Environment Analysis: Definition, Analysis Techniques, Factors, Benefits and MORE

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In the area of ​​marketing and even in business, you have to manage and know everything that a Surrounding analysis.

This is essential to know the variables in the environment, know what it is, how it influences, what are its techniques, its factors and everything related.

Would you like to know more information? Keep reading!

What is the Environment Analysis?

Environment Analysis It can be defined as a process in which they manage to identify the opportunities, threats, strengths and weaknesses that intervene in the operation of the organization, in the fulfillment of the goals and objectives.

Its main function is, as its name indicates, to analyze and understand the internal and external contexts that influence the development of the organization.

For this, various types of description are used, the qualitative and quantitative of the scenarios, existing or assumed, and the description that impacts in relation to their performance both economically, as well as politically, market and social.

In this line, the Surrounding analysis It is characterized by being an organized effort directed at the knowledge of the environment and its impact on the operation of the company, in order to improve organizational performance in all its areas.

Analysis Techniques

To run a Surrounding analysis Different types of techniques or instruments can be used, depending on the general, competitive or specific environment. However, any of them will serve to detect opportunities and threats to the company.

General environment analysis techniques

This type of analysis can be done through the use of PEST Analysis (known as PESTEL Analysis).

Competitive environment analysis techniques

On this, it is known that it can be done through the use of Competitive Forces Analysis.

Joint environment analysis techniques

In this type of techniques, a joint analysis of the environment is made based on the Strategic Profile and the Scenario Method.

With the first, the organization can identify its opportunities and threats by assigning them a numerical value based on the degree of importance that each one has. For its part, with the second case, the company outlines different future scenarios to anticipate strategies.

How is the Environment Analysis Performed?

Basically, the most important thing is to seek strategic planning that helps define initiatives, goals and objectives to direct the operation of your business. To achieve this, there is a well-known tool that expresses the study points in a very specific way: the SWOT matrix.

The meaning of this is made up of the initials of the words Strengths, Weaknesses, Opportunities and Threats, which are the points that will be studied by the company.

In this sense, the analysis of the internal environment will determine the strengths and weaknesses, but that of the external environment will be the one that will indicate the threats and opportunities that exist.

Internal environment

It is about the environment over which the company exercises total control, that is, the environment that can be controlled, managed and in which it can act voluntarily to detect strengths and weaknesses.

As an example of this environment we have, for example, machinery, commercial policy, transportation, customer lists, investment capacity, among other matters.

If we talk about strengths, characteristics that stand out from the competition can be highlighted. On the other hand, when speaking of weaknesses, reference is made to the aspects that, on the contrary, affect the organization itself in its relationship with the competition. For example, a fleet of old vehicles.

In this way, it is important to highlight that the following three points must be known from the internal analysis:

  • Mission of the organization: that is, the fundamental reason why a company exists. In other words, it is what makes it possible to justify the activity of the company within a given environment.
  • Market orientation: This point deals with the philosophy or business culture adopted by the organization, which serves and impacts the planning and execution of the marketing process.
  • Value delivery: This refers to the set of benefits that the organization provides to the consumer so that they decide to buy the products that are sold in the market and prefer them over those of the competition.

External environment

This is about the various factors over which the company has no control. Some of the examples could be the weather, economic crises, political crises, social conflicts, interest rates, among others.

However, when an external element generates a positive scenario for the company, it is considered as an opportunity, while if it is the other way around (unfavorable circumstances) it can be defined as threats to the business. For example, the increase in the cost of gasoline or the rise in the dollar.

This shows how some strengths can protect the organization against any threat to mitigate the damage in the new possibilities.

Along these lines, it must be taken into consideration that for an external analysis the following points must be known:

  • Client study: At this point it is essential to take into account all the data, information and material that the company or organization has about customers.
  • Competitors analysis: Knowing everything about the companies that market the same products, or some similar ones, is necessary to fuel the strategy.
  • Observation of collaborators: Since they are all who collaborate, help and support the organization so that it can achieve its objectives. In this group, the distributors stand out, who make the products reach the final consumer, the suppliers who are the ones who supply the inputs and raw materials to carry out the processes, and finally the agencies, which support to execute their communication processes, transport logistics, among others.
  • Analysis of the external environment: This is to detail and examine how the various trends are progressing, be they demographic, economic, technological or any that allows to determine and define the way of acting and the actions of the institution.

Steps for Environment Analysis

After knowing all the above, you can specify the steps to follow to carry out a Surrounding analysis:

  • Establish your strengths.
  • Determine weaknesses, opportunities and threats.
  • Insert the above data into the SWOT matrix.
  • Interconnect the matrix factors.

  • Examine the strengths that can improve opportunities, as well as the threats and weaknesses that can seriously affect the business.
  • Evaluate the organizational environment so that management can react appropriately.
  • Increase the results.
  • Consolidate your brand in the market.
  • Know the public of the company.
  • Adopt new strategies.

Using Environment Analysis for Business Growth

In these times it is important to carry out a Surrounding analysis because life changes daily, as well as the market, marketing, and even the public themselves.

Therefore, it is increasingly necessary for companies to know or be aware of these transformations, whether in consumer behavior, in the economic, social, governmental, state context, or even in competition, to act in consequence.

Likewise, it is essential that companies fully understand the characteristics of the business and use them to their benefit. Finally, its position within the business industry will depend on it both to prevent errors and failures, as well as to highlight strengths and focus strategies and optimize results.

General Environment Factors

The general environment is made up of legal or regulatory, cultural, economic, political, demographic, technological and environmental aspects.

For this reason, it is necessary to evaluate them and estimate how it influences, as well as to foresee the possible evolution of each factor in relation to the sector in question. studying.

Economic aspects: they are impacted by the multiple macroeconomic variables that are in the environment and that are generated in the current and future situation of the economy.

  • Socio-Cultural: within them are the demographic variables, exoduses or other social or cultural changes experienced by the population.
  • Technological: here comes any advance at the scientific level, as well as the new and varied technological infrastructures in a given context.
  • Legal: It influences both the legislative development, as well as any legal change that occurs and that impacts the business sector.
  • Environmental: This point refers to the degree or level of environmentalism that the company has in relation to society, as well as the tendency towards sustainability of the agents involved in each of the scenarios.

Thus, once the multiple factors that may impact our business and generic environment are known, defined and established, we proceed to the next phase of analysis of the specific factors that may affect operating profitability.

Profits

Finally, to conclude the present article based on a Surrounding analysis, it is necessary to take into account the multiple benefits that this process generates. Among them are:

  • It favors communication between the various members of the teams.
  • It encourages the cooperation of all those involved in the preparation of the study, case or verified problem.
  • Sum up new ideas from the various participants.
  • Better identify solutions to problems.
  • It assists the managers of the company to increase their knowledge of the business.
  • Develop assertive plans and strategies.
  • Look for multiple positive advantages.
  • Helps directly in business improvement.
  • It promotes better business and growth possibilities.

Thank you for reading!

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