Environmental Appraisal
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Environmental Appraisal
Organisational Micro/Market Macro
Environment Environment Environment
Finance Customers Political
Marketing Competition Legal
Production Suppliers Economic
Personnel Channels Environmental
Purchasing Social
Technological
Source: Wolverhampton Business School
Organisational Environment
Products/services offer (including all aspects
of their marketing mix)
Finance/Marketing/Production/Personnel/
Purchasing/Training etc..
Organisation Structure
Management Style
Location
Market Environment: Customers
How large is the Number and size
market? distribution of buyers
Where is the market? Local, regional,
Who does the market national or
serve? international markets
What do they want? Price and income
How do they want it? sensitivity
When do they want it? Information
Why do they want it? considerations
What quality? Product
How price sensitive? characteristics -
differentiation/niche
markets
Market Environment: Competitors
Who are they? Number and size
Where are they? distribution of
What are they doing? producers
How well are they Nature of competition
doing? Interdependence
What are their Barriers to entry
strengths and Economies of scale
weaknesses? Natural monopoly or
natural oligopoly
Market environment: Suppliers
How reliable - quality, Supplier
delivery? arrangements and
What can be competitive
subcontracted out? advantage
Multi-sourcing Vertical integration
policy? Impacts of integration
Are just-in-time on competitive
methods used? advantage
Market environment:
Intermediaries
What middlemen are Limitations to free
used? competition
Is their use cost- Specialisation and
effective? competitive
advantages
Macro environment: Political
Political philosophies: monetarism; privatisation
Policies - national and local government
Activities of various professional bodies, trade
unions, pressure groups and voluntary
associations
Monopoly and competition standards
Political stability
Government bureaucracy: efficient customs
handling; planning permission; good market
information
N.B. LINKS WITH OTHER FACTORS
Macro environment: Legal
Usually bound-up with political factors
Examples:
competition policy e.g. Competition Act 1979
consumer protection [Link] Description Act
1973
environmental protection e.g. European
Directives stipulating emissions standards
Regulatory change is usually slow
Macro environment: Economic
Economic growth rates (GNP per capita)
Trade cycles, recession and recovery
Inflation
Unemployment
Business confidence, uncertainty and investment
Taxation
Interest rates
Oil prices and other factor input prices
European single market
Macro environment:
Environmental (Natural)
Shortages of raw materials
Increased cost of energy
Increased pollution
Government intervention in natural resource
management
Macro environment: Social and
Cultural
Demographic trends
population age distribution
household/family composition
geographical shifts
Cultural factors
changes in social values and core beliefs
changes in attitudes towards women
multi-ethnic influences
greening of consumers
Macro environment:
Technological
Rapid product obsolescence
Manufacturing systems/warehousing
Competitive force wielded by new technology
E-commerce
Research and development
What does this mean for us?
Internal (controllable variables)
Strengths (e.g. good product quality)
Weaknesses (e.g. poor accounting
procedures)
External (uncontrollable variables)
Opportunities (e.g. a gap in the market)
Threats (e.g. a competitor increasing their
market share)
Business Attractiveness
Consideration of opportunities and threats
can allow us to categorise a businesss
overall attractiveness as:
An ideal business - high in major opportunities, low
in major threats
A speculative business - high in both major
opportunities and threats
A mature business - low in major opportunities,low
in threats
A troubled business - low in opportunities, high in
threats
The SWOT/TOWS Matrix
Strengths - S Weaknesses - W
List strengths List weaknesses
SO strategies WO strategies
Opportunities - O Use strengths to Overcome weaknesses
take advantage of by taking advantage of
List opportunities opportunities opportunities
Threats - T ST strategies WT strategies
Use strengths to Minimise weaknesses
List threats avoid threats and avoid threats
Wolverhampton Business School