Environmental Analysis is the assessment of the possible effects of outside forces on an organization’s continued existence and growth strategies. The environmental influences can be classified by a source such as political, economic, social, and technological factors. Environmental analysis is wide and will also include the market size, growth trends and the consumer’s attitudes and behaviors.
From the environmental analysis, the strengths and the weakness of a company will be known. The corporation will use technical analysis to improve and put up with the latest technology that will eliminate customer inconveniences. The market and the environmental analysis will stimulate the innovation of new power tools. The results of an opportunity analysis will provide the decision-makers with a strong database from which to choose among the various alternatives that are present in the market environment. The alternatives will be used together with the financial and internal considerations that are specified by the management. The analysis will involve a detailed study of current and potential competitors who may be attracting the customers you intend to get in touch with. If the analysis indicates that the factors are favorable to the business this will help in analyzing the financial implication of the opportunity that should be taken. The competitor analysis will help in understanding the competitor’s strategies and analyze them in a usable way. The financial analysis will be the key determinant of the potential profitability of the business and the expected return on investment. The results of the analysis will provide the information that can be used to attract investors or used by lenders who might be approached to obtain capital for the business. The analysis helps in strategic planning with decreasing expenses and increasing the profitability of the company. The analysis is a method of anticipating the threats and putting a strategy to minimize or neutralize them. The analysis will help the company to understand the customers and how to form a business relationship with the suppliers. The company must understand competition from the industry and this will help the management to concentrate on cost and value leadership in the industry. Understanding the market will help the organization in making accurate decisions. The factors with negative or positive impact on the company will be examined in details (Kleiböhmer, 2001).
The organization need to recognize the different political structures and their implications since some of the political structures can led to the fall down of businesses or promote the growth of businesses. When the government sets low interest rates on borrowings many people will be encouraged to borrow and spend more on goods which will led to a higher profit margin to the manufacturers and the retailers. The social factors in a population like tastes, beliefs and customs affect the developments of different business in a country. The company will analyze the social factors in order to know the preferences of the customers in a certain demographic pattern.
The company faces high competition and the market share of the other products apart from the circular saws is less than 3% while their quality is considered to be low. However the company enjoys the monopoly of selling the circuit saws. The competitors have copied their product and used their superior marketing power to displace the corporation at the retailer level. There is a high demand for the consumer channel and the cordless products which are growing at a rate of 10% per annum. The company has little knowledge of its market and the competitive analysis has not been performed for years. There is resistance among the senior management and the employees fear losing their jobs. The sales of the company have declined and the new owners also fear that the key management personnel will leave the company. The company has improved with the technology because the power tools manufactured has replaced the saws, planes and hammer drills. A company that manufactures cordless power tools has to abide with the laws and regulations of a country that ban certain toxic materials from being used. The company will have to redesign its processes in order to reduce pollution.
SWOT analysis is conducted to examine the company’s position, its capabilities and products in relation to the competitor’s activities, stakeholders, environmental trends and the company resources. Business people use the SWOT analysis to gain a competitive advantage over the others. Market and competitive analysis are conducted to help the company identify its competitive position and products within its market. An analysis of the market structure includes identifying the market size and the trends within it and whether the market can be subdivided into different market segments. An analysis of the customers includes gathering data about the buying and consumer habits and this should be aimed at examining whether the customer appreciates the products and services. The company will analyze the social factors in order to know the preferences of the customers. For businesses to succeed today there is a need to keep up with the latest technology. The businesses are using computers to control the manufacturing processes, to keep records, to make the financial transactions faster and to speed up communication via the internet or through emails. Therefore the company will need to perform a technological analysis. The weaknesses found after the analysis need to be addressed and appropriate course of action taken. An understanding of the competitor’s strategies and position creates a platform for change (Yandle, 1999).
Yandle, B. (1999). The market meets the environment: economic analysis of environmental policy. London. Rowman & Littlefield.
Kleiböhmer, W. (2001). Environmental analysis. Chicago. Elsevier.