Business environment critical analysis internal external

External Business Environment
Internal Business Environment


External Biz Environment
Analysis
 Socialcultural environment factors
 Economic environment factors
 Political/Legal environment factors
 Technology environment factors
 Global environmental factors
By studying the external business environment, firms
identify what they might choose to do.

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Socialcultural environment factors
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Population growth
Work/Career attitudes

Education
Income equality
Age group
People Mobility
Lifestyle/fashion
Entrepreneur spirit
Health
Feeling of safety/comfort
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Economic environment factors
 Economic growth
 Interest rates & monetary
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policies
Government spending
Unemployment policy
Taxation
Exchange rates
Inflation rates
Stage of the economic
cycle

Consumer confidence

4


Political/Legal environment factors
 Government organization /
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attitude
Enterprise law
Political Stability
Competition regulation
Contract enforcement law
Consumer protection
International trade
regulations
Employment laws
Safety regulations
Tax Policies

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Technology environment factors
 Government research
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spending
New inventions and
product development
Rate of technology
transfer
Energy use and costs
Usage of IT (eg. Internet)
Usage of mobile
technology
Rate of tech obsolescence

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Global Forces
 WTO
 AFTA
 Global economics and finance
 Global resources

 Global supply chain
 Climate change
 Armed conflict
 Natural disasters

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Porter 5 forces
 Threat of new entrants
 Power of suppliers
 Power of buyers
 Product substitutes
 Intensity of competitive rivalry

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Emerging Asia –Latest update

Discussion research on
Emerging Asia
by ANZ Bank

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Emerging Asia –Latest update
 China is overheating, Q1 GDP growth surge to

11.9% (y/y) and inflation pressures continue to
mount. The authorities have launched a series of
measures to curb property speculation but action
is clearly needed on the interest rate and
exchange rate fronts.

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Emerging Asia –Latest update

 Elsewhere in Asia the picture is mixed but

broadly positive. Domestic demand looks
generally strong, intra-regional trade
continues to drive exports (with some help
from global demand for electronics) and
inflation remains benign in most
economies.
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Opportunities and Threats
O&T’s posed by:
 Socialcultural trends
 Economic trends
 Political/Legal trends
 Technology trends
 Global trends

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Managing External Environment Risk
Col 1
External Environment
Risk type

Col 2
Probalility of risk
occurrence

Col 3
Adverse impact of
occurrence

Col 4
Estimated Risk
Score

(1 to 5)

(1 to 5)

(1 to 5)

(col2 x col 3)

Col 5
Risk mitigation Actions

Social
Economic
Political/legal
Technology
Global
TOTAL SCORE

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Risk Management in Your Company
 Prepare Risk Management Matrix (for external

business environment)
 Group Work

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Internal Biz Environment Analysis
 Resources
 Capabilities
 Core Competencies

By studying the internal environment, firms identify
what they can do
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Capabilities

Capabilities

The foundation of many capabilities lies
in:
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The unique skills and knowledge of a
firm’s employees
The functional expertise of those
employees

Capabilities are often developed in specific functional
areas or as part of a functional area.

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Functional Areas
Distribution
Human resources
Management
information systems
Marketing

Management
Manufacturing

Research &
development

Capabilities
Effective use of logistics management techniques
Motivating, empowering, and retaining employees
Effective and efficient control of inventories through
point-of-purchase data collection methods
Effective promotion of brand-name products
Effective customer service
Innovative merchandising
Ability to envision the future of products
Effective organizational structure
Design and production skills yielding reliable products
Product and design quality
Miniaturization of components and products
Innovative technology
Developing sophisticated technology control solutions
Rapid transformation of technology into new products and
processes
Digital technology
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Managing Internal Environment Risk
Col 1
Internal Environment
Risk type

Col 2
Probalility of risk
occurrence

Col 3
Adverse impact of
occurrence

Col 4
Estimated Risk
Score

(1 to 5)

(1 to 5)

(1 to 5)

(col2 x col 3)

Col 5
Risk mitigation Actions

Customer
Business process
Financial capacity
Learning & Development
Special cases
TOTAL SCORE

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Total Business Environment Analysis
 Provides a combined score for external and internal
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business environment analysis.
Guides the planning process and strategic thinking;
Points the way forward where improvements should
be made
Prioritize the risks
Take action immediately to mitigate the risk
Guides the budget preparation for risk management

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Risk Management in Your Company
 Prepare Risk Management Matrix (for both external

and internal business environment)
 Group Work

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THANK YOU

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