This document discusses environmental analysis and its importance for organizational planning. It defines the organizational environment and identifies its internal and external components. The external environment includes the general environment and operating environment. Environmental analysis plays an integral role by assessing trends, identifying opportunities and threats, and informing strategic planning. Regular environmental scanning allows businesses to anticipate changes and plan accordingly.

1. ENTREPRENEURSHIP DEVELOPMENT – KMB 402
Topic: Developing a Business Plan
(Part 1a of 4)
ACHLA TYAGI,
Assistant Professor
Department of Business Administration
ABES EC (032), Ghaziabad
AKTU, LUCKNOW
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

2. Unit 4 : Developing a Business Plan
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

3. Environmental Analysis
• The environment of any organisation is “the
aggregate of all conditions, events &
influences” that surround and affect it.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

4. Components of Organisational Environment
Organisational Environment can be broadly
classified into following categories :
• Internal Environment
• External Environment
External General Environment
External Operating Environment
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

5. Components of Internal Environment
• Internal Environment :
Organisational Aspect
Personnel Aspect
Production Aspect
Marketing Aspect
Financial Aspect
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

6. Components of External Environment
• External Environment :
External Operating Environment :
Supplier Component
Customer Component
Labor Component
Competition Component
International Component
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

7. Components of External Environment
• External Environment:
External General Environment :
Economic Component
Demographic Component
Technological Component
Legal Component
Political Component
Social Component
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

8. Environmental Analysis
1. Asses the nature
of environment
2. Audit
environmental
influences
3. Identify key
competitive forces
through structural
analysis
5. Identify key
opportunities &
threats
4. Identify strategic
position
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

9. Role of Environmental Analysis in Organisation
The role of environmental analysis vary
drastically from organisation to organisation,
however, the basic role played by it are as
under:
• Function Oriented Role: Its main purpose is to
improve organisational performance by
providing environmental information
concerning effective performance of specific
organisational functions.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

10. Role of Environmental Analysis in Organisation
• The Integrated Strategic Planning Role: Its
main purpose is to improve organisational
performance by making top managers &
divisional managers aware of the issue that
arises in organisation’s environment, by
having a direct impact on planning & by
linking corporate & divisional planning.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

11. Role of Environmental Analysis in Organisation
• The Policy Oriented Role : Its main purpose is
to improve organisational performance by
simply keeping top management informed
about major trends emerging in the
environment. It is basically unstructured,
indirect & informal.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

12. Strategies for Managing Environment
• Proper recruitment & selection
• Organisational image building through advertising.
• Proper domain choice & domain change
• Contracting
• Smoothening
• Lobbying
• Vertical integration
• Buffering
• Strategic alliances/ mergers/ acquisitions
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

13. What is environmental scanning?
• An analysis and evaluation process that
businesses use to understand their current
environment.
• The aim is to identify trends, gaps, events,
developments, and issues that will impact the
businesses.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

14. Why is environmental scanning
important to a business?
• It helps with the identification of a
number of broad factors and issues
that will have a significant impact on
businesses and their plans for the
future.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

15. Environmental scanning helps to:
• Aids in anticipating changes
• Answers the question, “Where are we now?”
• Provides a starting point for businesses’
planning of goals, objectives, and
• actions that answer the question, “Where do
we want to be?”
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW