Lesson 6

• Environmental Analysis

  A strategic tool that helps determine the external and internal factors affecting the performance of the business
• The environmental analysis is considered the heart of the business plan.
• Components of Environmental Analysis

  • Global Analysis
  • Industrial Analysis
  • Societal Analysis
• Global Analysis


  • The most significant bearing on the global analysis is the possible business opportunities or ideas that the global business trend offers
  • Global trend acts as an indicator of any favorable sign for a business idea
• Elements of Societal Analysis

  • Economic Forces
  • Political Forces
  • Socioeconomic Forces
  • Technological Forces
  • Ecological Forces
  • Legal Forces
  • Social Forces
• Social Forces


  Elements in society resulting from human interactions that can influence the thoughts, behavior, attitude, actions, and even the beliefs and customs of the people
• Social Forces


  • Values
  • Traditions
  • Literacy level
  • Consumer psychology
  • Time orientation
  • Lifestyle patterns
  • Professional career roles
• Political Forces


  The various elements usually comprising of the political parties, political systems, and other related political groups that substantially influence the political stability of a country
• Political Forces

  • Trade Regulations
  • Taxation
  • Government Stability
  • Unemployment
  • Workers' Benefits
  • Election Practices
• Economic Forces


  Factors which are primarily caused by changes or movements in the Philippine economy that have direct or indirect effects on the entrepreneurial venture
• Economic Forces

  • Interest rates
  • Inflation rates
  • Fiscal Policies
  • Income
  • Exchange rates
  • Employment
  • Consumer Confidence
• Technological Forces


  Trends and developments in computer and information technology that have impact on business
• Technological Forces


  • Internet
  • Social Media
  • E-commerce
  • Technological Infrastructure
  • Technological Advancement
• Legal Forces


  The elements and bodies that are directly involved in the legislation and interpretation of laws and ordinances directly affecting the business
• Legal Forces

  • Product control, pricing, and labeling
  • Health and safety of the workers
  • Administration of Election processes
  • Exercise of profession
  • Advertising and promotion
  • Education administration and fees
• Industry Analysis


  • Conducting a critical evaluation of the forces in the industry that affects the proposed business
  • Evaluating the probable position of the business in the industry
  • Determining the most appropriate strategy that may be adopted by the proposed business
• Industry Environment


  The external environment layer where the trends and changes are easily and immediately felt by the business
• Industry Forces

  • Government
  • Suppliers
  • Customers
  • Competitors
  • Employees
  • Creditors
• Government


  The system or institution that handles the affairs of a particular country
• Suppliers


  Individual persons or companies that provide the required materials, parts, or services to the business
• Customers


  The buyers of goods or services produced or rendered by the business
• Competitors


  The forces existing in the industry environment that produce, sell, or render products or services which are similar to those of the business
• Employees


  The workers of the business who are highly responsible for the production of goods or delivery of services to the consumers
• Creditors


  Banks, financial institutions, and financial intermediaries engaged in the lending of money to the borrower usually for a fee or charge in the form of interest
• Conducting a critical evaluation


  • Demand and supply analysis (also called the consumer and competitor analysis)
  • It is the backbone or the foundation of all other analyses
  • It is the most delicate, tedious, and difficult task in industry analysis
• Evaluating the business decision


  • It deals with market share and growth
  • Perceptual map/Positioning map help the entrepreneurs understand their position against their competitors in the market
  • It shows how the consumers respond to their products and services
• Determining the most appropriate business strategy


  • The strategy is highly influenced by the analysis of the business strengths, weaknesses, opportunities, and threats
  • The reason for the selection of the strategy must be clearly indicated
  • It is the last important task in the industry analysis