Question

please write me about Environmental Analysis (1-2 pages )

BUS 210 - 040: Introduction to Marketing Team 11 - Massage Therapy Clinic – Kelowna, BC

can you maybe use crest model and External Marketing Environment

its should be about Marketing Environment

Answer 1

Definition: Environmental Analysis is described as the process which examines all the components, internal or external, that has an influence on the performance of the organization. The internal components indicate the strengths and weakness of the business entity whereas the external components represent the opportunities and threats outside the organization.

It ascertains whether the goals defined by the organization are achievable or not, with the present strategies. If is not possible to reach those goals with the existing strategies, then new strategies are devised or old ones are modified accordingly.

Advantages of Environmental Analysis.

Environmental analysis helps in the detection of threats at an early stage, that assist the organization in developing strategies for its survival. Add to that, it identifies opportunities, such as prospective customers, new product, segment and technology, to occupy a maximum share of the market than its competitors.

Steps Involved in Environmental Analysis

1. Identifying: First of all, the factors which influence the business entity are to be identified, to improve its position in the market. The identification is performed at various levels, i.e. company level, market level, national level and global level.
2. Scanning: Scanning implies the process of critically examining the factors that highly influence the business, as all the factors identified in the previous step effects the entity with the same intensity. Once the important factors are identified, strategies can be made for its improvement.
3. Analysing: In this step, a careful analysis of all the environmental factors is made to determine their effect on different business levels and on the business as a whole. Different tools available for the analysis include benchmarking, Delphi technique and scenario building.
4. Forecasting: After identification, examination and analysis, lastly the impact of the variables is to be forecasted.

Environmental analysis is an ongoing process and follows a holistic approach, that continuously scans the forces effecting the business environment and covers 360 degrees of the horizon, rather than a specific segment..

There are many strategic analysis mechanisms that company can use. The most used comprehensive analysis of the environment is the PESTLE analysis. Company managers and strategy formulators use this analysis to find where their market currently. It also helps predict the future of the organization. PESTLE analysis comprises of numerous factors that affect the business environment. These factors can affect every industry directly or indirectly.

PESTEL denote the following factors:
Political factors
Economic factors
Social factors
Technological factors
Legal factors
Environmental factor

There are some drawbacks of environmental analysis:

• Environmental analysis does not predict the future, nor does it eliminate uncertainty for any organisation.
• Environmental analysis is not a sufficient guarantor of organizational effectiveness.
• The potential of environmental analysis is often not realised because of how it is practised.

Internal Analysis is performed because it is the only way to identify an organization's strengths and weaknesses it's needed for making good strategic decisions. In order to start the strategic management process, managers are required to conduct an internal analysis. This involves ascertaining the business' strengths and weaknesses, by analysing its competencies. It also involves managers emphasising competitive advantage of the business. For effective strategies, the organisation must exploit and expand on its strengths, as well as reduce its weaknesses; thus promoting its competitive advantage to gain cost-effectiveness.

There are four major areas which needs to be considered for internal analysis:

1. The organization's resources, capabilities.
2. The way in which the organization configures and co-ordinates its key value-adding activities.
3. The structure of the organization and the features of its culture.
4. The performance of the organization as measured by the strength of its products.

To summarize, environmental analysis is strategic device to distinguish external and internal elements, which can affect the performance of firms. The analysis include appraising threat level or opportunity the factors might present. These assessments are translated into the decision-making process. The analysis helps align strategies with the firm's environment. Internal analysis is the process of identifying and assessing an organization's particular features that include Resources, Capabilities, and Core competencies.

CREST analysis is an important tool that encompasses environmental forces, which affect an organization's activities. CREST is an acronym that stands for competitive, regulatory, economic, socio-cultural, and technological environments. All these environments affect an organization's performance and products.

The external marketing environment consists of social, demographic, economic, technological, political and legal, and competitive variables. Marketers generally cannot control the elements of the external environment. Instead, they must understand how the external environment is changing and the impact of that change on the target market. Then marketing managers can create a marketing mix to effectively meet the needs of target customers.
Within the external environment, social factors are perhaps the most difficult for marketers to anticipate. Several major social trends are currently shaping marketing strategies. First, people of all ages have a broader range of interests, defying traditional consumer profiles. Second, changing gender roles are bringing more women into the workforce and increasing the number of men who shop. Third, a greater number of dual-career families has created demand for time-saving goods and services.

The marketing activities of the business are affected by several internal and external factors. While some of the factors are in the control of the business, most of these are not and the business has to adapt itself to avoid being affected by changes in these factors. These external and internal factors group together to form a marketing environment in which the business operates.

Marketing Environment is the combination of external and internal factors and forces which affect the company’s ability to establish a relationship and serve its customers.

The marketing environment of a business consists of an internal and an external environment. The internal environment is company-specific and includes owners, workers, machines, materials etc. The external environment is further divided into two components: micro & macro. The micro or the task environment is also specific to the business but external. It consists of factors engaged in producing, distributing, and promoting the offering. The macro or the broad environment includes larger societal forces which affect society as a whole. The broad environment is made up of six components: demographic, economic, physical, technological, political-legal, and social-cultural environment.

Components of Marketing Environment

The marketing environment is made up of the internal and external environment of the business. While the internal environment can be controlled, the business has very less or no control over the external environment.

Internal Environment

The internal environment of the business includes all the forces and factors inside the organisation which affect its marketing operations. These components can be grouped under the Five Ms of the business, which are:

• Men
• Money
• Machinery
• Materials
• Markets

The internal environment is under the control of the marketer and can be changed with the changing external environment. Nevertheless, the internal marketing environment is as important for the business as the external marketing environment. This environment includes the sales department, marketing department, the manufacturing unit, the human resource department, etc.

External Environment

The external environment constitutes factors and forces which are external to the business and on which the marketer has little or no control. The external environment is of two types:

Micro Environment

The micro-component of the external environment is also known as the task environment. It comprises of external forces and factors that are directly related to the business. These include suppliers, market intermediaries, customers, partners, competitors and the public

• Suppliers include all the parties which provide resources needed by the organisation.
• Market intermediaries include parties involved in distributing the product or service of the organisation.
• Partners are all the separate entities like advertising agencies, market research organisations, banking and insurance companies, transportation companies, brokers, etc. which conduct business with the organisation.
• Customers comprise of the target group of the organisation.
• Competitors are the players in the same market who targets similar customers as that of the organisation.
• Public is made up of any other group that has an actual or potential interest or affects the company’s ability to serve its customers.