Seminar 3: Introduction to the Business Environment

Stage 2 Session 1

Principles of Business

2

Overview

• Review of lecture 2• Environmental scanning – why?• SWOT analysis• PESTEL analysis• LoNGPEST analysis• Scenario Planning• When it all goes wrong ….

3

Learning outcomesof this Seminar

• To be able to carry out a SWOT analysis of a live case

• To be able to use a SWOT and PESTLE analysis in an approach to strategic decision making

Why do organisations scan their environments?

• To be able to compete effectively• To be able to make better informed decisions• To understand where to strengthen the business• To be aware of the dynamic and changing nature of the environment they work in • To inform their overall long term and strategic planning approach• To highlight potential threats and opportunities within a timescale that enables

effective action to be taken

• Sometimes they get it wrong, as we see in the cases of Kodak, Nokia and others

SWOT analysis

• Stands for:

• Can be used to analyse a business, or a business unit, or a product or service• You can even do a SWOT analysis on yourself!• A well constructed SWOT analysis can provide some clear insights into the business

and inform what areas need to be strengthened either to mitigate against potential threats or take advantage of potential opportunities

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

USUALLY INTERNAL ISSUES USUALLY EXTERNAL ISSUES

Case study 1

Carrying out a SWOT analysisSTRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

What are your strengths?What do you do better than others?

What unique capabilities and resources do you possess?

What do others perceive as your strengths?

What are your weaknesses?What do your competitors do better

than you?What could you improve given the

current situation?What do others perceive as your

weaknesses?

What trends or conditions may positively impact you?

What opportunities are available to you?

What trends or conditions may negatively impact you?

What are your competitors doing that may impact you?

Do you have solid financial support?What impact do your weaknesses

have on your threats?

INTE

RNAL

EX

TERN

AL

Review

• So – what did you find out?

Case study two

• Group 1 – carry out a SWOT analysis on Foyles Bookshops• Group 2 – carry out a PESTLE analysis on the British Bookselling Industry

The PESTEL analysis

POLITICAL ECONOMIC

TECHNOLOGICAL ENVIRONMENTAL

SOCIO –CULTURAL

LEGAL

Local or national governmental issues Alliances and agreements between countries Changes in government and approaches to businessChanges in regulation Changes in employment law

Spending

Economic growth

Exchange rates

Employment statistics

Taxation changes

Health conscious societyAge demographicsLifestyle changesFashion changesMulti-culturalism Religious changes

Information and Communications technologyNew MachineryChanges in energy Social networks

Green issues Corporate Social responsibilityAttitudes towards charity Attitudes towards waste

New laws, repeals of old lawsRegulation againLicensingDriving lawsTendency to be more litigious

Another way of looking at it Political Economi

cSocio-cultural

Technological

Local Local authorities and associations

Local economy

Local community affairs

Difficult to segregate but rise in new communicationsTechnology, social networks etc

National National government and employer bodies

Central monetary and fiscal policiesStock market

Demographic change, immigration, culture

Global Alliances and agreements or disagreements

Trading blocsWorld money markets

Global demo-graphics, cross cultural issues, religious issues

To conclude

• Two groups

• You are the Board of Foyles – based on the information you now have from the two pieces of environmental scanning, what decisions do you think you now need to make about the strategic direction of the business?

Bringing it all together

• We have now looked in detail at two key methods of scanning the environment that business use extensively

• You have either completed two SWOT analyses or one SWOT and one STEEP analysis. You have also seen how these tools can be used to scan the internal and external environment of a business

• End of Seminar