ENVIRONMENTAL ANALYSIS
A country's territorial size, geographical
Environmental analysis is a strategic
tool. It is a process to identify all the external
and internal elements, which can affect the
organization’s performance.
An environmental analysis includes a
thorough study of:
 Economic Forces
 Physical Environment
 Political Factors
 Cultures and Lifestyles
 Competition
Economic Forces
Are the factors that help to determine
the competitiveness of the environment in
which the firm operates.
Factors includes:
 Unemployment
Unemployment occurs when a
person who is actively searching
for employment is unable to find
work. Unemployment is often
used as a measure of the health
of the economy.
 Inflation
Is a term used to describe a
general rise in the price of goods
and services in an economy over
a given period of time.
 Fiscal Policy
Fiscal policy refers to the use of
government spending and tax
policies to influence
macroeconomic conditions,
including aggregate demand,
employment, inflation and
economic growth.
Physical Environment
location, natural resources, climate, rivers, lakes
and forests constitute its physical environment.
When planning international
marketing activities, the possible impact of
the physical environment should consider.
For example:
 Topography
 Certain climatic conditions
 Climate
 Abnormal weather conditions
Political Factors
The political factors affecting business
are often given a lot of importance. Several
aspects of government policy can affect
business. All firms must follow the law.
Political factors that tend to have an important
impact on economic development include:
 Regime type
 Political stability or instability
Cultures and Lifestyles
Culture is the lifeblood of a vibrant
society, expressed in the many ways we tell our
stories, celebrate, remember the past, entertain
ourselves, and imagine the future. It is
important to study cultural practices such as:
 Fiesta
 Christmas season
 Trends
Competition
The degree of competition in the market
and the extent and strength of competition are
all very vital in determining the success or failure
of the business.