A business environment is meant to be affected by many different forces. These forces further are divided into two categories. The categories are internal and external namely. As the names go, we understand that the internal forces usually include things that affect the business from within the organization, and on the other hand, external forces are those that exist outside the organization. To understand and classify both forces further and more precisely, tools have been found and developed. Two popularly used tools are SWOT and PESTLE. A SWOT analysis covers both internal and external factors that affect an enterprise. PESTLE analysis only focuses on the external factors of an enterprise but in detail.
SWOT simply stands for Strength, Weakness, Opportunity, and Threats. As mentioned earlier, SWOT analysis is a popularly used tool in the business world for analyzing the market and covers both, internal and external factors. The internal factors include Strength and Weakness. The external factors include Opportunities and Threats.
Strength in an organization is an inherent capability that it has and can use to gain strategic advantage. For example, good brand image in the market.
Weakness is an inherent limitation of an organization that creates a strategic disadvantage to it. For example, shortage of funds.
Opportunity is nothing but a favorable condition for an organization. It helps a company to strengthen its position in the market. For example, growing demand in the market.
A threat is an unfavorable condition in the external environment of the company which can cause damage to its position. Hence, alerting the organization to take steps to recover in advance. For example, competition from multinational companies.
Pestle is the acronym for Political, Economic, Social, Technology, Legal and Environment. Pestle analysis largely focuses on and analyses the external environment of a business organization.
these are the policies of the state that can affect the business one has. The factors can be:
There are several factors of economy that highly affect the business.
social factors affect the business environment in multiple ways.
use of capitalintensive techniques in production reduces costs and increases profits, and labor-intensive has a vice versa effect. Thus, technology has become an essential factor, highly controlling the changes and results of a company.
there exist legal factors affecting the businesses.
in modern times, environmental laws are largely to be considered by any business firm for survival. Industries have destructed the environment over centuries and that imposes a threat to the sustainability of human beings and all other organisms on the planet. Thus, an entrepreneur is to consider the environment while making production decisions.
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