External Environment

Analysis
Group 1

Overview

The Business Environment

Source: Johnson et al, 2008

Overview

Usage

Case Analysis

Summary

Financial Sum

Overview-II
External Environment Analysis
Environmental analysis is a strategic tool. It is a process to identify all the external elements,
which can affect the organizations performance.
Objectives
Understand the reasons behind growth or decline in the market
Identify new directions for the business as a whole
Respond to the current and anticipated future legislations
Identify untapped markets and avoid costly mistakes
Tools
PESTEL Analysis conducted to identify opportunities and threats

Overview

Usage

Case Analysis

Summary

Financial Sum

Usage
Political Factors
The political factors take the countrys current political situation. It also reads the global political conditions effect
on the country and business. E.g: Government policies, taxes laws and tariff, Stability of government, Entry mode
regulations

Economic Factors
Economic factors involve all the determinants of the economy and its state. E.g. inflation rate, interest rate,
disposable income of buyers, credit accessibility, unemployment rates, monetary or fiscal policies, foreign
exchange rate

Social Factors
Every country has a distinctive mindset. These attitudes have an impact on the businesses. E.g. cultural
implications, gender and connected demographics, social lifestyles, domestic structures, educational levels
,distribution of Wealth

Technological Factors
Technological factors will help you know how the consumers react to various trends. E.g. new discoveries, rate of
technological obsolescence, technological advances, innovative technological platforms

Legal Factors
Businesses should analyze the legal developments in respective environments. E.g. product regulations
employment regulations, competitive regulations, patent infringements, health and safety regulations

Environmental Factors
E.g. geographical location, climate and weather, waste disposal laws, energy consumption regulation, peoples
Overview
Usage
Case Analysis
Summary
attitude towards
the environment

Financial Sum

Newfoundland Centre of Arts - External Analysis

Political:
Complex
government
policies for
grant funding

Economic:
Financial
decline of 2002
led to budget
cuts of
corporate
organizations
donating to the
arts

Overview

Social:
Rising interest
of indigenous
arts in
Newfoundland

Usage

Environmental
:
Technological: Geographical
New
location of St.
technological
Johns
trends making
Newfoundland
current theatre offers a small
space obsolete- community feel:
refurbishment
people
required
passionate
about Union
Hall

Case Analysis

Legal:
Health and
safety
regulations to
consider when
offering
concession
stands

Summary

Financial Sum

Summary
PESTEL is only one tool of many that can be used to conduct an external analysis
Other variants include STEEPLE, DEEPLIST etc(Social, Technological, Economic, Environmental,
Political, Legal and Ethical, Demographic Factors)
External analysis is a MACRO analysis to see the larger picture
Critical to do to avoid becoming myopic

Overview

Usage

Case Analysis

Summary

Financial Sum