Business environment
Dynamic: ever changing in nature
Forces that affect organisation’s ability to develop and maintain successful transactions with its customers
Can be sub-divided into micro-environment and macro-environment
The Micro-Environment
The Macro-Environment
(external factors that affect an organisation’s performance, many of which are beyond the control of the business)
The market structure that the organisation competes in
Has direct impact on the company’s strategy
Factors which the organisation has some control over
Elements
Customers
(Companies survive by meeting customer’s needs and wants.)
Suppliers
(Good relationships with suppliers helps combat rises in prices.)
Employees
(Lifeblood of the business)
Shareholders
(They own the company.)
Media
(Can affect the business performance through positive/negative attention.)
Competitors
(Close observation allows to differentiate.)
PESTLE
aims of doing the PESTLE analysis
used to examine the current and future state of the industry an organisation belongs to
tool used to analyse and identify the key macro-environmental (external) factors that may affect an organisation
the PESTLE process
Step 1. Gathering information about factors
Step 2. Identifying which PESTLE factors represent opportunities/threats
identify which may change in the future
exploit the opportunities/defend against the threats better than competitors
find out the current external factors affecting the organisation
SWOT
Strategic planning tool
Internal: strengths and weaknesses
Strenghts
Weaknesses
Opportunities
Threats
External: opportunities and threats
Specifying the objective of the business venture/ project to identify the internal and external factors favourable/ unfavourable to achieving that objective
Political
Economic
Social
Technological
Legal
Environmental