The environmental analysis is carried out to determine various environmental factors and their potential impact on a company.
The environmental analysis is carried out to determine various environmental factors and their potential impact on a company. On the basis of a corresponding environmental analysis, companies are better able to assess their future market opportunities and risks. Overall, an environmental analysis may also serve to assess market attractiveness.
The creation of an environmental analysis is generally carried out considering several areas of the environment - for example, it is first possible to differentiate between influencing factors to be analyzed, which emanate from the global environment and those that bring about the competitive environment of a company.
A common method for the investigation of influencing factors in the field of the global environment is the so-called PESC analysis – the letters P, E, S and T stand for the terms 'political', 'economic', 'socio-cultural' and 'cultural'. With regard to political factors influencing the global environment, for example, the current legislation and the political stability of a country may affect the processes of a company located there. Economic factors that influence a company or industry include current unemployment, the availability of resources and the success of a given economy. In sociocultural terms, data on demographics, average income and consumer behavior are included in an environmental analysis, while the technological variable is considered to be the technological level relevant to a company.
When determining the competitive environment, factors such as the industry's internal rivalry and the extent of the corporate threat posed by replacement products or new providers are included in an environmental analysis. As these competitive forces increase, so too do the challenges facing a company.