SlideShare a Scribd company logo
Analysing business risks:
Macro-environment
from
businessbankingcoach.com
In the macro-environment, new risk
factors are constantly appearing and
they are much more difficult to
identify, both for the managers of the
business as well as for bankers.
The major changes
or developments in
the macro-
environment are
usually outside the
business’ control.
It’s essential that the
managers of the
business are able to
anticipate the impact
of these changes on either the
business itself or on its market before
they actually happen, so as to be
able to adjust the business’ products
or processes accordingly.
As part of our credit risk assessment we
must ensure that the management of the
business is aware of possible changes in
its macro-environment
Failure to do so may
result in the business
losing any competitive
advantage that it might
have had and
compromising its very
existence.
Note that when the
business is operating
across-borders and
revenues and cash
flows come from
foreign sources you
would need to
consider these factors
in those countries as
well as in your home
country.
The acronym PESTEL is used to describe
the components of the business’ macro-
environment. Each of these components
comprises a number of
factors that can positively
or negatively affect
businesses of
all sizes……….
……although it should be noted that
most businesses and/or industries
will not be affected by all the factors
simultaneously or to the same
degree as others.
The idea is to consider each of these
factors in turn and the changes that are
taking place in these environments and to
determine whether, and to what extent,
the business that we are assessing will
be affected by the changes.
PESTEL
Political
Economic
Social
Technological
Ecological
Legal
Political; In this
environment we
consider political, but
not legislative, issues.
We are not only
concerned with local
and foreign
governmental activity
here…..
…..but also the
activities of
organisations
(such as NGO’s)
and special-
interest groups
and the
pressure they
bring to bear on
government
policy.
We should also consider the government’s
general policies, plans and attitudes
towards economic development in the
country over the medium to long-term.
Also, consider the
possibility of
elections and the
possible outcome,
whether peaceful
and whether a
political transition
may take place.
Economic; This
environment, perhaps
more than any of the
others, is the one that
most influences
business decisions,
especially in developing
economies that are
prone to sudden and
significant economic
shocks from external
sources.
Businesses can be affected directly by some
economic changes (e.g. interest rate
changes on a business that borrows
significant amounts) or indirectly (e.g.
interest rate changes affecting the
disposable income of the consumer).
Social; In this environment
we consider the business’
broader market, i.e. its
customers and their changing
attitudes and values and the
general trends that affect the
way the market buys products
and services.
Technology; The way in which
technology has become more
influential in all our lives is well known.
However, how has it influenced the
way in which businesses connect with
their customers?
Obviously, the rise of
the Internet has
changed the way many
businesses deliver their
products to the end-
user and, indeed, there
are many businesses
that only now exist
because of the
presence of an enabling
technology like the
Internet.
In this technological
environment we should
also consider the impact
that the possible changes
in technology will have
directly on the business –
perhaps in the way it
manufactures its
products……
…….and in the level of
competition that it might
encounter from
businesses that were
not in the same market
in the recent past.
Ecological; There are
two aspects to this
environment. Firstly,
the ecological issues
have to be considered
and, of course, not
all businesses are
affected by these
concerns.
In this part of the
analysis we should
consider the ecological
impact of the business’
operations,
remembering that
negative public
perceptions can have a
significant impact on a
business’ reputation
and, ultimately, its level
of sales.
Secondly, there are some issues regarding
the way in which the business treats its
physical environment – not in an
ecological sense – but in the way in which,
for example, it plans its operations so that
disturbance and noise are minimised.
Legal; This
environment is similar to
the political environment
which we discussed
earlier but analysis is
restricted to only
legislative issues,
especially focusing
on the effect that up-
coming legislation may
have on the business.
This would include both
changes to existing
legislation and
completely new
legislation. Mostly,
changes in this
environment would
have a direct impact on
the business.
I do hope that you enjoyed this presentation.
For more commercial and business banking content,
please visit www.businessbankingcoach.com
where you can subscribe to the business banking
blog, watch the videos or view and download
other Slideshare presentations.
If you have any questions about this presentation
or any other content, please send an email at
support@businessbankingcoach.com

More Related Content

Similar to Analysing business risks; macro environment

Smans
SmansSmans
business environment project by kavita jain..pdf
business environment project by kavita jain..pdfbusiness environment project by kavita jain..pdf
business environment project by kavita jain..pdf
sohamfreefire0
 
THE BUSINESS ENVIRONMENT OF THE ENTERPRISE
THE BUSINESS ENVIRONMENT OF THE ENTERPRISETHE BUSINESS ENVIRONMENT OF THE ENTERPRISE
THE BUSINESS ENVIRONMENT OF THE ENTERPRISE
Anil Kumar
 
BUSINESS ENVIRONMENT UNIT-1
BUSINESS ENVIRONMENT UNIT-1BUSINESS ENVIRONMENT UNIT-1
BUSINESS ENVIRONMENT UNIT-1
Dr.ankireddy yenireddy
 
P E S T E L ANALYSIS
P E S T E L            ANALYSISP E S T E L            ANALYSIS
P E S T E L ANALYSIS
Rahul Singh
 
Business environment and ethics2
Business environment and ethics2Business environment and ethics2
Business environment and ethics2
vibuchandran
 
ENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSIS
ENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSISENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSIS
ENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSIS
Libcorpio
 
EXTERNAL ENVIRONMENT OF BUSINESS
EXTERNAL ENVIRONMENT OF BUSINESS EXTERNAL ENVIRONMENT OF BUSINESS
EXTERNAL ENVIRONMENT OF BUSINESS
VVINAY6
 
businessenvironment-PPT.pptx
businessenvironment-PPT.pptxbusinessenvironment-PPT.pptx
businessenvironment-PPT.pptx
udishaomanakuttan
 
businessenvironment-PPT.pptx
businessenvironment-PPT.pptxbusinessenvironment-PPT.pptx
businessenvironment-PPT.pptx
LavKumar97
 
Ramesh.pptx
Ramesh.pptxRamesh.pptx
Ramesh.pptx
Mbabba2
 
Business Environment
Business EnvironmentBusiness Environment
Business Environment
Mbabba2
 
business environment.pdf
business environment.pdfbusiness environment.pdf
business environment.pdf
Yashwanth Rm
 
Business environment
Business environmentBusiness environment
Business environment
Shompa Nandi
 
PESTEL-ANALYSIS.pdf
PESTEL-ANALYSIS.pdfPESTEL-ANALYSIS.pdf
PESTEL-ANALYSIS.pdf
Kiran Dubb
 
BBALLB205 PPT Unit-1.pptx
BBALLB205 PPT Unit-1.pptxBBALLB205 PPT Unit-1.pptx
BBALLB205 PPT Unit-1.pptx
NehaChoithramani2
 
External Environment | Business Environment
External Environment | Business EnvironmentExternal Environment | Business Environment
External Environment | Business Environment
shubham ghimire
 
32 business i environment i society mba 2016
32 business i environment i society mba 201632 business i environment i society mba 2016
32 business i environment i society mba 2016
Rajesh Satpathy, Regional College of Management (RCM), Bhubaneswar
 

Similar to Analysing business risks; macro environment (20)

Smans
SmansSmans
Smans
 
business environment project by kavita jain..pdf
business environment project by kavita jain..pdfbusiness environment project by kavita jain..pdf
business environment project by kavita jain..pdf
 
Be unit 1
Be unit 1Be unit 1
Be unit 1
 
THE BUSINESS ENVIRONMENT OF THE ENTERPRISE
THE BUSINESS ENVIRONMENT OF THE ENTERPRISETHE BUSINESS ENVIRONMENT OF THE ENTERPRISE
THE BUSINESS ENVIRONMENT OF THE ENTERPRISE
 
BUSINESS ENVIRONMENT UNIT-1
BUSINESS ENVIRONMENT UNIT-1BUSINESS ENVIRONMENT UNIT-1
BUSINESS ENVIRONMENT UNIT-1
 
P E S T E L ANALYSIS
P E S T E L            ANALYSISP E S T E L            ANALYSIS
P E S T E L ANALYSIS
 
Business environment and ethics2
Business environment and ethics2Business environment and ethics2
Business environment and ethics2
 
ENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSIS
ENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSISENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSIS
ENVIRONMENTAL ‎ANALYSIS & SWOT ‎ANALYSIS
 
EXTERNAL ENVIRONMENT OF BUSINESS
EXTERNAL ENVIRONMENT OF BUSINESS EXTERNAL ENVIRONMENT OF BUSINESS
EXTERNAL ENVIRONMENT OF BUSINESS
 
businessenvironment-PPT.pptx
businessenvironment-PPT.pptxbusinessenvironment-PPT.pptx
businessenvironment-PPT.pptx
 
businessenvironment-PPT.pptx
businessenvironment-PPT.pptxbusinessenvironment-PPT.pptx
businessenvironment-PPT.pptx
 
Ramesh.pptx
Ramesh.pptxRamesh.pptx
Ramesh.pptx
 
Business Environment
Business EnvironmentBusiness Environment
Business Environment
 
business environment.pdf
business environment.pdfbusiness environment.pdf
business environment.pdf
 
Business environment
Business environmentBusiness environment
Business environment
 
External environment
External environmentExternal environment
External environment
 
PESTEL-ANALYSIS.pdf
PESTEL-ANALYSIS.pdfPESTEL-ANALYSIS.pdf
PESTEL-ANALYSIS.pdf
 
BBALLB205 PPT Unit-1.pptx
BBALLB205 PPT Unit-1.pptxBBALLB205 PPT Unit-1.pptx
BBALLB205 PPT Unit-1.pptx
 
External Environment | Business Environment
External Environment | Business EnvironmentExternal Environment | Business Environment
External Environment | Business Environment
 
32 business i environment i society mba 2016
32 business i environment i society mba 201632 business i environment i society mba 2016
32 business i environment i society mba 2016
 

More from Geoff Burton

Analysing a business' gross profit margin
Analysing a business' gross profit marginAnalysing a business' gross profit margin
Analysing a business' gross profit margin
Geoff Burton
 
Analysing business risks; introduction
Analysing business risks; introductionAnalysing business risks; introduction
Analysing business risks; introduction
Geoff Burton
 
The first 5 numbers to look at in an income statement
The first 5 numbers to look at in an income statementThe first 5 numbers to look at in an income statement
The first 5 numbers to look at in an income statement
Geoff Burton
 
Where the credit risk lies in letters of credit
Where the credit risk lies in letters of creditWhere the credit risk lies in letters of credit
Where the credit risk lies in letters of credit
Geoff Burton
 
Depreciation methods; units of production and reducing balance
Depreciation methods; units of production and reducing balanceDepreciation methods; units of production and reducing balance
Depreciation methods; units of production and reducing balance
Geoff Burton
 
Depreciation methods; straight line
Depreciation methods; straight lineDepreciation methods; straight line
Depreciation methods; straight line
Geoff Burton
 
Introduction to depreciation
Introduction to depreciationIntroduction to depreciation
Introduction to depreciation
Geoff Burton
 
Analysing business risks; market environment
Analysing business risks; market environmentAnalysing business risks; market environment
Analysing business risks; market environment
Geoff Burton
 
Analysing business risks; resources
Analysing business risks; resourcesAnalysing business risks; resources
Analysing business risks; resources
Geoff Burton
 
Analysing business risks; management quality
Analysing business risks; management qualityAnalysing business risks; management quality
Analysing business risks; management quality
Geoff Burton
 
How to conduct a financial impact analysis
How to conduct a financial impact analysisHow to conduct a financial impact analysis
How to conduct a financial impact analysis
Geoff Burton
 
Sustainable growth rate
Sustainable growth rateSustainable growth rate
Sustainable growth rate
Geoff Burton
 
Understanding the gearing ratio
Understanding the gearing ratioUnderstanding the gearing ratio
Understanding the gearing ratio
Geoff Burton
 
Liquidity - Analysing the Current and Quick Ratios
Liquidity - Analysing the Current and Quick RatiosLiquidity - Analysing the Current and Quick Ratios
Liquidity - Analysing the Current and Quick Ratios
Geoff Burton
 
EBITDA
EBITDAEBITDA
EBITDA
Geoff Burton
 
The first 5 numbers to look at in a cash flow statement
The first 5 numbers to look at in a cash flow statementThe first 5 numbers to look at in a cash flow statement
The first 5 numbers to look at in a cash flow statement
Geoff Burton
 
The first 5 numbers to look at in a balance sheet
The first 5 numbers to look at in a balance sheetThe first 5 numbers to look at in a balance sheet
The first 5 numbers to look at in a balance sheet
Geoff Burton
 
How to sign up on twitter
How to sign up on twitterHow to sign up on twitter
How to sign up on twitter
Geoff Burton
 
How to calculate the cost of not taking a discount
How to calculate the cost of not taking a discountHow to calculate the cost of not taking a discount
How to calculate the cost of not taking a discount
Geoff Burton
 
Managing current liabilities
Managing current liabilitiesManaging current liabilities
Managing current liabilities
Geoff Burton
 

More from Geoff Burton (20)

Analysing a business' gross profit margin
Analysing a business' gross profit marginAnalysing a business' gross profit margin
Analysing a business' gross profit margin
 
Analysing business risks; introduction
Analysing business risks; introductionAnalysing business risks; introduction
Analysing business risks; introduction
 
The first 5 numbers to look at in an income statement
The first 5 numbers to look at in an income statementThe first 5 numbers to look at in an income statement
The first 5 numbers to look at in an income statement
 
Where the credit risk lies in letters of credit
Where the credit risk lies in letters of creditWhere the credit risk lies in letters of credit
Where the credit risk lies in letters of credit
 
Depreciation methods; units of production and reducing balance
Depreciation methods; units of production and reducing balanceDepreciation methods; units of production and reducing balance
Depreciation methods; units of production and reducing balance
 
Depreciation methods; straight line
Depreciation methods; straight lineDepreciation methods; straight line
Depreciation methods; straight line
 
Introduction to depreciation
Introduction to depreciationIntroduction to depreciation
Introduction to depreciation
 
Analysing business risks; market environment
Analysing business risks; market environmentAnalysing business risks; market environment
Analysing business risks; market environment
 
Analysing business risks; resources
Analysing business risks; resourcesAnalysing business risks; resources
Analysing business risks; resources
 
Analysing business risks; management quality
Analysing business risks; management qualityAnalysing business risks; management quality
Analysing business risks; management quality
 
How to conduct a financial impact analysis
How to conduct a financial impact analysisHow to conduct a financial impact analysis
How to conduct a financial impact analysis
 
Sustainable growth rate
Sustainable growth rateSustainable growth rate
Sustainable growth rate
 
Understanding the gearing ratio
Understanding the gearing ratioUnderstanding the gearing ratio
Understanding the gearing ratio
 
Liquidity - Analysing the Current and Quick Ratios
Liquidity - Analysing the Current and Quick RatiosLiquidity - Analysing the Current and Quick Ratios
Liquidity - Analysing the Current and Quick Ratios
 
EBITDA
EBITDAEBITDA
EBITDA
 
The first 5 numbers to look at in a cash flow statement
The first 5 numbers to look at in a cash flow statementThe first 5 numbers to look at in a cash flow statement
The first 5 numbers to look at in a cash flow statement
 
The first 5 numbers to look at in a balance sheet
The first 5 numbers to look at in a balance sheetThe first 5 numbers to look at in a balance sheet
The first 5 numbers to look at in a balance sheet
 
How to sign up on twitter
How to sign up on twitterHow to sign up on twitter
How to sign up on twitter
 
How to calculate the cost of not taking a discount
How to calculate the cost of not taking a discountHow to calculate the cost of not taking a discount
How to calculate the cost of not taking a discount
 
Managing current liabilities
Managing current liabilitiesManaging current liabilities
Managing current liabilities
 

Recently uploaded

Top mailing list providers in the USA.pptx
Top mailing list providers in the USA.pptxTop mailing list providers in the USA.pptx
Top mailing list providers in the USA.pptx
JeremyPeirce1
 
In the Adani-Hindenburg case, what is SEBI investigating.pptx
In the Adani-Hindenburg case, what is SEBI investigating.pptxIn the Adani-Hindenburg case, what is SEBI investigating.pptx
In the Adani-Hindenburg case, what is SEBI investigating.pptx
Adani case
 
Agency Managed Advisory Board As a Solution To Career Path Defining Business ...
Agency Managed Advisory Board As a Solution To Career Path Defining Business ...Agency Managed Advisory Board As a Solution To Career Path Defining Business ...
Agency Managed Advisory Board As a Solution To Career Path Defining Business ...
Boris Ziegler
 
Putting the SPARK into Virtual Training.pptx
Putting the SPARK into Virtual Training.pptxPutting the SPARK into Virtual Training.pptx
Putting the SPARK into Virtual Training.pptx
Cynthia Clay
 
Organizational Change Leadership Agile Tour Geneve 2024
Organizational Change Leadership Agile Tour Geneve 2024Organizational Change Leadership Agile Tour Geneve 2024
Organizational Change Leadership Agile Tour Geneve 2024
Kirill Klimov
 
Training my puppy and implementation in this story
Training my puppy and implementation in this storyTraining my puppy and implementation in this story
Training my puppy and implementation in this story
WilliamRodrigues148
 
Bài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.doc
Bài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.docBài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.doc
Bài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.doc
daothibichhang1
 
Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)
Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)
Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)
Lviv Startup Club
 
一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理
一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理
一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理
taqyed
 
Exploring Patterns of Connection with Social Dreaming
Exploring Patterns of Connection with Social DreamingExploring Patterns of Connection with Social Dreaming
Exploring Patterns of Connection with Social Dreaming
Nicola Wreford-Howard
 
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challenges
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesEvent Report - SAP Sapphire 2024 Orlando - lots of innovation and old challenges
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challenges
Holger Mueller
 
Meas_Dylan_DMBS_PB1_2024-05XX_Revised.pdf
Meas_Dylan_DMBS_PB1_2024-05XX_Revised.pdfMeas_Dylan_DMBS_PB1_2024-05XX_Revised.pdf
Meas_Dylan_DMBS_PB1_2024-05XX_Revised.pdf
dylandmeas
 
Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...
Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...
Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...
Lviv Startup Club
 
Maksym Vyshnivetskyi: PMO Quality Management (UA)
Maksym Vyshnivetskyi: PMO Quality Management (UA)Maksym Vyshnivetskyi: PMO Quality Management (UA)
Maksym Vyshnivetskyi: PMO Quality Management (UA)
Lviv Startup Club
 
Mastering B2B Payments Webinar from BlueSnap
Mastering B2B Payments Webinar from BlueSnapMastering B2B Payments Webinar from BlueSnap
Mastering B2B Payments Webinar from BlueSnap
Norma Mushkat Gaffin
 
-- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month ---- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month --
NZSG
 
ikea_woodgreen_petscharity_cat-alogue_digital.pdf
ikea_woodgreen_petscharity_cat-alogue_digital.pdfikea_woodgreen_petscharity_cat-alogue_digital.pdf
ikea_woodgreen_petscharity_cat-alogue_digital.pdf
agatadrynko
 
Brand Analysis for an artist named Struan
Brand Analysis for an artist named StruanBrand Analysis for an artist named Struan
Brand Analysis for an artist named Struan
sarahvanessa51503
 
The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...
Adam Smith
 
Set off and carry forward of losses and assessment of individuals.pptx
Set off and carry forward of losses and assessment of individuals.pptxSet off and carry forward of losses and assessment of individuals.pptx
Set off and carry forward of losses and assessment of individuals.pptx
HARSHITHV26
 

Recently uploaded (20)

Top mailing list providers in the USA.pptx
Top mailing list providers in the USA.pptxTop mailing list providers in the USA.pptx
Top mailing list providers in the USA.pptx
 
In the Adani-Hindenburg case, what is SEBI investigating.pptx
In the Adani-Hindenburg case, what is SEBI investigating.pptxIn the Adani-Hindenburg case, what is SEBI investigating.pptx
In the Adani-Hindenburg case, what is SEBI investigating.pptx
 
Agency Managed Advisory Board As a Solution To Career Path Defining Business ...
Agency Managed Advisory Board As a Solution To Career Path Defining Business ...Agency Managed Advisory Board As a Solution To Career Path Defining Business ...
Agency Managed Advisory Board As a Solution To Career Path Defining Business ...
 
Putting the SPARK into Virtual Training.pptx
Putting the SPARK into Virtual Training.pptxPutting the SPARK into Virtual Training.pptx
Putting the SPARK into Virtual Training.pptx
 
Organizational Change Leadership Agile Tour Geneve 2024
Organizational Change Leadership Agile Tour Geneve 2024Organizational Change Leadership Agile Tour Geneve 2024
Organizational Change Leadership Agile Tour Geneve 2024
 
Training my puppy and implementation in this story
Training my puppy and implementation in this storyTraining my puppy and implementation in this story
Training my puppy and implementation in this story
 
Bài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.doc
Bài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.docBài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.doc
Bài tập - Tiếng anh 11 Global Success UNIT 1 - Bản HS.doc
 
Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)
Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)
Helen Lubchak: Тренди в управлінні проєктами та miltech (UA)
 
一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理
一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理
一比一原版加拿大渥太华大学毕业证(uottawa毕业证书)如何办理
 
Exploring Patterns of Connection with Social Dreaming
Exploring Patterns of Connection with Social DreamingExploring Patterns of Connection with Social Dreaming
Exploring Patterns of Connection with Social Dreaming
 
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challenges
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesEvent Report - SAP Sapphire 2024 Orlando - lots of innovation and old challenges
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challenges
 
Meas_Dylan_DMBS_PB1_2024-05XX_Revised.pdf
Meas_Dylan_DMBS_PB1_2024-05XX_Revised.pdfMeas_Dylan_DMBS_PB1_2024-05XX_Revised.pdf
Meas_Dylan_DMBS_PB1_2024-05XX_Revised.pdf
 
Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...
Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...
Evgen Osmak: Methods of key project parameters estimation: from the shaman-in...
 
Maksym Vyshnivetskyi: PMO Quality Management (UA)
Maksym Vyshnivetskyi: PMO Quality Management (UA)Maksym Vyshnivetskyi: PMO Quality Management (UA)
Maksym Vyshnivetskyi: PMO Quality Management (UA)
 
Mastering B2B Payments Webinar from BlueSnap
Mastering B2B Payments Webinar from BlueSnapMastering B2B Payments Webinar from BlueSnap
Mastering B2B Payments Webinar from BlueSnap
 
-- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month ---- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month --
 
ikea_woodgreen_petscharity_cat-alogue_digital.pdf
ikea_woodgreen_petscharity_cat-alogue_digital.pdfikea_woodgreen_petscharity_cat-alogue_digital.pdf
ikea_woodgreen_petscharity_cat-alogue_digital.pdf
 
Brand Analysis for an artist named Struan
Brand Analysis for an artist named StruanBrand Analysis for an artist named Struan
Brand Analysis for an artist named Struan
 
The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...
 
Set off and carry forward of losses and assessment of individuals.pptx
Set off and carry forward of losses and assessment of individuals.pptxSet off and carry forward of losses and assessment of individuals.pptx
Set off and carry forward of losses and assessment of individuals.pptx
 

Analysing business risks; macro environment

  • 2. In the macro-environment, new risk factors are constantly appearing and they are much more difficult to identify, both for the managers of the business as well as for bankers.
  • 3. The major changes or developments in the macro- environment are usually outside the business’ control.
  • 4. It’s essential that the managers of the business are able to anticipate the impact of these changes on either the business itself or on its market before they actually happen, so as to be able to adjust the business’ products or processes accordingly.
  • 5. As part of our credit risk assessment we must ensure that the management of the business is aware of possible changes in its macro-environment
  • 6. Failure to do so may result in the business losing any competitive advantage that it might have had and compromising its very existence.
  • 7. Note that when the business is operating across-borders and revenues and cash flows come from foreign sources you would need to consider these factors in those countries as well as in your home country.
  • 8. The acronym PESTEL is used to describe the components of the business’ macro- environment. Each of these components comprises a number of factors that can positively or negatively affect businesses of all sizes……….
  • 9. ……although it should be noted that most businesses and/or industries will not be affected by all the factors simultaneously or to the same degree as others.
  • 10. The idea is to consider each of these factors in turn and the changes that are taking place in these environments and to determine whether, and to what extent, the business that we are assessing will be affected by the changes.
  • 12. Political; In this environment we consider political, but not legislative, issues. We are not only concerned with local and foreign governmental activity here…..
  • 13. …..but also the activities of organisations (such as NGO’s) and special- interest groups and the pressure they bring to bear on government policy.
  • 14. We should also consider the government’s general policies, plans and attitudes towards economic development in the country over the medium to long-term.
  • 15. Also, consider the possibility of elections and the possible outcome, whether peaceful and whether a political transition may take place.
  • 16. Economic; This environment, perhaps more than any of the others, is the one that most influences business decisions, especially in developing economies that are prone to sudden and significant economic shocks from external sources.
  • 17. Businesses can be affected directly by some economic changes (e.g. interest rate changes on a business that borrows significant amounts) or indirectly (e.g. interest rate changes affecting the disposable income of the consumer).
  • 18. Social; In this environment we consider the business’ broader market, i.e. its customers and their changing attitudes and values and the general trends that affect the way the market buys products and services.
  • 19. Technology; The way in which technology has become more influential in all our lives is well known. However, how has it influenced the way in which businesses connect with their customers?
  • 20. Obviously, the rise of the Internet has changed the way many businesses deliver their products to the end- user and, indeed, there are many businesses that only now exist because of the presence of an enabling technology like the Internet.
  • 21. In this technological environment we should also consider the impact that the possible changes in technology will have directly on the business – perhaps in the way it manufactures its products……
  • 22. …….and in the level of competition that it might encounter from businesses that were not in the same market in the recent past.
  • 23. Ecological; There are two aspects to this environment. Firstly, the ecological issues have to be considered and, of course, not all businesses are affected by these concerns.
  • 24. In this part of the analysis we should consider the ecological impact of the business’ operations, remembering that negative public perceptions can have a significant impact on a business’ reputation and, ultimately, its level of sales.
  • 25. Secondly, there are some issues regarding the way in which the business treats its physical environment – not in an ecological sense – but in the way in which, for example, it plans its operations so that disturbance and noise are minimised.
  • 26. Legal; This environment is similar to the political environment which we discussed earlier but analysis is restricted to only legislative issues, especially focusing on the effect that up- coming legislation may have on the business.
  • 27. This would include both changes to existing legislation and completely new legislation. Mostly, changes in this environment would have a direct impact on the business.
  • 28. I do hope that you enjoyed this presentation. For more commercial and business banking content, please visit www.businessbankingcoach.com where you can subscribe to the business banking blog, watch the videos or view and download other Slideshare presentations. If you have any questions about this presentation or any other content, please send an email at support@businessbankingcoach.com