ANALYSIS OF REAL-WORLD
ISSUES
BA40101E
Week 4: Business Environment and Economic Crisis II
SEMINAR OUTLINE
vSeminar Teaching
vAn overview of the global environment
vPESTLE Analysis continue
vBusiness Performance and SWOT analysis- Another business analysis tool
AN OVERVIEW OF THE GLOBAL ENVIRONMENT
ØThe dimensions of the business environment stem largely from the characteristics
which go to make up societies:
ØEvery society has a cultural heritage, a social makeup, distinctive economic
activities, political arrangements, one or more legal frame-works and technological
capacities.
ØThese dimensions do not stop at national borders.
ØFor each dimension, there is an array of interactions ranging from the local
community to national and international influences.
ØIn fact these interactions have multiplied with deepening globalization.
AN OVERVIEW OF THE GLOBAL ENVIRONMENT
Society
(Five
Distinct
Categories)
Cultural
heritage,
Social
makeup,
Distinctive
economic
activities, Political
arrangements,
one or more
legal frameworks
Technological
capacities
Business Environment- stems from society outplay
We can understand these dimensions through the PESTLE Analysis
MULTI DIMENSIONS AND THE PESTLE
ANALYSIS
ØA common tool of analysis of the business environment is the PESTLE analysis.
Ø The PESTLE analysis provides a tool for analysing six key dimensions of the
environment.
ØPESTLE analysis of a national environment which stands
ØPolitical,
ØEconomic,
ØSocio-cultural,
ØTechnological,
ØLegal and
ØEnvironmental dimensions
MULTI DIMENSIONS AND THE PESTLE
ANALYSIS
P-POLITICAL
ØPolitical stability
ØForm of government, e.g. democratic,
authoritarian
ØLevel of freedoms, e.g. freedom of expression
and association
ØIncentives to foreign investors
ØLevel of transparency in political decision
making
ØLevel of corruption in business and political ties
MULTI DIMENSIONS AND THE PESTLE
ANALYSIS
E-ECONOMIC
Ø Level of economic development
Ø Trends in GDP
Ø Rate of inflation
Ø Wage levels and level of unemployment
Ø Strength of currency and convertibility
Ø Rates of taxation
Economic Indicators⇥ Business Performance
MULTI DIMENSIONS AND THE PESTLE
ANALYSIS
Socio-cultural
Socio-cultural– This dimension looks at the values, attitudes and identities of the groups that
make up a society, including minority groups.
Ø Social cohesion is an aspect of the environment that concerns businesses, especially in
any context of possible social tension.
Ø The education system of the country, from primary education to university level, is an
indicator of the country’s commitment to the individual betterment of all its inhabitants.
Ø There is the spread of western consumer lifestyles associated with economic
development are a global phenomenon, national cultures remain a potent force.
What aspect of Socio-cultural identity can impact Business Operations?
MULTI DIMENSIONS AND THE PESTLE
ANALYSIS
Technological Outlook (T)
Technological –
The depth of a country’s scientific education and training, as well as the extent of
government funding for R&D, are indicators of the country’s technological environment.
Ø It is important for businesses that new products and inventions which are the creative
outputs of their researchers are protected in law.
Ø These are assets that can be protected by laws relating to intellectual property (IP). They
include patents for the firm’s inventions; copyright for written works, music, film and
software; and trademarks, such as company logos.
Ø As countries climb the technological ladder, the protection and enforcement of IP rights
are demanded by businesses.
To what extent does the country encourage the use of applied scientific knowledge for
practical purposes?
MULTI DIMENSIONS AND THE PESTLE
ANALYSIS
LEGAL (L)
Legal – This area covers how laws are made and how they are enforced in practice. In any
country, businesses look for clarity and predictability in the laws which pertain to them, with fair,
impartial implementation and enforcement.
Ø These characteristics indicate the existence of the rule of law in a country.
Ø Where a country is fragmented, with differing law-making authorities in separate regions,
instability can result, making it more difficult to do business in the country, especially for
foreign firms unfamiliar with the differing authorities.
Ø Cross-border legal actions, involving both national and international law, have become
more significant for companies in the era of deepening international ties.
MULTI DIMENSIONS AND THE PESTLE
ANALYSIS
ENVIRONMENT (E)
Environmental– This dimension focuses on sustainability and environmental protection.
Ø Environmental degradation in today’s world has been caused largely by human activity,
especially through industrialization, urbanization and modern large-scale agriculture.
Ø Businesses are gaining greater knowledge and awareness of the environmental impacts of
their operations in differing locations, as well as their impacts on global phenomena such as
climate change.
Ø Resource scarcity and climate change are increasingly becoming imperatives for corporate
strategists to take into account.
Countries are implementing ESG (Environment, Social and Governance) frameworks across
different industries.
DISCUSSION
• Using the Covid-19 episode which aspect of the “PESTLE” analysis was more
responsible for the negative impacts on Business Performance?
• POLITICAL CHANGES?
• ECONOMICAL CHANGES?
• SOCIAL CHANGES
• TECHNOLOGICAL CHANGES?
• LEGAL CHANGES?
• ENVIRONMENTAL CHANGES?
SWOT ANALYSIS AND THE BUSINESS
ENVIRONMENT
• ANOTHER BUSINESS TOOL TO UNDERSTAND THE BUSINESS ENVIRONMENT
• PESTLE ANALYSIS
• SWOT ANALYSIS
MAIN DISCUSSIONS
• What is SWOT analysis?
• Basic Elements of The SWOTAnalysis
2
WHAT IS SWOTANALYSIS
qA technique that enables organisations or individual
to move from everyday problems and traditional
strategies to a fresh prospective.
qSWOT analysis looks at your strengths and
weaknesses, and the opportunities and threats your
business faces. SWOT can help your company face
its greatest challenges and find its most promising
new markets.
3
q The SWOTAnalysis framework is a very important
and useful tool to use in marketing Management
and other business applications
q A clear understanding of SWOT is required for
business majors.
4
BASIC ELEMENTS OFTHE SWOT
ANALYSIS
5
STRENGTHS (INTERNAL, POSITIVE FACTORS)
• * Characteristics of the business or individual that give it an advantage over others in the
industry.
• * Positive tangible and intangible attributes, internal to an organization or individual.
• * Beneficial aspects of the organization or the capabilities of an organization, process
capabilities, financial resources, products and services, customer goodwill and brand loyalty.
6
WEAKNESSES(INTERNAL,NEGATIVE
FACTORS)
• Characteristics that place the firm or individual at a disadvantage relative to others.
• * Detract the organization from its ability to attain the core goal
and influence its growth.
• * Weaknesses are the factors which do not meet the standards we feel they should meet.
However, weaknesses are controllable. They must be minimized and eliminated.
• Examples – Limited financial resources, Very narrow product line, Limited
distribution, Higher costs, Weak market image, Poor marketing skills, Limited
management skills, Under-trained employees.
7
OPPORTUNITIES
• Are external attractive factors that represent reasons your business is likely to prosper.
• * Chancesto make greater profits in the environment – External attractive
factors that represent the reason for an organization to exist & develop.
• * Arise when an organization can take benefit of conditions in its environment to plan and execute strategies
that enable it to become more profitable.
• * Organization should be careful and recognize the opportunities and grasp them whenever they arise..
• Examples- Rapid market growth, Rival firms are complacent, Changing
customer needs/tastes, New usesfor product discovered, Economic boom,
Government deregulation, Salesdecline for a substitute product .
8
THREATS (EXTERNAL, NEGATIVE
FACTORS)
• * External elements in the environment that could cause
trouble for the business – External factors, beyond a!norganization’scontrol.
• * Arise when conditions in external environment jeopardize
the reliability and profitability of the organization’s business.
• Examples – Entry of foreign competitors, Introduction of new
substitute products, Product life cycle in decline, Changing
customer needs/tastes, Rival firms adopt new strategies,
Increased government regulation, Economic downturn.
9
SEMINAR DISCUSSION
• NEXT WEEK
ASSESSMENT 1 BRIEF
• CONTINUATION OF THE BUSINESS ENVIRONMENT
QUESTIONS, HOUSEKEEPING AND LOGISTICS
SEE YOU NEXT WEEK!
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