization
• Social Behavior of Individuals
• Demographic factors
• Cultural Effects of Gender

Read More: What is an Executive MBA For Working Professionals?

• Technical aspects – The success of an organization is discussed through technological advancements, technological level, technology acquisition, the research and development budget, etc. The following are a few technological elements:
• Modern technology platform
• Technological progress
• Technology obsolescence rate
• Recent Findings
• Legal aspects – The legislation, laws about business, courts, and the legal system combine up the legal environment in which a company operates. Yet, the following are some legal considerations:
• Laws for health and safety
• Intrusions on patents
• Competitive regulations
• Occupational Guidelines
• Rules for Products and Services
• Environmental factors – The crucial cultural traits of worldwide markets, pertinent global marketplaces, and massive global political rallies make up a company’s global environment. These are some of the primary environmental factors:
• The way people view and respond to the environment
• Rules About Power Consumption
• Disposing of Waste Laws
• Environment and Weather
• Location-specific Information

This approach presents one of the pillars of strategic management, which goes beyond simply analyzing the market to consider an organization’s objectives and the tactics used to achieve them. This model’s entire scope is essential for whatever sector a company may operate in. The significance of each aspect may vary depending on the type of industry, but conducting the PESTLE analysis is essential for any plan a firm wishes to design because it is a much more detailed version of the SWOT analysis.

• SWOT Analysis: Before formulating a business strategy, it is crucial to carry out the SWOT analysis as a component of internal emphasis. The method for handling risks must include everything. Understanding SWOT analysis is aided by identifying the strengths and weaknesses as an internal evaluation of a business or by focusing on controllable aspects. As a result, the business’s possibilities and dangers are evaluated from the outside, considering external forces and influences that aren’t under its control.
• What benefits does your company offer?
• What exclusive or inexpensive resources can you access that nobody else can?
• What do customers in your market think you’re good at?
• What characteristics suggest you “win business”?
• What might you change?
• What must you keep away from?
• What flaws are you most likely to be viewed as having by your economy?
• What elements contribute to your business decline?
• Opportunities
• What favorable possibilities can you see?
• What fascinating trends do you know about?
• What challenges do you encounter?
• What are your rivals up to?
• Is your job at risk due to evolving technology?
• Do you have issues with bad debt or cash flow?

SWOT analysis can assist a company in exposing unsafe shortcomings and challenging hypotheses about its performance. It can provide fresh perspectives on where a company is right now and assist it in creating the ideal strategy for any circumstance if it uses it thoughtfully and in coordination.

Read More: Top IIM MBA for Working Professionals in 2024: Choose the Right MBA

Process of conducting environmental analysis in your business

It is quite clear now what environmental analysis is and how it can benefit a company. Let us now understand how should an environmental analysis be done. Though it is usually an ongoing process, there are pre-defined steps. The six steps of an effective environmental study are listed below:

• List the factors: Selecting the criteria requires careful evaluation, which is the first stage in conducting an effective business environment study. Constitutional, ethical, technological, financial, and other variables may also be involved. The environmental analysis’s important factors are determined by the sector in which the company operates. An IT company, for instance, is more concerned with technological matters, while a healthcare company would wish to examine its legal considerations. 
• Analyze the elements critically: Analysts look at them while selecting the best ones for their business. Feedback on each of these criteria is gathered. They even conduct research and track the parameters. They have the option of vocally or in writing gathering information. Note-taking is one of the methods used to gather verbal data derived from on-ground research. In contrast, textual data is gathered through reading and scrutiny. 
• Examine rivals: The next step is for businesses to examine the rivals and assess where they stand in the market. This aids them in identifying risks and investment opportunities. Companies use conventional or unconventional methods to gather data on rivals. Traditionally, knowledge is gathered from either primary or secondary sources. Snooping, ideally considered unconventional, can also be used to collect this information. They observe new developments among rivals and then incorporate them into their operations . Companies also gain insight into previous errors and try to work on them, which helps them improve organizational performance shortly.
• Consider organizational implications: After businesses have done their due diligence on their competitors’ actions, evaluating the implications of this information on their daily activities is necessary. To do this, strategy makers use the power of prediction and extrapolation. This helps them to estimate how specific factors will affect a firm via prediction. This aids in spotting dangers, chances, possibilities, weaknesses, and strengths. Analysts conduct surveys, brainstormed ideas, and more to forecast the effect. Decisions are made based on these collected data sets to enhance the company.
• Create a plan: Now that basic research is done, analysts at every organization develop a strategy after inspecting all external factors and assessing organizational impacts. They issue statements and remedies on enhancing efficiency as well as company operations. This strategy can help firms accomplish their main goals.
• Put the plan into practice: Finally, it’s time for the company to implement the strategy in its daily activities once the analysts create the plan. The strategy consists of tactics that the company must adopt to boost productivity. These approaches are differentiators, which means that each issue relating to a given aspect has a unique solution. Companies can take advantage of opportunities and prevent challenges after implementing the strategy.

Limitations of Business Environmental Analysis

Every model or study has its drawbacks. Similarly, environmental analysis is also subject to some restrictions. Listed below are these restrictions:

• Need for preparation for unexpected events – Future predictions based on conducted environmental analysis are not sure to occur as predicted. When employed in a business, this study fails to do away with uncertainty. On the other hand, environmental analysis should minimize the severity and frequency of surprises that could strike a commercial organization.
• No guarantee of organizational efficiency – Environmental analysis cannot guarantee good management performance. It simply functions as a method’s evaluation and creation input. The verifiability and accuracy of information are sometimes taken for granted by management, who rely on it blindly.
• Poorly Reliable – Typically, people rely too heavily on the data gathered from environmental analysis. Yet this should not be the case in the actual world. One is liable to need clarification when information is bombarded.
• A lack of a strategic plan – The key to every organizational progress is taking calculated risks and needing to be more adventurous. Environmental analysis frequently causes someone to be overly careful in their approach, and they are more prone to fall behind the events. So, this examination needs to be done strategically.
• Time-consuming and expensive – The gathering, processing, and analyzing information for predicting takes much time and money. Hence, prediction is only helpful because the benefits are worth the effort and expense required.

The Bottom Line

Ultimately, it is vital to appreciate that environmental analysis focuses on evaluating a firm’s surroundings and potential scenarios that may or may not impact its activities. The environmental analysis procedure is often drawn out since it takes much time. But for businesses to thrive and flourish in this ever-evolving marketing climate, entrepreneurs need to sharpen their skills in conducting this study. The outcome of the procedure after learning the skill will help learners enhances their organization’s performance. These companies can profit from effective tactics that improve operational efficiency. The income and profitability of a company will also increase significantly as a result of this study

More Information:

The Complete Guide To The IIM Raipur ePGP

Strategic Marketing: Definition, Process and Advantages

What is the CXO Programme? Objectives & Features

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Environmental Analysis INTRODUCTION

In recent years, individuals, businesses, organizations, and various governments all around the world are working tirelessly to ensure the preservation of environmental components. This shouldn’t be surprising considering the fact that important environmental resources and the mother earth resources as a whole are gradually been depleted due to incessant usage from during socio-economic development and activities, which might not be unsustainable in the long-term. Assuming a middle cause in this regards, necessitate all stakeholders from around the world to lay emphasis on the concept of sustainability. According to the definition proffered by the UN World Commission on Environment and Development:  “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” [1]

The concept of sustainability is further broken down into three core concepts or “pillars” which includes; economic, environmental, and social. The concept of sustainability often corresponds to the belief that without a paradigm change to the way the earth and its resources is run, it will suffer irreparable degradation. [2] Also, considering the efforts by various governments to ensure sustainability in all its entirety, there are major commitments been made in some of the countries and regions responsible that are responsible for significant resources use and waste. For instance, the US Government’s American Jobs Plan, now includes measures to retrofit energy-efficient homes, electrify the federal fleet of vehicles, including postal vans, and ending carbon pollution from power generation by 2035. [3]

Not only are the governments  championing sustainability, individuals and businesses are increasingly showing concerns in sustainability practises. Some big corporations like Walmart Stores, Inc. (WMT) has pledged to reach zero emissions by 2040, [4] Morgan Stanley pledged net-zero “financed emissions” by 2050, [5] and Google has also pledged to operate carbon-free by 2030 [6]

As a business or company planning to establish anywhere in the world, most especially in the United States (U.S.), it’s therefore important to show how your business would ensure environmental sustainability in the U.S. and also help the government achieve same. Questions such as how your business will impact on the environment? What measures will be used to mitigate the impact? Thus, the new chapter that all business and public plan writers should consider including while writing a business plans for businesses anywhere in the world is the Environmental Analysis Chapter. Aside writing a business plan, business analysts roles should now include business environmental analysis, where they conduct environmental analysis for businesses around the world by using important environmental metrics to analyze the impacts of such businesses on the environment, and suggesting likely ways to mitigate the impacts. For such business, environmental sustainability strategies might include:

• Utilizing sustainable materials in the manufacturing process
• Optimizing supply chains to reduce greenhouse gas emissions
•  Using renewable energy sources like solar and wind to power facilities
• The strategies might be different and unique for various organizations, irrespective of what strategy is adopted, it should tie into the larger business goals and organizational values.

In addition to the above, environmental  business analysts can also assist businesses or organizations in energy-efficient computing; power management; data center efficiency; responsible disposal and recycling of IT resources; compliance with green regulations and internal policies; green metrics, assessment tools, and methodology; and in environment-related risk mitigation.

Key Characteristics of Sustainable Products and Services

According to Belz, Frank-Martin in his book “Frank-Martin B. and Peattie, K. (2009). Sustainability Marketing: A Global Perspective. Wiley, United Kingdom,” six characteristics of sustainable product were identified as follows;

Customer satisfaction: using this characteristics, a sustainable products or services that do not meet customer needs will not survive in the market in a long term. This is because product or services are actually being developed to satisfy customers, and anything short of this would not stay long due to available substitutes for such products or services.

Dual focus: compared with purely environmental products, sustainable products should not only focus on ecological significance but should be of social significance to the general public.

Life-cycle orientation: sustainable products are eco-friendly throughout their entire life. Which means that from the moment the raw materials are being explored, and exploited to the moment the final product is disposed of, there must be no permanent damage to the environment.

Significant improvements: sustainable products should contribute significantly to deal with socio-ecological problems on both national and global level, or at least provide measurable improvements in socio-ecological product performance.

Continuous improvement: as the state of knowledge, technologies and societal expectation develop from generation to generation, sustainable products should also continuously improve with regard to social and environmental variation.

Competing offers: even though sustainable products and services may still lag behind competing offers, the competing offers may therefore serve as a benchmark regarding social and ecological performance and can be improved accordingly.

The Unbelievable Benefits of Including the Environmental Analysis Chapter in Your Business Plan

1) Early Adopter:

Taking a glance into a business plan and coming across the environmental analysis chapter shows the reader that you are current and well-aware of important happenings in the world. This would surely give you a competitive advantage as a business environmental analyst. On the part of your clients, the environmental analysis chapter will give the readers an idea that your company is not oblivious of environmental sustainability goals, but is also at the fore-front of tackling environmental issues.

2) Success for Business:

By including the environmental analysis chapter in your business plan, the environmental sustainability chapter can help drive business success. As said earlier, individuals including investors today important metrics such as the use environmental, social, and governance (ESG) to analyze an organization’s ethical impact and sustainability practise. Important factors such as a company’s carbon footprint, water usage, waste generation and so on, will likely determine whether or not your business is worth investing in. To ensure success, organizations should request business environmental analysis to be conducted while writing the business plan.

3) Competitive Advantage:

In order to show ecological responsibility, companies around the world should assess and reduce their ecological damage. Through rare raw materials and increasing pollution, an environmentally friendly management gets spotlighted more and more by the public interest. Consequently, utilizing eco-friendly products or technologies can even signify a competitive advantage for your business or organization.

4) Increased Profitability: some consumers have the willingness to pay (WTP) for products that are eco-friendly, and being a brand known for this quality will significantly earn you a market share and increase your profit. A recent study conducted by Unilever found that 33 % of consumers want to buy from brands “doing social or environmental good,” creating an opportunity in the market for sustainable goods. [7]

Disadvantages of not including the Environmental Analysis Chapter When Writing a Business Plan

1) Likely Boycott by customers: with more and more individuals becoming more environmentally-conscious, more businesses are using eco-friendly materials in production. Not conducting an environmental analysis chapter in the business plan means likely boycott of such products and services by customers.

2) Reduced Access to Opportunities: most government grants and organizations offering grants are usually attached to environmental compliance goals, and not meeting the criteria might affect access to opportunities by such company.

3) Increased Overhead Cost: considering the total cost utilized in the production of some products from the point of raw material exploration to the final disposal, “going green” or designing a sustainable product can creates the need to analyze the business situation from an environmental perspective, looking into ways to redesign operations to use less energy and water, produce fewer emissions, and generate less waste. This in the short and long term will ensure business uses the least cost during production which would subsequently reduce profitability. However, not including this chapter by companies in the business plan, would of course, lead to increased overhead cost for the production of non-environmental friendly products by such companies.

Suggestions for the Environmental Analysis Chapter in the Business Plan

Communicating your environmental analysis goals to readers under appropriate headings is as important as the chapter itself. Below are suggestions for sub-sections under the chapter when writing your business plan.

1) Environmental Sustainability Assessment and Objectives:

Driving change in any sector involves a critical analysis of a goal, followed by the objectives to be met by achieving the set goal.

Thus starting this chapter with the “Environmental Sustainability Assessment and Objectives” section allow your business to critically assess what environmental sustainability means to your team, company, industry, and client.

What does your business team consider a priority when it comes to environmental sustainability. For instance, to a company in a restaurant business, using a biodegradable product for their packaging might be a better solution as compared to recycling such packaging material.

To guide this process, consider asking questions, such as:

How much waste is the organization generating?

Is your product eco-friendly ?

Answering these types of questions will help you establish your company’s environmental sustainability objectives.

Upon agreeing on concrete objectives for your environmental sustainability goals, it is necessary to develop a mission statement from the objective (s).

Here is an example of companies with effective mission statements:

Consider the Outdoor clothing brand “Patagonia’s” mission which can be broken down into four objectives:

• Build the best product
• Cause no unnecessary harm
• Use business to protect nature
• Do not be bound by convention

In this mission statements, it’s clear what the company’s values are and how they’re executing against them

2) Environmental Sustainability Standards:

In this particular section, two important standards would be critically examined to provide what the company is/will do to meet the International standards below:

• Life Cycle Assessment (LCA):

This assessment evaluates and discloses the environmental benefits of products over their full life cycle, thag is from the point of raw materials extraction to final disposition. Following its standardization in 1997 by the International Organization for Standardization (ISO), the process of conducting LCA studies has been widely used by organizations around the world.

• Nordic Swan Ecolabel

The standard of Nordic Swan Ecolabel, which is distributed in Norway, Sweden, Denmark, Finland and Iceland, mainly refers to distinguished products that have a positive effect on the environment. More likely, however, it has climate requirements that limit the amount of CO2 emissions where it is most relevant.[8] About 3,000 products, that are predominantly household chemicals, paper products, office machinery and building materials have been issued with this label. The criteria account environmental factors through the product’s life cycle (raw material extraction, production and distribution, use and refuse). Thus the most important parameters are consumption of natural resources and energy, emissions into air, water and soil, generation of waste and noise. Businesses should also aim to include if or not they meet the requirements of the organization in this section of the business plan.

• U. S. Green Building Council LEED Rating System: ensuring the company is established following a sustainable approach, all buildings should be evaluated for environmental performance over their life in line with the LEED Green Building Rating System, which provides the definitive standard for what constitutes a “green” building. Consequently persuading the consumer and building industry to develop products that are more environmentally and economically viable.

3) Environmental Mitigating Landscape (EML ): Following the identification of the various activities and operations from your company which could negatively impact on the earth, there is need to come up with a long term plan on how the identified environmental factors would be abated. Thus, there should be a table showing the various activities against the mitigating plan. Indeed, providing a mitigating landscape in this chapter of the business plan would give a general overview of the environmental impact activities at a glance.

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How To Write a Business Plan for Environmental Impact Assessment in 9 Steps: Checklist

By henry sheykin, resources on environmental impact assessment.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan

Welcome to our blog post on how to write a business plan for environmental impact assessment (EIA) in 9 steps! In today's rapidly evolving world, businesses and government organizations are increasingly recognizing the importance of sustainability. As environmental concerns continue to grow , the demand for comprehensive EIA reports is higher than ever. In fact, according to recent statistics, the global environmental consulting services market is projected to reach $58.62 billion by 2027 , with a compound annual growth rate of 5.9% . With our digital platform, EcoAssess, we are dedicated to helping businesses and government organizations enhance their sustainability initiatives through comprehensive environmental impact assessments.

So, let's dive into the 9 essential steps that will guide you in writing an effective business plan for an environmental impact assessment:

• Identify the purpose and scope of the Environmental Impact Assessment (EIA)
• Conduct a preliminary environmental review
• Define the legal and regulatory requirements
• Engage stakeholders and establish communication channels
• Create a project timeline and set clear objectives
• Determine the methodology for conducting the assessment
• Gather relevant data and conduct field investigations
• Analyze the data and assess potential environmental impacts
• Prepare an outline and structure for the EIA report

By following these steps, you'll be well-equipped to create a comprehensive and insightful EIA report that addresses the environmental impacts of your business operations or projects. Let's get started!

Identify The Purpose And Scope Of The Environmental Impact Assessment (EIA)

Before embarking on the process of conducting an Environmental Impact Assessment (EIA), it is crucial to clearly identify the purpose and scope of the assessment. This step sets the foundation for the entire process, ensuring that the assessment focuses on the specific objectives and goals.

The purpose of the EIA is to evaluate and analyze the potential environmental impacts that a project or activity may have. This assessment helps identify any adverse effects on the environment, human health, and overall sustainability. By understanding the purpose, you can direct the assessment to address specific concerns, minimize negative impacts, and enhance the overall environmental performance of the project.

The scope of the EIA defines the boundaries and extent of the assessment. It outlines which aspects of the project will be included in the assessment, such as the site selection, construction, operations, and potential decommissioning phases. The scope also determines the key environmental factors that will be considered, such as air and water quality, biodiversity, land use, and social and cultural aspects. By clearly defining the scope, you can ensure that the assessment addresses all relevant environmental aspects.

Identifying the purpose and scope of the EIA should involve consultation with all stakeholders, including project proponents, regulators, and potentially affected communities. This collaborative effort enables the inclusion of diverse perspectives and ensures that the assessment encompasses all concerns and interests.

• Clearly define the objectives and goals of the EIA before proceeding with the assessment.
• Engage in dialogue with stakeholders to gather their input and recommendations.
• Consider the project context and specific environmental concerns when establishing the scope of the assessment.
• Ensure that the determined purpose and scope align with legal and regulatory requirements.

Conduct A Preliminary Environmental Review

Before diving into the full Environmental Impact Assessment (EIA) process, it's essential to conduct a preliminary environmental review. This step lays the foundation for a successful assessment by gathering initial information about the project and its potential environmental impacts.

To conduct a thorough preliminary environmental review, consider the following:

• Identify the project's location, including nearby areas of ecological or cultural significance.
• Research any previous environmental studies or assessments conducted in the area.
• Gather information on the project's objectives, scope, and potential environmental hazards.
• Identify any requirements or considerations outlined in relevant environmental policies or regulations.
• Assess the potential impacts on environmental factors such as air, water, soil, biodiversity, and cultural heritage.
• Consider any potential indirect or cumulative impacts that may arise.
• Identify any known environmental sensitivities or concerns expressed by stakeholders.

Tips for conducting a preliminary environmental review:

• Engage with local communities, environmental organizations, and experts to gather valuable insights and local knowledge.
• Consider conducting site visits or field investigations to gain a firsthand understanding of the project's potential impacts.
• Utilize available technologies and data sources to enhance your understanding of the project's environmental context.
• Document and organize all the gathered information in a systematic manner for easy reference throughout the EIA process.

By conducting a comprehensive preliminary environmental review, you will be better equipped to determine the appropriate scope and methodology for your EIA. It will also help you identify potential mitigation measures to address any adverse environmental impacts that may arise during your assessment.

Define The Legal And Regulatory Requirements

When conducting an Environmental Impact Assessment (EIA), it is crucial to understand and adhere to the legal and regulatory requirements that govern the assessment process. These requirements vary from country to country and sometimes even within different regions or states. Failure to comply with these requirements can result in potential legal and financial consequences for your business or organization.

To ensure compliance, the first step is to thoroughly research and identify the specific laws, regulations, guidelines, and policies that apply to your EIA. This may involve consulting with environmental agencies, government bodies, and legal experts who specialize in environmental regulations. It is important to consider both national and local laws, as they may differ in their requirements and criteria.

Once you have identified the applicable regulations, create a checklist of the key requirements that need to be addressed in your EIA. This checklist will serve as a guide throughout the assessment process and help you ensure that nothing is overlooked.

• Include a detailed description of the project and its potential environmental impacts
• Specify the necessary permits, licenses, or approvals that need to be obtained
• Outline the timelines and deadlines for submitting documents or conducting assessments
• Identify any specific reporting requirements, such as the format for the EIA report or the need for public disclosure
• Ensure that the assessment process complies with relevant environmental legislation and policies
• Keep a record of all the relevant legal and regulatory requirements to refer to throughout the assessment process.
• Regularly check for updates or changes in environmental regulations to stay up-to-date with compliance.
• Seek expert advice or legal counsel if you are uncertain about any specific requirements.

By clearly defining the legal and regulatory requirements at the beginning of your EIA, you can ensure that your assessment process is in line with the applicable laws and regulations. This not only helps you avoid any potential legal repercussions but also demonstrates your commitment to responsible and sustainable business practices.

Engage Stakeholders and Establish Communication Channels

Engaging stakeholders and establishing effective communication channels is crucial for a successful Environmental Impact Assessment (EIA). Stakeholders include individuals, organizations, and communities who may be directly or indirectly affected by the proposed project. Their involvement in the process ensures that their opinions, concerns, and suggestions are considered in decision-making.

Here are some important steps to follow when engaging stakeholders and establishing communication channels:

• Identify the key stakeholders relevant to the project. This may include local communities, environmental NGOs, government agencies, industry representatives, and other interested parties.
• Reach out to the identified stakeholders and explain the purpose of the EIA. Clearly communicate how their input and participation will contribute to the assessment process.
• Organize stakeholder meetings, workshops, or public consultations to facilitate discussions and gather feedback. These interactions provide an opportunity for stakeholders to express their concerns, suggestions, and expectations.
• Establish effective communication channels, such as regular email updates, dedicated project websites, or social media platforms, to keep stakeholders informed about the progress of the EIA.
• Listen attentively to stakeholders' perspectives and concerns. Take notes and document their input to ensure that their viewpoints are considered throughout the assessment process.

Tips for Engaging Stakeholders:

• Be transparent and open in your communication to build trust and credibility with stakeholders.
• Provide clear and concise information about the project and the EIA process, using non-technical language whenever possible.
• Ensure that stakeholders have sufficient time to review relevant documents and provide feedback.
• Consider diverse perspectives and prioritize inclusivity by engaging with stakeholders from various backgrounds and interests.
• Document stakeholder engagement activities and outcomes to demonstrate compliance with regulatory requirements and best practices.

By engaging stakeholders and establishing robust communication channels, you create an inclusive and collaborative environment for the EIA process. This ensures that the environmental concerns and interests of all stakeholders are taken into account, leading to a more comprehensive and credible assessment.

Create A Project Timeline And Set Clear Objectives

Creating a project timeline and setting clear objectives is essential for the successful implementation of an Environmental Impact Assessment (EIA). This step helps to organize the assessment process, allocate resources efficiently, and ensure that all necessary tasks are completed on time.

When creating a project timeline, it is important to consider the scope and complexity of the EIA. Break down the assessment into smaller tasks and assign specific timelines to each task. This will help in tracking progress and identifying any potential delays or bottlenecks.

In addition to setting a timeline, it is crucial to establish clear objectives for the EIA. Define what you aim to achieve through the assessment process and outline the specific goals that need to be accomplished. This will provide a clear direction and focus for the assessment.

• Identify key milestones: Break down the EIA process into key milestones and set deadlines for each milestone. This will help in tracking progress and ensuring that the assessment stays on schedule.
• Allocate resources: Determine the resources required for each task and allocate them accordingly. This includes personnel, budget, and any necessary equipment or software.
• Define deliverables: Clearly define the deliverables for each task or milestone. This includes reports, data analysis, stakeholder engagement plans, and any other relevant output. This will help in maintaining clarity and accountability throughout the assessment process.
• Consider contingencies: Anticipate any potential challenges or risks that may arise during the assessment process. Develop contingency plans to mitigate these risks and ensure that the project stays on track.
• Involve key stakeholders and team members in the timeline and objective-setting process to gain their input and ensure buy-in.
• Regularly review and update the project timeline as needed to account for any changes or unforeseen circumstances.
• Use project management tools or software to track progress, set reminders, and communicate with team members efficiently.
• Break down tasks into smaller, manageable sub-tasks to make the timeline more realistic and achievable.

By creating a comprehensive project timeline and setting clear objectives, you lay the foundation for a well-structured and successful EIA. This step sets the stage for effective planning, execution, and reporting, ultimately contributing to the overall sustainability goals of your organization or business.

Determine The Methodology For Conducting The Assessment

Once you have established the purpose and scope of the Environmental Impact Assessment (EIA), the next crucial step is to determine the methodology for conducting the assessment. This involves selecting the appropriate methods, tools, and techniques to gather and analyze the necessary data to evaluate the potential environmental impacts of your business or government project.

Here are some important considerations when determining the methodology for conducting the assessment:

• Identify the key environmental parameters: Begin by identifying the specific environmental factors that are likely to be affected by your project. This could include air quality, water resources, biodiversity, and soil composition. By focusing on these key parameters, you can develop a targeted methodology that addresses the specific environmental impacts relevant to your project.
• Choose appropriate data collection methods: Select the most suitable methods for gathering the necessary data. This could involve a combination of desk research, on-site surveys, interviews with experts, and data aggregation from relevant sources. Ensure that the chosen methods are reliable, accurate, and capable of providing the required information.
• Consider the scale and timeline of the project: Depending on the size and duration of your project, you may need to adjust the methodology accordingly. For large-scale or long-term projects, it may be necessary to conduct extensive field investigations, while smaller projects may require a more focused approach. Take into account any specific time constraints or seasonality factors that could impact data collection and analysis.
• Include qualitative and quantitative assessments: To ensure a comprehensive evaluation of the potential environmental impacts, incorporate both qualitative and quantitative assessments into your methodology. Qualitative methods, such as expert opinions and surveys, can provide valuable insights, while quantitative methods, such as data analysis and modeling, help to quantify the impacts and assess their significance.
• Consult environmental experts and professionals to gain insights into the most appropriate methodology for your specific project.
• Consider using standardized assessment frameworks or guidelines, such as those provided by governmental or international organizations, to ensure consistency and credibility in your methodology.
• Regularly review and update your methodology throughout the assessment process to incorporate any changes or new information that may arise.

By carefully determining the methodology for conducting the assessment, you can ensure that your Environmental Impact Assessment is conducted in a systematic and rigorous manner, resulting in accurate and reliable findings that support your sustainability initiatives.

Gather Relevant Data And Conduct Field Investigations

Gathering relevant data and conducting field investigations is a critical step in conducting an environmental impact assessment. This step involves collecting information and conducting on-site visits to assess the potential environmental impacts of a project or activity. Here are some important considerations:

• Identify the data needs: Determine the specific data you need to collect to assess the environmental impacts of the project. This may include information on air quality, water quality, soil composition, biodiversity, and habitat suitability, among others.
• Develop a sampling plan: Create a plan to collect representative samples of the environmental parameters you need to assess. This may involve selecting appropriate sampling locations and determining the frequency and duration of data collection.
• Conduct field investigations: Visit the project site and conduct field investigations to gather the necessary data. This may involve conducting habitat surveys, water quality sampling, air pollution monitoring, and other field-based assessments.
• Ensure that data collection methods comply with relevant standards and adhere to ethical guidelines.
• Use appropriate equipment and techniques to collect accurate and reliable data.
• Incorporate multiple data sources and use cross-validation techniques to minimize biases and uncertainties in the data.
• Consider engaging local experts or consultants familiar with the project site and its environmental characteristics.
• Document field investigations thoroughly, including relevant observations, measurements, photographs, and any potential limitations or challenges faced during data collection.

Gathering relevant data and conducting field investigations play a crucial role in assessing the potential environmental impacts of a project. By ensuring accurate and comprehensive data collection, you can provide a solid foundation for the subsequent analysis and evaluation stages of the environmental impact assessment process.

Analyze The Data And Assess Potential Environmental Impacts

Once you have gathered all the necessary data from your field investigations, it is time to analyze it thoroughly. This step is crucial in determining the potential environmental impacts of your proposed project or initiative.

1. Data Analysis: Begin by reviewing all the data collected during your field investigations. Look for patterns, trends, and any significant findings that may arise. It is important to approach this analysis objectively and scientifically, using appropriate methods and tools to draw accurate conclusions.

2. Impact Assessment: Based on the data analysis, identify and assess the potential environmental impacts of your project. Consider both the direct and indirect effects it may have on the surrounding ecosystem, air quality, water resources, biodiversity, and other relevant aspects. This assessment should be comprehensive and take into account all phases and activities associated with the project.

• Ensure that the data analysis and impact assessment are carried out by qualified professionals with expertise in environmental sciences or relevant fields.
• Consider involving external experts or consultants if necessary to ensure accuracy and impartiality of the assessment.
• Use appropriate models and tools to aid in the analysis and assessment process, such as environmental impact matrices or risk assessment frameworks.
• Consider the potential long-term and cumulative effects of your project on the environment, rather than focusing solely on immediate impacts.

3. Mitigation Measures: Based on the identified environmental impacts, develop measures to mitigate or minimize any negative effects. These measures should aim to protect and conserve natural resources, reduce pollution and waste, promote sustainable practices, and enhance overall environmental stewardship.

4. Evaluation: Finally, evaluate the effectiveness of the proposed mitigation measures in addressing the potential environmental impacts. This evaluation should consider the feasibility, practicality, and projected outcomes of the proposed actions. It is important to monitor and review the effectiveness of these measures throughout the project lifecycle to ensure continuous improvement.

By thoroughly analyzing the data and assessing the potential environmental impacts of your project, you can develop effective strategies to mitigate any negative effects and enhance the sustainability of your business or organization. This step is crucial in aligning your operations with environmental best practices and contributing to a more sustainable future.

Prepare An Outline And Structure For The EIA Report

Once all the relevant data has been gathered and analyzed, it is time to prepare an outline and structure for the Environmental Impact Assessment (EIA) report. This report will serve as a comprehensive document outlining the findings and conclusions of the assessment, as well as the potential environmental impacts of the proposed project.

• Start by creating a clear and logical structure for the report. This will help ensure that the information is organized and easy to navigate for readers.
• Include an executive summary at the beginning of the report, which provides a brief overview of the project and the key findings of the assessment.
• Divide the report into sections based on the different aspects of the assessment, such as the project description, the methodology used, the data analysis, and the conclusions.
• Within each section, further divide the information into subsections to provide a clear and organized presentation of the data and analysis.

Additionally, it is important to clearly and succinctly summarize the key findings and conclusions of the assessment in the report. This will allow readers to quickly understand the potential environmental impacts of the proposed project and the measures that can be taken to mitigate these impacts.

A visually appealing and well-formatted report can also help enhance the readability and understanding of the information presented. Consider using headings, subheadings, bullet points, and tables to make the content more accessible and visually appealing.

• Use clear and concise language throughout the report, avoiding jargon or technical terms that may be difficult for readers to understand.
• Include relevant charts, graphs, or visuals to help illustrate the data and findings.
• Proofread the report thoroughly to ensure that there are no typos or grammatical errors that could detract from the professionalism and credibility of the document.

By following these steps and tips, you can prepare an outline and structure for the EIA report that effectively communicates the findings and conclusions of the environmental impact assessment. This report will play a crucial role in informing decision-makers and stakeholders about the potential environmental implications of the project and guide them in making sustainable and environmentally responsible choices.

Writing a business plan for environmental impact assessment is a crucial step in promoting sustainability and ensuring the well-being of our planet. By following the nine steps outlined in this checklist, organizations can effectively identify and address potential environmental impacts, while also engaging stakeholders and meeting legal requirements.

• Identify the purpose and scope of the assessment
• Define legal and regulatory requirements
• Determine the assessment methodology
• Prepare a structured EIA report

With the support of tools like EcoAssess, businesses and government organizations can streamline the process and achieve their sustainability goals more efficiently. Together, we can make a positive environmental impact and contribute to a healthier and greener future.

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PESTLE Analysis

SWOT and Business Analysis Tools

SWOT and PESTLE Analysis: 5 Important Questions Answered

Mar 21, 2024 by Kiesha Frue

Every company follows certain frameworks to understand the market it is catering to. They usually keep on checking the nerve of the market where they want to focus their products. Certain companies carry out fieldwork in the form of market research, conducting surveys, or employing other techniques to gauge the market needs and trends.

Then, there are other analysis methods that allow for a more holistic approach to determining trends and then setting strategies. From a strategic management perspective , there are certain tools that permit the knowledge of the market and the surrounding environment in depth, but the most famous ones are PESTLE and SWOT analysis .

What is the SWOT and PESTLE Analysis?

PEST analysis , which many refer to as a deeper approach to the marketing environment, consists of the Political, Economic, Social, and Technological features of a market. A more prolonged form of this analysis is called PESTLE, which incorporates the aspect of Legal and Environmental factors affecting the marketplace.

PESTLE analysis is a more detailed view of the environment a business is situated in. It can be rightly called a bird’s eye view where a company or an individual tries to ascertain specific trends of the market from a macroeconomic perspective.

These factors are major determinants of strategic development and define how conducive an environment is within which a business strives to thrive. Their details are given below:

• Political: It accounts for all the influences that a government may have upon the business environment, including business cycles, the economy at large and individual business industries. Tax reforms, fiscal policies and trade tariffs form part of this analysis.
• Economic: This analyzes the economy as a whole and its performance owing to global trends and long-term effects that may be evident. Inflation rates, interest rates, economic growth, demand and supply trends are all analyzed under this head.
• Social: This charts the analysis of cultural trends, demographical determinants, age distribution etc.
• Technological: This analyses the technological trends of the business environment. It accounts for the rate at which the innovations are occurring and how directly and indirectly they’re influencing the business you’re in.
• Legal: There are many laws and policies that directly impact the way your business is run and the decisions that fuel its propulsion. These laws can be social laws, regulatory laws, certain standards that need to be met and other such laws.
• Environmental: Your business has effects in the environment it operates in, therefore you need to analyze in depth what implications your business might be having on it. On the other hand, the environment also influences your business directly or indirectly especially the tourism, farming or agriculture business . Therefore these factors account for the geographical location, weather, climate etc. but are not just limited to the study of these only.

The components of the SWOT analysis are:

• Strengths: The S in the acronym stands for Strengths. Much to do with the name, it analyses the company’s strengths in line with the product/service and counts the USP (unique selling propositions) that it has. Strengths of a company or a product make it stand out when in comparison with their competitors.
• Weaknesses : The W stands for Weaknesses. It accounts for all the current weaknesses that the company may have or may be facing and how the product features them. It gives the company the view from an external standpoint where they can understand what their areas of lacking and then work upon them to remove them from their internal environment.
• Opportunities : O spells out Opportunities. These opportunities are for the company to gain, master and then derive benefits from. Usually, weaknesses are reflected here with a strategy to encounter them as opportunities where the company can work upon itself or the product/service.
• Threats : Threats, denoted by T take into account the threats that able and potential competitors pose for the company and its products/services. These also analyze the barriers to entry and how potential competition can be tackled effectively.

Both these measures give an in-depth view to the company regarding the environment they’re in or are about to enter and also about the products or the services with which they plan to enter the marketplace.

What is the Difference between SWOT and PESTLE Analysis?

Ah, that’s a fantastic question and a pretty common one too!

Now, even though both SWOT and PESTLE analyses are vital tools for understanding various aspects of a business environment, they do have their unique angles and purposes. Let me break it down for you in a simple and easy way.

Think of SWOT Analysis as looking inward and outward at the same time, but with a focus on the immediate environment of your business or project . Remember, SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It’s like taking a good, hard look at yourself in the mirror, assessing both your killer outfits (strengths and opportunities) and the bits you might want to work on (weaknesses and threats). It helps you understand what you’re good at, where you might be vulnerable, and how external factors like competitors or market trends could affect you.

SWOT analysis is the analysis on the internal environment of the company based on its products etc. SWOT tends to be more product/service specific as an individual or an entity conducts this analysis based on that product/service.

On the other hand, PESTLE Analysis is like using a telescope to scan the horizon far and wide. It stands for Political, Economic, Social, Technological, Legal, and Environmental factors. This tool encourages you to consider broader forces that might impact your business, from global economic trends and legal regulations to social changes and technological advancements.

It’s about the external macro-environment, way beyond your immediate control but crucial to your strategic planning. PESTLE can be rightly called a thorough view on the external environment in which an organization is operating in.

So, in a nutshell, while SWOT analysis is your personal and project-specific reality check, PESTLE analysis zooms out to give you a broader perspective on the external factors at play. Both are super important, but they serve different, complementary purposes. It’s like using both a mirror and a telescope to navigate your business through the choppy waters of the market. Cool, right?

Can SWOT and PESTLE be used together?

Absolutely, and that’s a brilliant approach to take! Combining SWOT and PESTLE analyses is like forming a dynamic duo for strategic planning .

Before I dive into how they complement each other, let’s set the stage with a little analogy.

Imagine you’re planning a road trip (that’s your business strategy). Now, using a SWOT analysis is like checking your car before you hit the road. You’ll look at what’s good about your car (strengths), what needs fixing (weaknesses), the scenic routes you could take (opportunities), and potential roadblocks (threats). It’s all about understanding your vehicle’s readiness and the immediate journey ahead.

Bringing in a PESTLE analysis is akin to researching the regions you’ll be driving through. What’s the political climate? Are there any economic factors, like toll roads or areas of high employment, that might affect your trip? How about social attitudes—places where you’ll be welcomed or maybe not so much? Don’t forget to consider technological advancements that could make your journey smoother, any legal requirements for drivers, and environmental conditions that might dictate the best time of year to travel.

Now, how do these two analyses work hand-in-hand for your business strategy?

• Comprehensive View: By using both SWOT and PESTLE, you’re ensuring no stone is left unturned. You’re looking at internal capabilities and external factors that could influence your success. It’s like being prepared for both the condition of your car and the roads you’ll be traveling on.
• Strategic Alignment: Understanding the external environment (PESTLE) can help you better leverage your internal strengths and opportunities or mitigate weaknesses and threats (SWOT). This alignment ensures your strategy is not just reactive but also proactive.
• Risk Management: With a broader perspective, you can identify potential risks more effectively. PESTLE can highlight external risks you hadn’t considered, while SWOT can help you assess your readiness to tackle those challenges.
• Opportunity Identification: Sometimes, an external change (identified through PESTLE) can uncover a new opportunity for your business. By analyzing your SWOT in light of these changes, you can quickly pivot or adapt to seize those opportunities.

Let me explain better with some examples.

1. SWOT and PESTLE analysis helps you prep & plan effectively

PESTLE analysis and SWOT analysis are tools for preparation and planning. How you can use this information depends on your needs.

For instance, digital marketers need to sell products and services. They’ll benefit when using PESTLE analysis before a new campaign. Since PESTLE is about the six macro-environmental influences affecting businesses, products, and locations, it gives marketers much-needed insight about policies, economics, technologies, and so forth.

It also shows limitations, regulations, and attitudes regarding a product or service. For example, supplements — like vitamins — must abide by strict regulations. Health providers manage what they’re allowed and not allowed to say about supplements, or they’ll face legal ramifications. One wrong word and the whole company could be shut down.

But if a marketer uses PESTLE analysis first, they’ll discover political and legal limitations of supplements. Knowing this allows them to create effective campaigns.

This is the same idea of preparation and planning for SWOT analysis. By understanding a product or services’ strengths, weaknesses, opportunities, and threats, it’s much easier for the marketer to sell it.

Once identified, they can work on or bury weaknesses while bringing strengths to the forefront of consumers’ minds. They can also prep for future opportunities and potential threats.

SWOT analysis and PESTLE analysis apply to students, business analysts, researchers, and just about anyone who just wants more information about a topic.

2. Achieve your goals easier with PESTLE and SWOT analysis

It’s easier to set and meet goals with PESTLE and SWOT analysis. Both help you create sustainable, actionable goals. They’re best used for personal goals, academic goals, and business goals.

Everyone benefits by having a clear direction and accountability for their goals. When creating goals, write them down first. Think about the disadvantages you’ve had(weaknesses). Then brainstorm other means to reach this goal (opportunities). And finally, identify what’s preventing you from reaching this goal (threats).

Once you’re done, read through your SWOT information. Think. Reflect. And create a plan to reach these goals where you can limit weaknesses, capitalize on opportunities, and avoid threats.

PESTLE analysis also helps with goals, but differently. While SWOT analysis helps you look at your goals internally, PESTLE is the opposite; it forces you to focus on the external factors you can’t influence easily.

You should look at how the six influences (policies, economics, society, technologies, laws, and the environment) impact your goals. Are certain policies making it harder to achieve? Are you lacking funding or your paycheck is getting cut? Are how others think about your goals influencing your success?

You’d continue with this line of thinking throughout the rest of the PESTLE analysis. And once you’ve got the information needed, you’d reflect on it and use it to achieve your goals.

3. Make strategic business decisions by using SWOT and PESTLE analysis

When you’ve got these two analyses, making business decisions is easier. You shouldn’t be surprised to find out so many people make professional decisions without an ounce of research. This the surefire way to get yourself in trouble.

PESTLE and SWOT analysis require information. For PESTLE, you’re collecting facts about the six environmental influences — which you can obtain from reports, government websites, and publications you trust.

This information should be factual, not something heard from a friend-of-a-friend.

SWOT analysis is similar, however most times, you’re not using external data. You’ll acquire information internally. It’s still based on research, facts, or information from the people who matter (business partners, managers, and employees).

You should use the findings of both SWOT and PESTLE analysis before making any important decisions. When you’ve completed both, you’ll have the internal and external information needed to make smart, informed choices.

4. Find Risks and crush them with PESTLE analysis and SWOT analysis

No matter what you’re doing — creating a product, a school report, or building a business from scratch — risks aren’t your friend. If you can avoid them, you should.

This is where SWOT and PESTLE come in. These two identify critical information about your topic and the many unavoidable factors influencing it. In doing so, you’ll likely discover risks you hadn’t realized were there.

For instance, let’s say you’re a sales manager and your sales team is having communication issues. Most say they’re meeting the weekly cold calls quota, but you find out that half of the team is pretending to dial rather than actually calling prospects.

Not only is this a risk for the company (sales are dropping faster than you can count), but your team is also dejected. So dejected, most are considering other jobs — some are already signing for new positions!

If you hadn’t followed up with the team, you may not have noticed how risky this behavior is. It’s putting the company in financial distress, employees are on the breaking point, and in a few short months, there might not even be a sales team anymore.

Using SWOT analysis (particularly the “weakness” section) you may have identified that many of the team seem hesitant to discuss cold calling. You could also use the “opportunities” section to brainstorm ways to get the team on the same page about cold calling — find out what makes them not want to do it. And then, in the “threats” part, you’d discuss the consequences of ignoring these problems.

As for PESTLE analysis, you could study how people, in general, feel about cold calling during the “social” section (most people feel intense anxiety about calling strangers). You could also look into the economics surrounding cold calling, and what sort of “environment” is needed for this to be a successful venture.

In doing so, you’d likely run into what isn’t the right environment for a sales team (risks), and how much or little cold calling makes most companies (potential risks).

This is just one example of a specific instance and person. But risks are everywhere — you’ll only know if you’ve done the research for it.

Combining SWOT and PESTLE analysis is not just beneficial; it’s a strategic powerhouse. It ensures that your business strategy is well-rounded, deeply informed, and ready to navigate both the immediate and broader challenges of your marketplace. Like a well-planned road trip, it’s about enjoying the journey as much as reaching your destination. So, why not use every tool at your disposal to make it a success?

How do I link my PESTLE to my SWOT Analysis?

That’s easy! Linking your PESTLE to your SWOT analysis is like adding chocolate chips to your cookie dough – it makes a good thing even better! It’s all about blending the broad, external factors with your internal analysis to whip up a strategy that’s both delicious and robust.

Here’s how you can mix these two perfectly:

• Start with Your PESTLE: Kick things off by looking outside the window with your PESTLE analysis. This is where you take note of all the big, external forces at play – from the latest tech trends that could revolutionize your industry, to new laws that might make your life a bit trickier (or easier!).
• Spot the Links: As you jot down these external factors, start thinking about how they could affect your business. Does a new technological advancement open up a fresh opportunity? Or maybe an economic downturn poses a threat to your customer’s purchasing power? This is where you’re drawing lines between the outer world and your own backyard.
• Draft Your SWOT: With those insights, dive into your SWOT analysis. Now that you’ve got a good grasp of the external environment from your PESTLE, you can more accurately pinpoint your internal Strengths and Weaknesses, and identify Opportunities and Threats coming from the outside. This makes your SWOT analysis supercharged with context and clarity.
• Strategic Mashup: Finally, blend it all together into a strategy smoothie. Use the strengths you’ve identified to take advantage of opportunities and mitigate threats, all while keeping an eye on external factors that could impact your moves. And voilà, you’ve linked your PESTLE and SWOT in a way that guides your strategic decision-making!

Think of it as being a DJ at a party, mixing tracks to keep the vibe just right. You’re blending internal beats with external rhythms to make sure your business party doesn’t stop. And there you have it, a straightforward and fun way to link your PESTLE to your SWOT Analysis. Now, go ahead and turn those insights into action!

What are the similarities between SWOT and PESTLE Analysis?

Oh, talking about similarities between SWOT and PESTLE Analysis is like finding common ground between coffee and tea. At first glance, they seem quite different, but deep down, they share some pretty cozy similarities. Let’s spill the tea (or coffee, if you prefer) on this:

• Big Picture Thinkers: Both SWOT and PESTLE are all about stepping back to get a good look at the bigger picture. They encourage you to move beyond day-to-day tasks and dive deep into understanding the broader landscape. It’s like using Google Earth to zoom out from your house and look at the entire planet.
• Strategic Planning Aces: These analyses are the bread and butter of strategic planning. Whether you’re plotting to take over the world or just looking to grow your business, SWOT and PESTLE are your go-to tools for mapping out your journey. They help identify where you’re going, the obstacles you might face, and the windfalls that could propel you forward.
• External Environment Scouts: Both methods require you to put on your explorer’s hat and investigate the external environment. While PESTLE focuses exclusively on external factors (Political, Economic, Social, Technological, Legal, and Environmental), SWOT also considers external elements when identifying Opportunities and Threats. It’s like being on a safari, keeping an eye out for both the landscapes (PESTLE) and the lions and elephants (Opportunities and Threats in SWOT).
• Decision-Making Dynamo: At their core, both SWOT and PESTLE aim to equip you with insights that improve decision-making. By analyzing your situation through these lenses, you can make more informed choices, reducing the guesswork and increasing the odds of success. They’re like your strategic GPS, guiding you through the decision-making jungle.
• Adaptability Artists: Lastly, both tools are incredibly adaptable. They can be applied to a wide range of scenarios, from individual projects and business units to entire organizations and even personal career planning. It’s like having a Swiss Army knife in your toolkit, ready to tackle just about any challenge.

So, there you have it – SWOT and PESTLE might seem like they’re from different worlds, but they’re actually sipping from the same cup when it comes to strategic analysis. Both tools are indispensable for anyone looking to navigate the complex world of business (or life!) with a bit more clarity and confidence.

Should I do a SWOT or PESTLE first?

Ah, the age-old question of which comes first, the SWOT or the PESTLE? It’s kind of like asking if you should put on your left or right shoe first – both will get you where you need to go, but there’s a bit of strategy to it.

Here’s the friendly scoop: It often makes sense to start with a PESTLE Analysis. Think of PESTLE as laying down the groundwork or setting the stage. It’s all about scanning the horizon and understanding the external environment that your business operates in. By identifying the Political, Economic, Social, Technological, Legal, and Environmental factors first, you’re essentially mapping the terrain.

Once you’ve got a good grasp on the external landscape through your PESTLE Analysis, you can then dive into your SWOT Analysis with a treasure trove of insights. This approach allows you to identify your internal Strengths and Weaknesses, as well as external Opportunities and Threats, with a clear understanding of the broader context. It’s like using the map you created with PESTLE to plot a course that leverages your strengths and addresses your weaknesses while navigating the opportunities and threats identified.

However, it’s not a one-size-fits-all rule. In some cases, you might start with a SWOT Analysis to get a quick snapshot of where you stand, and then use PESTLE to dive deeper into the external factors that could impact your strategy. It’s like sketching a quick self-portrait before painting the detailed landscape behind you.

In essence, while starting with PESTLE often provides a solid foundation for your SWOT Analysis, the best approach depends on your specific situation, goals, and the information you already have at hand. It’s all about using these tools in a way that best suits your journey towards understanding and decision-making. So, lace up your shoes in the order that feels right, and embark on your strategic exploration with confidence!

PESTLE and SWOT analysis give internal and external insight about a topic. This is beneficial for people of all walks of life. Without it, you may never discover your true strengths and weaknesses. Or realize how much the macro-environmental factors of of the PESTEL framework truly influence everything around us. Use these two simple analyses to your advantage whenever you need.

Next-gen B2B sales: How three game changers grabbed the opportunity

Driven by digitalized operating models, B2B sales have seen sweeping changes over the recent period amid rising customer demand for more seamless and transparent services. 1 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023. However, many industrial companies are failing to keep pace with their more commercially focused peers and, as a result, are becoming less competitive in terms of performance and customer services.

The most successful B2B players employ five key tactics to sharpen their sales capabilities: omnichannel sales teams; advanced sales technology and automation; data analytics and hyperpersonalization; tailored strategies on third-party marketplaces; and e-commerce excellence across the full marketing and sales funnel. 2 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023.

Companies using all of these tactics are twice as likely to see more than 10 percent market share growth than companies focusing on just one. 3 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023. However, implementation is not as simple, requiring a strategic vision, a full commitment, and the right capabilities to drive change throughout the organization. Various leading European industrial companies—part of McKinsey’s Industrial Gamechangers on Go-to-Market disruption in Europe—have achieved success by implementing the first three of these five sales tactics.

Omnichannel sales teams

The clearest rationale for accelerating the transition to omnichannel go-to-market is that industry players demand it. In 2017, only about 20 percent of industrial companies said they preferred digital interactions and purchases. 4 Global B2B Pulse Survey, McKinsey, April 30, 2023. Currently, that proportion is around 67 percent. In 2016, B2B companies had an average of five distinct channels; by 2021, that figure had risen to ten (Exhibit 1).

Excelling in omnichannel means enabling customers to move easily between channels without losing context or needing to repeat information. Companies that achieve these service levels report increased customer satisfaction and loyalty, faster growth rates, lower costs, and easier tracking and analysis of customer data. Across most of these metrics, the contrast with analogue approaches is striking. For example, B2B companies that successfully embed omnichannel show EBIT growth of 13.5 percent, compared to the 1.8 percent achieved by less digitally enabled peers. Next to purely digital channels, inside sales and hybrid sales are the most important channels to deliver an omnichannel experience.

Differentiating inside versus hybrid sales

Best-in-class B2B sellers have achieved up to 20 percent revenue gains by redefining go-to-market through inside and hybrid sales. The inside sales model cannot be defined as customer service, nor is it a call center or a sales support role—rather, it is a customer facing, quota bearing, remote sales function. It relies on qualified account managers and leverages data analytics and digital solutions to optimize sales strategy and outreach through a range of channels (Exhibit 2).

The adoption of inside sales is often an advantageous move, especially in terms of productivity. In fact, inside sales reps can typically cover four times the prospects at 50 percent of the cost of a traditional field rep, allowing the team to serve many customers without sacrificing quality of service. 5 McKinsey analysis. Top performing B2B companies are 50 percent more likely to leverage inside sales.

Up to 80 percent of a company’s accounts—often smaller and medium-sized customers, accounting for about half of revenues—can be covered by inside sales teams. 6 Industry expert interviews; McKinsey analysis. The remaining 20 percent often require in-person interactions, triggering the need for hybrid sales. This pertains to highly attractive leads as well.

Hybrid sales is an innovative model combining inside sales with traditional in-person interactions. Some 85 percent of companies expect hybrid sales will be the most common job role within three years. 7 Global B2B Pulse Survey, McKinsey, December 2022. Hybrid is often optimal for bigger accounts, as it is flexible in utilizing a combination of channels, serving customers where they prefer to buy. It is scalable, thanks to the use of remote and online sales, and it is effective because of the multiplier effect of numerous potential interactions. Of companies that grew more than 10 percent in 2022, 57 percent had adopted a hybrid sales model. 8 Global B2B Pulse, April 2023.

How an industrial automation solution player implemented game-changing inside sales

In 2019, amid soaring digital demand, a global leader in industrial digital and automation solutions saw an opportunity to deliver a cutting-edge approach to sales engagement.

As a starting point, the company took time to clearly define the focus and role of the inside sales team, based on product range, customer needs, and touchpoints. For simple products, where limited customer interaction was required, inside sales was the preferred go-to-market model. For more complex products that still did not require many physical touchpoints, the company paired inside sales teams with technical sales people, and the inside sales group supported fields reps. Where product complexity was high and customers preferred many touch points, the inside sales team adopted an orchestration role, bringing technical functions and field sales together (Exhibit 3).

The company laid the foundations in four key areas. First, it took time to sketch out the model, as well as to set targets and ensure the team was on board. As in any change program, there was some early resistance. The antidote was to hire external talent to help shape the program and highlight the benefits. To foster buy-in, the company also spent time creating visualizations. Once the team was up and running, early signs of success created a snowball effect, fostering enthusiasm among both inside sales teams and field reps.

Second, the company adopted a mantra: inside sales should not—and could not—be cost saving from day one. Instead, a significant part of the budget was allocated to build a tech stack and implement the tools to manage client relationships. One of the company’s leaders said, “As inside sales is all about using tech to obtain better outcomes, this was a vital step.”

The third foundational element was talent. The company realized that inside sales is not easy and is not for everyone—so finding the right people was imperative. As a result, it put in place a career development plan and recognized that many inside sales reps would see the job as a stepping stone in their careers. Demonstrating this understanding provided a great source of motivation for employees.

Finally, finding the right mix of incentives was key. The company chose a system based on compensation and KPI leading and lagging indicators. Individual incentives were a function of whether individuals were more involved with closing deals or supporting others, so a mix of KPIs was employed. The result was a more motivated salesforce and productive cooperation across the organization.

Advanced sales technology and automation

Automation is a key area of advanced sales technology, as it is critical to optimizing non-value adding activities that currently account for about two-thirds of sales teams’ time. More than 30 percent of sales tasks and processes are estimated to be partially automatable, from sales planning through lead management, quotation, order management, and post-sales activities. Indeed, automation leaders not only boost revenues and reduce cost to serve—both by as much as 20 percent—but also foster customer and employee satisfaction. (Exhibit 4). Not surprisingly, nine out of ten industrial companies have embarked on go-to-market automation journeys. Still, only a third say the effort has achieved the anticipated impact. 9 McKinsey analysis.

Leading companies have shown that effective automation focuses on four areas:

• Lead management: Advanced analytics helps teams prioritize leads, while AI-powered chatbots contact prospective customers via text or email and schedule follow-up calls at promising times—for example, at the beginning or end of the working day.
• Contract drafting: AI tools automate responses to request for proposal (RFP) inquiries, based on a predefined content set.
• Invoice generation: Companies use robotic process automation to process and generate invoices, as well as update databases.
• Sales commission planning: Machine learning algorithms provide structural support, for example, to optimize sales commission forecasting, leading up to a 50 percent decline in time spent on compensation planning.

How GEA seized the automation opportunity

GEA is one of the world’s most advanced suppliers of processing machinery for food, beverages, and pharmaceuticals. To provide customers with tailored quotes and services, the company launched a dedicated configure, price, quote (CPQ) system. The aim of the system was to enable automated quote creation that would free up frontline sales teams to operate independently from their back office colleagues. This, in turn, would boost customer interaction and take customer care to the next level.

The work began with a bottom-up review of the company’s configuration protocols, ensuring there was sufficient standardization for the new system to operate effectively. GEA also needed to ensure price consistency—especially important during the recent supply chain volatility. For quotations, the right template with the correct conditions and legal terms needed to be created, a change that eventually allowed the company to cut its quotation times by about 50 percent, as well as boost cross-selling activities.

The company combined the tools with a guided selling approach, in which sales teams focused on the customers’ goals. The teams then leveraged the tools to find the most appropriate product and pricing, leading to a quote that could be enhanced with add-ons, such as service agreements or digital offerings. Once the quote was sent and agreed upon, the data automatically would be transferred from customer relationship management to enterprise resource planning to create the order. In this way, duplication was completely eliminated. The company found that the sales teams welcomed the new approach, as it reduced the time to quote (Exhibit 5).

Data analytics and hyperpersonalization

Data are vital enablers of any go-to-market transformation, informing KPIs and decision making across operations and the customer journey. Key application areas include:

• lead acquisition, including identification and prioritization
• share of wallet development, including upselling and cross-selling, assortment optimization, and microsegmentation
• pricing optimization, including market driven and tailored pricing, deal scoring, and contract optimization
• churn prediction and prevention
• sales effectiveness, so that sales rep time allocations (both in-person and virtual) are optimized, while training time is reduced

How Hilti uses machine data to drive sales

Hilti is a globally leading provider of power tools, services, and software to the construction industry. The company wanted to understand its customers better and forge closer relationships with them. Its Nuron battery platform, which harvests usage data from tools to transform the customer experience and create customer-specific insights, provided the solution.

One in three of Hilti’s frontline staff is in daily contact with the company’s customers, offering advice and support to ensure the best and most efficient use of equipment. The company broke new ground with its intelligent battery charging platform. As tool batteries are recharged, they transfer data to the platform and then to the Hilti cloud, where the data are analyzed to produce actionable insights on usage, pricing, add-ons, consumables, and maintenance. The system will be able to analyze at least 58 million data points every day.

Armed with this type of data, Hilti provides customers with advanced services, offering unique insights so that companies can optimize their tool parks, ensuring that the best tools are available and redundant tools are returned. In the meantime, sales teams use the same information to create deep insights—for example, suggesting that companies rent rather than buy tools, change the composition of tool parks, or upgrade.

To achieve its analytics-based approach, Hilti went on a multiyear journey, moving from unstructured analysis to a fully digitized approach. Still, one of the biggest learnings from its experience was that analytics tools are most effective when backed by human interactions on job sites. The last mile, comprising customer behavior, cannot be second guessed (Exhibit 6).

In the background, the company worked hard to put the right foundations in place. That meant cleaning its data (for example, at the start there were 370 different ways of measuring “run time”) and ensuring that measures were standardized. It developed the ability to understand which use cases were most important to customers, realizing that it was better to focus on a few impactful ones and thus create a convincing offering that was simple to use and effective.

A key element of the rollout was to ensure that employees received sufficient training— which often meant weeks of engagement, rather than just a few hours. The work paid off, with account managers now routinely supported by insights that enrich their interactions with customers. Again, optimization was key, ensuring the information they had at their fingertips was truly useful.

Levers for a successful transformation

The three company examples highlighted here illustrate how embracing omnichannel, sales technology, and data analytics create market leading B2B sales operations. However, the success of any initiative will be contingent on managing change. Our experience in working with leading industrial companies shows that the most successful digital sales and analytics transformations are built on three elements:

• Strategy: As a first step, companies develop strategies starting from deep customer insights. With these, they can better understand their customers’ problems and identify what customers truly value. Advanced analytics can support the process, informing insights around factors such as propensity to buy and churn. These can enrich the company’s understanding of how it wants its go-to-market model to evolve.
• Tailored solutions: Customers appreciate offerings tailored to their needs. 10 “ The multiplier effect: How B2B winners grow ,” McKinsey, April 13, 2023. This starts with offerings and services, extends to pricing structures and schemes, and ways of serving and servicing. For example, dynamic pricing engines that model willingness to pay (by segment, type of deal, and route to market) may better meet the exact customer demand, while serving a customer completely remotely might better suit their interaction needs, and not contacting them too frequently might prevent churn more than frequent outreaches. Analytics on data gained across all channels serves to uncover these needs and become hyperpersonalized.
• Single source of truth: Best-in-class data and analytics capabilities leverage a variety of internal and external data types and sources (transaction data, customer data, product data, and external data) and technical approaches. To ensure a consistent output, companies can establish a central data repository as a “single source of truth.” This can facilitate easy access to multiple users and systems, thereby boosting efficiency and collaboration. A central repository also supports easier backup, as well as data management and maintenance. The chances of data errors are reduced and security is tightened.

Many companies think they need perfect data to get started. However, to make productive progress, a use case based approach is needed. That means selecting the most promising use cases and then scaling data across those cases through speedy testing.

And with talent, leading companies start with small but highly skilled analytics teams, rather than amassing talent too early—this can allow them to create an agile culture of continual improvement and cost efficiency.

As shown by the three companies discussed in this article, most successful B2B players employ various strategies to sharpen their sales capabilities, including omnichannel sales teams; advanced sales technology and automation; and data analytics and hyperpersonalization. A strategic vision, a full commitment, and the right capabilities can help B2B companies deploy these strategies successfully.

Paolo Cencioni is a consultant in McKinsey’s Brussels office, where Jacopo Gibertini is also a consultant; David Sprengel is a partner in the Munich office; and Martina Yanni is an associate partner in the Frankfurt office.

The authors wish to thank Christopher Beisecker, Kate Piwonski, Alexander Schult, Lucas Willcke, and the B2B Pulse team for their contributions to this article.

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New to Climate Change?

Scope 1, 2 and 3 emissions.

Scopes 1, 2 and 3 are ways of classifying climate-warming greenhouse gas emissions . When companies and other organizations make plans to control their climate pollution, many start by sorting their activities into these different scopes. And because this system is used so widely, understanding it can help all of us read these climate plans clearly and judge how thorough and ambitious they are.

The three scopes and what they cover

Scope 1 emissions are greenhouse gases a company puts into the atmosphere with its own property. For instance, when a company burns oil or gas to heat its buildings , these heating fuels create greenhouse gases. Those emissions belong in scope 1.   Scope 2 emissions come from electricity the company buys from the electric grid . These are “indirect” emissions that happen at distant power plants. Still, as with scope 1 emissions, the company is clearly and solely responsible for them: if it used less electricity, there would be less demand for coal, gas and other climate-polluting energy sources.   Scope 3 emissions include all other indirect sources of greenhouse gases from the company’s operations. These might be connected with the day-to-day running of the company: for instance, if a company’s employees drive to work, the gasoline they burn falls under scope 3. They might be upstream in the organization’s supply chain, like when a car company buys steel: manufacturing that steel creates some greenhouse gases. Or the emissions might be downstream, like when a car company sells a car, which someone then fills with gas, creating more scope 3 emissions. 

Slippery scope 3

Scope 3 emissions sometimes raise knotty questions about who is “really” responsible. For example, a car can create scope 3 emissions for the driver’s employer, and the company that made the car, and the oil company that extracted the oil to be refined into gasoline. Is this a sort of double (or triple) counting?   Yes, but the point of counting these emissions is to outline the many ways companies can make a difference on climate change. The driver’s employer can lower emissions by making it easier for its employees to walk or take public transit to work. The car manufacturer can lower emissions by making its cars more energy-efficient, or by making electric vehicles instead. Even the oil company could explore alternative fuels that produce less climate pollution when burned. All of them have power to put fewer greenhouse gases in the air.   Another challenge of scope 3 is measurement. Imagine again our car company buying steel. It doesn’t run the steel foundry: how can it be sure how much climate pollution is created for each ton of steel it buys?   There are two main ways companies solve this. One is “environmentally extended input-output analysis,” which sounds complicated but simply means that every type of product and service—steel, paper, waste disposal, air travel —is given an average value for the emissions it creates per dollar spent. In the U.S., the Environmental Protection Agency keeps a set of computer models for just this purpose.   This is helpful when companies plan to deal with scope 3 emissions by buying less stuff, like an office going paperless. But for our car company, it’s not the right approach: the steel is absolutely needed to build the cars. This company would be better served with “process-based lifecycle assessment,” engaging with suppliers all down the supply chain to learn how the steel is made and how much climate pollution is created at each step, calculated for each ton of steel instead of each dollar. This strategy takes much more work and data, but in the end, the company can choose less polluting steel, and even work with its suppliers to improve their processes.

The savvy climate plan reader

Scopes 1, 2 and 3 were invented as part of the “Greenhouse Gas Protocol,” a joint effort by the World Resources Institute and the World Business Council for Sustainable Development to create worldwide standards for measuring greenhouse gas emissions. This project published its first set of corporate standards in 2001, introducing scope 1, 2 and 3 emissions to the world.   Today, many large companies have or are developing targets for reducing their greenhouse gas emissions—often to “ net zero ”—and associated climate mitigation plans. Most of these plans use the Greenhouse Gas Protocol.   Once you know about scope 1, 2 and 3 emissions, these targets and climate plans become easier to read and judge. Almost all plans pledge to cut scope 1 and 2 emissions. Does the plan also lay out what those emissions are today? Is it specific about its targets: how much emissions will be cut, and by what date? Is there a plan for how these cuts will be achieved?   A smaller but growing number of companies also track their scope 3 emissions. If a plan does not mention scope 3, you might ask: how important is that for this kind of business? For companies high upstream in the supply chain, most emissions probably fall in scopes 1 and 2: think of a mining company producing raw iron ore, whose emissions mostly come from its own mining and processing equipment. But for downstream manufacturers like our car company, scope 3 emissions are by far the most important, and a climate plan that ignores them will not be a very serious one.   If a climate plan does mention scope 3, you can also consider how specific it is. Is it mainly concerned with day-to-day operations, like travel and waste? Does it also include the goods and services the company buys? How about the products it sells, and how they are used? And how is it measuring emissions—and will that give it the information it needs to change its practices?

Published March 20, 2024.

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Tasmania trades on its environment, so what are the major parties promising at the state election?

Analysis Tasmania trades on its environment, so what are the major parties promising at the state election?

Tasmania's environment has long been used to entice visitors to the island state, and its beauty and diversity are things all Tasmanians agree on.

It's little wonder environmental issues have, in the past, dominated political discourse in the state.

But in this state election, the big issues of cost of living, housing, and health have been the focus. Not only are they at the forefront of the major parties' campaign strategies, they are at the front of many voters' minds.

So, with little fanfare on Friday, Tasmanian Labor sent out a media release detailing its environment policies — no press conference, just a 370-word statement.

The party says it has an "ambitious and achievable" plan to tackle climate change and manage the state's natural environment — but you could be forgiven for thinking you'd heard some of this plan before.

If elected, Labor says it'll deliver a container refund scheme by the end of the year — legislation supporting this has already passed state parliament, but the scheme is yet to start.

It'll ban single-use plastics, also by the end of the year — currently, a state-wide legislative phase-out of "problematic" single-use plastics is to be in place by 2025.

Labor has also committed to producing Tasmania's first State of the Environment report since 2009.

The government is required to produce the report every five years but the Liberals failed to do so in both 2014 and 2019 . 

However, we know the report is already coming this year — it's due to be released by the end of June.

Labor is promising it will produce the report on time, going forward.

The party will invest $500,000 in a workforce package for Parks and Wildlife, which it says will create new jobs and training opportunities.

It's also committing to implement Tasmania's Climate Change Action Plan.

The plan is an existing government document, released in the middle of 2023 under the Liberals, and it has these main targets:

Net zero emissions, or lower, from 2030 Reduce food waste by 50 per cent by 2030, and reduce the volume of organic waste sent to landfill by 25 per cent by 2025 and 50 per cent by 2030 100 per cent electric government fleet vehicles by 2030 Double Tasmania's renewable electricity production (from 2020 levels) by 2040, with an interim target of 150 per cent by 2030 Maintain the lowest, or among the lowest, regulated prices in the National Electricity Market Become a significant producer of renewable hydrogen by 2030 No loss of fire-sensitive vegetation and other high conservation natural, cultural and historic values in the Tasmanian Wilderness World Heritage Area

And this is what was included in Labor's plan, released on Friday:

At least net zero emissions from 2030 A 50 per cent reduction in food waste and a 50 per cent reduction in organic waste sent to landfill by 2030 100 per cent electric vehicles in the government fleet by 2030 Doubling Tasmania's renewable energy production by 2040 No loss of fire-sensitive vegetation or other high conservation values in the Wilderness World Heritage Area

Seem similar?

Sure does, according to the Greens' environment spokesperson, Vica Bayley.

"While the Liberals' environment policy is non-existent, unfortunately Labor's is mostly a rehash of existing commitments, and is full of gaping holes," Bayley said.

"They won't even take the most basic step of adopting emissions targets for each sector of the economy.

"Labor's attitude to the environment is made pretty clear by the fact they are supporting the Liberals' policy of native forest logging for at least another 16 years.

"Not only that, but their environment policy is mostly made up of measures committed to by the Liberals and already underway."

Liberals 'absolutely committed' to protecting environment

While you can see there's a resemblance between the environment policies of Labor and the Liberals, Labor says: "We have lived through 10 years of a Liberal government that's had no interest in protecting our environment."

"They've kept making commitments but failed again and again to act," it says.

The Liberals hadn't talked about the environment in this election campaign until Saturday, when, much like Labor, they just issued a media release.

They've promised $15 million for upgrades at Mount Field, the Nut State Reserve, and the Dial Range and will also spend $8 million over four years to establish a new Tasmanian Threatened Species Fund.

"The Liberals are absolutely committed to protecting Tasmania's pristine natural environment, and protecting our unique species," Liberal environment spokesperson Roger Jaensch said.

But both major parties tried early to win over one industry that has had a contentious history with environmentalists — forestry.

Labor has promised to launch an independent review into the state's native and plantation forests available for logging.

It will also stop the current plantation sawlog expression of interest process being conducted by Sustainable Timber Tasmania.

Meanwhile, the Greens announced a policy aimed at extending the Tasmanian Wilderness World Heritage Area.

The policy also includes introducing a new national park tenure that provides for Aboriginal ownership and management, and an end to a program that encourages tourism operators to apply to develop attractions and experiences inside national parks.

While other issues have dominated the campaign, the environment could shape up to be a contentious topic in the new parliament.

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What We Know About Trump’s Failure to Arrange a Half-Billion-Dollar Bond

Donald J. Trump’s lawyers told a judge that their client could not come up with the collateral needed to stave off efforts to collect a $454 million judgment. He has three days left.

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By Kate Christobek and Ben Protess

It’s crunchtime for Donald J. Trump.

By Monday, March 25, the former president must secure an appeal bond for roughly half a billion dollars in his civil fraud case in New York, and his ability to do so was called into question this week.

In a court filing, Mr. Trump’s lawyers revealed that he had been unable to secure an appeal bond despite “diligent efforts” that included approaching about 30 bond companies.

While Mr. Trump this month managed to post a $91.6 million bond in his defamation case against the writer E. Jean Carroll, securing the deal at the 11th hour from a large insurance company , he lacks the assets needed to secure the far bigger guarantee for the fraud case.

If he cannot produce the bond in time, Mr. Trump faces the possibility of financial disaster and humiliation. New York’s attorney general, Letitia James, who brought the fraud case, would be entitled to collect the $454 million and could move to freeze some of Mr. Trump’s bank accounts.

She could also seek to seize some of his New York properties, and public records show that Ms. James has formally posted the judgment in Westchester County, a preliminary step needed to stake a claim to Mr. Trump’s private estate and golf club there. Yet any effort to seize property would most likely trigger a lengthy court fight with an uncertain result.

Mr. Trump’s money problems spread well beyond New York. As the presumptive Republican nominee for president, he is facing increased pressure to raise money to fund his campaign, lagging behind his opponent, President Biden, in fund-raising.

In recent days, The New York Times has received many questions about Mr. Trump’s financial woes. Here are answers to several:

What was Trump accused of?

Ms. James took Mr. Trump, his company and his adult sons to trial last fall, accusing them of fraudulently inflating the value of his golf clubs, office buildings and other properties to the tune of about $2 billion.

Mr. Trump exaggerated the property values, and in turn his own net worth, to obtain favorable loan terms from banks and insurers, according to Ms. James.

At the trial, which lasted months, Ms. James’s lawyers showed that Mr. Trump’s company had ignored appraisals and manipulated numbers to sometimes absurd heights.

For example, the former president had valued his triplex apartment in Trump Tower on Fifth Avenue as if it were 30,000 square feet for years. It was actually 10,996 square feet.

Mr. Trump lost the trial. The judge overseeing the case — there was no jury — ruled in favor of Ms. James.

How was he punished?

The judge, Arthur F. Engoron, came down hard on Mr. Trump, imposing a judgment of $355 million plus interest, amounting to $454 million.

The judge also imposed a range of penalties that could curb Mr. Trump’s influence over his family business, barring him from serving as a top executive at a New York company for three years.

What comes next?

Mr. Trump has appealed the judgment.

Although he does not have to pay Ms. James’s office the $454 million while he appeals, he is on the hook to either cut a check to the New York State Court system for the full amount himself, or, more likely, obtain an appeal bond.

What is an appeal bond?

In this case, it would be a document in which a bond company promises to pay the $454 million judgment, plus interest, if Mr. Trump were to lose his appeal and fails to pay.

To obtain a bond of such size, Mr. Trump would need to pledge a significant amount of collateral to the bond company — about $557 million, his lawyers said — including as much cash as possible, as well as any stocks and bonds he could sell quickly.

He would also owe the bond company a fee that could amount to nearly $20 million.

Does he have enough cash to obtain one?

Short answer: No.

A recent New York Times analysis found that Mr. Trump had more than $350 million in cash as well as stocks and bonds, far short of the $557 million he would need to post in collateral.

In a court filing on Monday, Mr. Trump’s lawyers said they had contacted more than 30 bond companies, and none had agreed to do a deal.

But I thought he was a billionaire?

While Mr. Trump has long bragged about his wealth, his true financial position remains something of a mystery. And most of his wealth is tied up in his real estate holdings, which bond companies don’t typically accept as collateral.

He also has less liquid collateral available today than he did even a few weeks ago. Earlier this month, Mr. Trump had to post a $91.6 million bond in the defamation case he lost to E. Jean Carroll. For that, he most likely had to pledge more than $100 million in collateral to Chubb, the insurance company that provided the bond. That money cannot be used as collateral for a second bond.

What is the deadline for the bond?

Mr. Trump asked an appeals court either to pause the fraud judgment while he appeals it, or to accept a lesser bond of $100 million. It is unclear whether the court will rule before Mr. Trump’s deadline to post the bond.

Although Ms. James could have moved to collect the $454 million immediately, she offered a 30-day grace period, which ends on March 25.

Ms. James could still grant additional time for Mr. Trump to pay or show mercy to the former president by offering a counterproposal.

What other options does Trump have?

If the appeals court denies his bid for a pause, and he still can’t find a bond by March 25, he might appeal to the state’s highest court.

Assuming that fails, he could quickly sell one of his properties or other assets, or seek help from a wealthy supporter. He might also try to obtain a loan from a bank, hedge fund or private equity firm, which he could then post as collateral for a bond. And the attorney general has suggested that Mr. Trump could pledge his properties to the court.

And his net worth could soon leap when shares of his social media company start trading on the stock market as early as Monday. His shares are currently valued at roughly $3 billion. Although he is prohibited from selling the shares for six months, Mr. Trump could find ways around that restriction that enable him to use his stake to raise cash for the appeal bond.

If all else fails, he could have the corporate entities implicated in the fraud case file for bankruptcy, which would automatically halt the judgment against those entities. But Mr. Trump is likely to balk at bankruptcy, and even if he were to pursue that path, it is not a panacea.

Ms. James’s judgment would not be halted against Mr. Trump himself, and she would most likely seek to hold him accountable for his company’s debts.

How could the state collect?

If Mr. Trump misses the March 25 deadline, Ms. James could move swiftly to begin collecting the money owed to the state.

It could get ugly for Mr. Trump. She could send so-called restraining notices to Mr. Trump’s banks and brokerage firms, effectively freezing his accounts. She could do the same to anyone who owes Mr. Trump money, essentially collecting rent from tenants in his building.

And if she wanted to take a more aggressive posture, she could even try to seize some of the properties involved in the case, including the golf club and Seven Springs estate in Westchester. She has threatened to take aim at his office tower on Wall Street in Lower Manhattan, but it unclear whether she can, because Mr. Trump does not actually own the building. Instead, he effectively controls the property and pays rent to the owner.

Actually seizing any property through the courts could take significant time without a guarantee of a huge payoff. Mr. Trump could seek delays, and even if Ms. James can force a sale, Mr. Trump’s lenders would be first in line to collect.

Ms. James probably would not be entitled to seize assets unrelated to the case, though that and similar questions might require litigation to resolve.

Although Ms. James can’t put Mr. Trump in jail — because it is a civil case, not a criminal one — Justice Engoron could issue an arrest warrant for Mr. Trump if he repeatedly flouts court orders in the collection process. That, however, is unlikely to happen.

Could Trump use campaign money to pay?

Probably not.

A super PAC supporting Mr. Trump’s candidacy can raise unlimited amounts of money, but it is legally banned from coordinating with him and cannot pay the judgment.

And although the former president has used a political action committee under his control to pay for lawyers and witnesses in his legal cases, that group lacks the kind of money needed to address the $454 million penalty.

He is now scrambling to raise campaign cash as he faces a significant financial deficit. Mr. Biden’s campaign recently announced that it had entered March with $155 million cash on hand. Mr. Trump’s campaign and the Republican National Committee had about $40 million total on hand at the end of January, though the Trump campaign has not released a more recent total.

What else is happening on March 25?

Mr. Trump also has a crucial hearing in his Manhattan criminal case, which could be the first prosecution of a former American president.

The Manhattan district attorney, Alvin Bragg, filed charges against Mr. Trump that accuse him of covering up a sex scandal involving a porn star to bolster his 2016 presidential campaign. The case is now proceeding to trial.

Jury selection was originally scheduled to start on March 25, but the trial was delayed late last week after the disclosure of more than 100,000 pages of records that had been in the possession of the federal prosecutors.

While the documents have now been turned over, Mr. Trump’s lawyers were given until mid-April to review the papers.

Justice Juan M. Merchan set the March 25 hearing to determine if the trial should be delayed further and to rule on Mr. Trump’s motion for an outright dismissal.

The Manhattan case is among four criminal prosecutions Mr. Trump faces.

Ben Protess is an investigative reporter at The Times, writing about public corruption. He has been covering the various criminal investigations into former President Trump and his allies. More about Ben Protess

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In 2015, Jeff Bezos predicted that delivery drones would ultimately become as common as mail trucks. That hasn’t happened yet, but there are still plenty of companies investing in this futuristic delivery method. For example, in August 2023, Walmart announced it would add two more supercenters to its network of drone delivery hubs to offer 30-minute delivery to an additional 60,000 households in the Dallas-Fort Worth area. 

What is drone delivery?

Drone delivery involves using flying drones as a means of delivering packages from retailers to customers, much like traditional mail trucks or courier services. Drones are small or medium-sized unmanned aerial vehicles that can drive remotely and autonomously, and maintain a consistent level of flight.

Benefits of drone delivery 

Faster delivery .

Drone delivery offers the potential for significantly faster delivery times compared with traditional ground or air methods. For retailers, that could help meet the growing consumer demand for faster order fulfillment, which has become a key expectation of customers in the digital age.

Drones can operate autonomously and are not subject to traffic congestion or other logistical challenges that traditional delivery vehicles may face. This can lead to more efficient delivery routes, reducing the time it takes to deliver packages.

Cost savings

While there may be initial investments in drone technology, over time, retailers can potentially save on costs by reducing the need for human delivery drivers and associated labor costs. Drones can operate around the clock without the need for breaks.

Reduced environmental impact

Drone delivery can be more environmentally friendly compared with traditional delivery methods that rely on fossil fuels. Electric drones produce fewer emissions, making them a greener option for last-mile deliveries.

Increased accessibility

Drones can reach remote or hard-to-access locations, including rural areas or areas with challenging terrain, where traditional delivery vehicles may struggle to deliver products efficiently.

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Improved customer experience

Faster and more efficient deliveries make for a better customer experience . Retailers can meet customer expectations for quick and reliable service, potentially retaining their loyalty and encouraging them to make future purchases.

Brand differentiation

Retailers adopting drone delivery can separate themselves from the competition and demonstrate to customers and prospects that they are innovative and forward-thinking brands.

Versatility 

Drones can adapt to various delivery scenarios, whether they’re delivering common products like food or more urgent ones like medical supplies. This makes them suitable for a wide range of industries beyond retail.

Uses for drone delivery services

Last-mile delivery .

Drones can transport packages from a local distribution center or retailer directly to a customer’s doorstep. In the case of last-mile deliveries , drones are typically used for delivering small or medium-sized parcels and can cover relatively short distances.

Fulfillment 

Drones can be deployed within large fulfillment centers or warehouses to assist with tasks such as picking and packing items for customer orders. They can operate autonomously to increase the efficiency of order fulfillment.

Food delivery

Some retailers and food delivery services have explored the use of drones to deliver prepared meals and groceries. These drones are equipped with specialized compartments to keep food items secure during transport.

Hard-to-reach locations

Drones offer access to hard-to-reach locations like remote, rural, or disaster-stricken areas that are typically inaccessible through conventional methods. This is especially important as drone delivery can offer underserved regions better access to healthcare. 

Drone delivery company Zipline has partnered with OhioHealth to deliver medications and lab products via drones. Zipline’s drone delivery platform will afford OhioHealth the opportunity to deliver prescriptions directly to patients’ homes and move medical supplies between the not-for-profit health system’s facilities.

Urgent delivery 

Drones equipped with medical supplies, defibrillators, or other emergency equipment can be used for rapid response in emergency situations. Delivery personnel can quickly reach accident scenes or locations where immediate assistance is needed.

Contactless delivery

In situations where contactless delivery is important, such as during health crises, drones can drop off packages without any physical interaction between the delivery personnel and the recipient.

Examples of retailers using drone delivery

Amazon drone delivery.

Amazon announced its plan to launch Prime Air drone deliveries in Lockeford, California last year, investing over $2 billion in the effort. Despite Amazon’s big ambitions to drive its drone delivery initiative forward within four to five years, this endeavor has been slowed down due to delays in receiving regulatory approval by the Federal Aviation Administration (FAA) and local officials, as well as the loss of two high-profile executives.

Walmart drone delivery

Amazon’s drone delivery setbacks created an opening for Walmart to swoop in and take the lead in this space. Walmart has expanded its network to offer drone deliveries in seven states from 36 stores, and has completed over 10,000 deliveries since launching its program in 2021. 

Walmart customers in the Dallas-Fort Worth region will soon have the option for drone delivery of groceries, over-the-counter medications, and various household essentials, thanks to a newly formed alliance with Alphabet-owned Wing , a drone delivery company, per a joint statement.

How much does drone delivery cost?

A drone delivering a single package is estimated to have a direct operating cost of approximately $13.50, per a McKinsey report , which actually costs more compared with electric cars and vans doing the same single delivery.

What are the disadvantages of drone delivery?

Delivery people could lose their jobs to automation, and those who maintained their jobs would be severely limited in their career prospects within their companies.

Privacy concerns

As drones would likely use GPS and cameras to find homes and deliver packages, this may raise privacy and security concerns among consumers. 

High initial costs

Acquiring and maintaining drones can be expensive for retail businesses. Initial costs include the purchase of the drone, necessary accessories and training, as well as ongoing expenses such as repairs, upgrades, and insurance.

Public acceptance

Not all members of the public are comfortable with the presence of drones in their neighborhoods or skies. Public perception and acceptance of drones can vary, leading to mixed reactions and potential resistance to drone-related initiatives.

Limited autonomy

While autonomous drone technology is advancing, many drones still require human operators for tasks like takeoff, landing, and decision-making in complex situations. Fully autonomous operations remain a challenge.

Security risks

Drones can be susceptible to hacking or hijacking, posing security risks. Malicious actors could potentially take control of drones for unauthorized purposes, such as surveillance, espionage, or other criminal activities.

Regulatory issues

Drone takeoffs and landings require meticulous scrutiny by the FAA and local officials. The complexities of the regulatory environment makes it challenging for drone delivery networks to expand, and there are questions about whether the return is worth the initial investment and the hurdles retailers are required to jump through.

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