13 management strategic management environmental

13
Management
Strategic Management
Environmental Scanning and Approaches
The final results of an analysis could be listed in the matrix in given below –
The SWOT Matrix –
FACTORS POSITIVE NEGATIVE
INTERNAL
FACTORS
Strengths
 Patents
 Strong brand names
 Good Reputation
 Cost advantages from proprietary
know how
 Exclusive access to high grade
natural resources
 Favourable access to distribution
networks
Weaknesses
 Lack of potent protection
 A weak brand name
 Poor reputation among
customers
 High cost structure
 Lack of access to the best
natural resources
 Lack of access to key
distribution channels
EXTERNAL
FACTORS
Opportunities
 An unfulfilled customer need
 Arrival of new technologies
 Loosening of regulations
 Removal of international trade
barriers
Threats
 Shifts in consumer tastes away
from the firm’s products
 Emergence of substitute
products
 New regulations
 Increased trade business
ROLE AND IMPORTANCE OF SWOT ANALYSIS
A. Identify strengths – The internal environment analysis identifies the strengths of an
organisation. The internal environment includes the resources of the organisation - physical,

14
Management
Strategic Management
Environmental Scanning and Approaches
financial and human resources for instance – when a company has superior technology in
comparison to its counterparts, it becomes strength for the company.
B. Identify weaknesses – SWOT analysis also identifies the areas where a company needs
improvement and which puts it at a disadvantage in comparison to its competitors. The analysis
helps a company to spot such weaknesses and take corrective actions, for instance – having
lesser financial resources can be a weakness and in order to work on this issue the company may
have to explore for avenues to raise additional funds.
C. Identify opportunities – The external environment may have to offer many new
opportunities for businesses and SWOT analysis helps a company in recognising them.
D. Identify threats – With many opportunities, the external environment also leads a
company to various threats from competitors, govt. policies, etc. Early identification of such
threats helps a company to counter them in future. For instance, the govt. may change the
taxation policies which may further affect the costing for the firms; therefore, business firm must
take necessary steps to reduce the effect of such changes.
E. Effective planning – Environmental analysis also helps a firm in planning its future
actions and facilitates quick decision-making. The planning exercise must take into account the
internal and external environment and the SWOT analysis enables a firm to make well defined
plans.
F. Facilitates Organising Resources – Environmental analysis helps an organisation to
predict the future demand of their products which enables it to organise its resources
accordingly. The organisation can plan the requirement of resources to handle the activities of
the market.