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Environmental Analysis

Internal and external environmental forces.

By the Mind Tools Content Team

Most organizations work within a business environment of constantly changing forces that guide (and sometimes hinder) their overall strategic direction. This article examines these environmental influences in more detail.

The business environment can be separated into the internal and external environment as shown in the diagram below. Both of these environments have a huge impact on an organization, and the strategic decisions it makes.

The Internal Environment

Environmental analysis begins with an examination of internal factors and how these help or hinder organizational performance. An organization will wish to carry out an internal analysis that examines the strengths and weaknesses of its:

• Physical resources, including its products
• Financial resources
• Human resources
• Intellectual resources
• Operational capacity and efficiency
• Strategic capabilities/competence
• Organizational structure
• Organizational culture

The results of this analysis can then be fed into a SWOT analysis (see later). Porter’s Value Chain can also help the organization to pinpoint strengths contained within the organization by examining which of its activities create value for the company.

The External Environment

Organizations need to identify the key opportunities and threats that are likely to arise from the external environment. The external environment can be split into two areas, the near environment and the far environment.

The Near Environment

This comprises the industries and sectors, competitors and markets where the organization competes for resources and consumers (it is sometimes referred to as the ‘competitive’ environment). All organizations need to be aware of the factors and conditions that impact on their particular industry or sector. For example, the boundaries between separate industries may change, resulting in convergence, such as is the case with the computing, telecoms and entertainment industries. Key to making sense of the near environment is an awareness and understanding of the competitive forces that exist. Porter’s Five Forces model was devised to help organizations to do exactly this by assessing:

• The threat of entry of new rivals
• The bargaining power of buyers
• The bargaining power of suppliers
• The threat of substitute products

Despite being devised in the 1980s, Porter’s Five Forces is still a favored method of industry analysis today. As well as analyzing its industry, an organization will wish to carry out market segmentation in order to understand customers and satisfy their needs better than the competition.

Many organizations segment consumer markets differently from industrial markets.

Consumer markets tend to be segmented along differing customer characteristics such as:

• Geographic: e.g. country, region, neighborhood.
• Demographic: e.g. age, gender, occupation, race, religion.
• Psychographic: e.g. interests, values, opinions.
• Behavioral: e.g. brand loyalty, readiness to buy, user status (first-time buyer, regular buyer, etc.).

Industrial markets tend to be segmented by:

• Location: e.g. distance from vendor.
• Company type: e.g. size, product or service offered.
• Behavioral characteristics: e.g. buyer status, purchasing methods.

By segmenting its industry and markets, an organization can gain a better understanding of its customers and potential customers, and therefore tailor its products and services to match customer needs as closely as possible.

The Far Environment

The six main pressures and influences on organizations in the ‘far’ external environment are represented by the acronym PESTLE which represents the following external forces:

• Political: the existing and potential influences that government places on organizations, via government agencies, pressure groups, etc.
• Economic: the impact that the national and international economy has on all types of organizations. For example, when bank interest rates are low, people have more disposable income to spend on a range of goods and services; but when interest rates are high, consumer spending will reduce.
• Social: changes in society have a considerable impact on how organizations set strategies. When analyzing the external environment, organizations should consider demography, i.e. the impact that the size and structure of the population has on customer demand and on the workforce, e.g. an aging population. Social culture will also affect the demand for goods and services, e.g. increasing environmental awareness has created a demand for eco-friendly products.
• Technological: advances in technology probably have the most profound effect on organizational strategy. The arrival of the internet, for instance, has transformed the way that organizations sell their products, and how they communicate with customers and employees across the globe.
• Legal: organizations need to be aware of existing and upcoming local, national and international legislation that affects their business, including employment law, competition law, and health and safety regulations.
• Environmental: factors such as environmental protection laws and regulations, and social attitudes to energy consumption and waste disposal can all affect organizations and the way they do business.

A PESTLE analysis is a popular technique that can be used to examine the many different external factors affecting an organization, in order to help organizations systematically identify any threats. Once an organization has identified the main characteristics of the external environment in which it operates, it should look for ways to minimize any possible threats and exploit new opportunities.

Spotting The Opportunities

Johnson and Scholes point out that if organizations consistently compete with market rivals that have the same or similar products or services, then everyone will find the market tough and unattractive. This can be countered if an organization can spot a strategic gap in the market.

Strategic gap: ‘An opportunity in the competitive environment that is not being fully exploited by competitors.’ [1]

Johnson and Scholes suggest the following areas in which organizations may find such opportunities: [2]

• Opportunities in substitute industries: e.g. a software company substitutes paper encyclopedias for online versions.
• Opportunities in other strategic groups: [3] e.g. privatization of the rail network in the U.K. means that bus operators can apply for rail franchises.
• Opportunities for complementary products: e.g. people go to the gym to stay in shape and look good, so some private gyms also have beauty salons on site.
• Opportunities in new market segments: e.g. Starbucks has turned coffee into an experience, not just a drink, by providing customers with the opportunity to customize their beverage, and enjoy it in a relaxing atmosphere.
• Opportunities over time. Where an organization anticipates a change in the competitive environment, it can gain first-mover advantages, e.g. eBay anticipated that the internet could revolutionize the ‘small ads’ business, which it has turned into a multi-million dollar enterprise.

SWOT Analysis

The combination of outputs from the analysis of both the internal and external environment is a SWOT analysis, which helps organizations analyze their overall Strengths, Weaknesses, Opportunities, and Threats. These are often set out in table form as shown below. The example shown is for a small pharmaceutical company.

This approach, however, does not put the strengths, weaknesses, opportunities, and threats in context. In particular, it does not relate them to one another, or illustrate how a particular strength will allow an organization to exploit an opportunity or counter a threat. Nor does it highlight whether acknowledged weaknesses might leave the organization vulnerable to a threat or unable to exploit an opportunity.

To develop strategies that take into account the SWOT profile, therefore, it is a good idea to carry out a matching process, by constructing a TOWS matrix as shown below.

• S-O Strategies represent opportunities that are a good fit with the organization’s strengths.
• S-T Strategies indicate ways for the organization to use its strengths to counter external threats.
• W-O Strategies help the organization to overcome its weaknesses to pursue opportunities.
• W-T Strategies help the organization to prevent its weaknesses from rendering it vulnerable to external threats.[4]

In addition, an organization should consider its SWOT profile in terms of how it compares to those of its competitors.

The Importance of Scenario Planning

Given the rapid pace of political, environmental and technological change in today’s society, strategic decisions can be increasingly difficult to make. Scenario planning can be a very useful way to analyze the environment in this regard.

‘Scenario planning is a discipline for rediscovering the original entrepreneurial power of creative foresight in contexts of accelerated change, greater complexity, and genuine uncertainty.’ [5]

It differs from conventional market research or financial forecasting techniques by depicting alternative ‘futures’ instead of projecting forward current trends. [6] This enables organizations to model a series of potential futures and to modify their future plans according to the most feasible scenarios. Scenarios are not predictions, then, but plausible, well-illustrated hypotheses of various ‘what if’ possibilities.

In order for organizations to make informed and appropriate strategic choices, they must first develop a clear understanding of both their internal and external environment.

Internal analysis of the organization involves a thorough examination of the firm’s strengths and weaknesses.

External analysis looks at the opportunities and threats posed by competitors in the organization’s industry and markets, and by existing and potential opportunities and threats that exist in wider society.

The results of internal and external analysis can be brought together and summarized in a SWOT analysis, which can then be used to inform future strategic development.

[1] Johnson and Scholes, Exploring Corporate Strategy (FT Prentice Hall, 2005) p 99.]

[2] Ibid pp 99-100.

[3] Strategic groups are industry subgroups that compete directly for the same customers, or for similar resources. For example, grocery retailing has several strategic groups, including supermarkets, minimarts and corner shops.

[4] www.quickmba.com (May 25, 2005).

[5] Pierre Wack, Royal Dutch/Shell, 1984. GBN Global Business Network, Scenarios.

[6] 'Scenario Planning' http://www.economist.com/node/12000755

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What is Environmental Analysis? – Definition, Tools & Process

The environmental analysis assists businesses and companies to recognize inner and outer factors that are positively or negatively impacting the company. The analysis of such factors would help the company to recognize potential opportunities and threats. You can develop an effective marketing strategy for your business if you know how to conduct an environmental analysis. Today, we’ll discuss what is environmental analysis; its tools, and its process.

Table of Contents

What is Environmental Analysis?

The environmental analysis is a strategic tool that helps you to recognize the internal and external factors that could impact the performance of your business. The analysis helps you to evaluate potential opportunities and threats present in the market. These indicators would further help you in the decision-making process. The analysis helps the company to align its strategies relevant to the business environment.

The business market environment is highly dynamic in terms of quickly changing market trends. Sometimes, the market trends quickly emerge and become obsolete before the world could see them. Businesses don’t have control over the changing market trends. What you can do is to study such factors that would help you to make changes.

The environment greatly influences a business’s efficiency, profitability, and daily operations. Therefore, businesses should constantly study external and internal factors in order to be aware of the market trends.

Tools of Environmental Analysis

Some of the main tools for environmental analysis are as follows;

PESTLE Analysis

Pestle’s analysis studies the macro factor that could possibly impact the company from operating its business. The company’s management used a pestle to know the overall market, and where the company would be in the future. However, pestle analysis consists of various macro factors like political, economic, social, technological, legal, and environmental. The details of every element of the pestle are as follows;

Political Factors

Political factors deal with the political environment of the country in which the company operates its business. It also studies international relations and global politics of different countries and how it impacts the country in which the company is operating its business. Therefore, it’s significant to study the regulation and government policies relevant to the industry. The political environment studies the following elements;

• Entry Mode Regulations
• Government Stability
• Tariff & Tax Laws
• Government Policies

When you’re launching or expanding your business in a certain country, then you should study the political factors of the country. The association and attachment of politicians to the company could be risky because their one political statement would push people away from the company.

Economical Factors

Economical factors are critical to the business of the company because they give direction to the businesses wherever the economy leads them. Companies should carefully analyze the economic factors of the country where they launching or expanding their business. It would help them to align their strategies relevant to the economic changes. Some of the economic factors that you should study are as follows; 

• Foreign Currency Exchange Rate
• Fiscal and Monetary Policies
• Unemployment Rate
• Credit Accessibility
• Disposable Income of Potential Customers
• Interest Rate
• Inflation Rate

It’s important to mention it here that powerful economies promote business with flexible policies, and the weak economies discourage them with stiff regulations.

Social Factors

Countries and their geographies and people are different because of many social factors like norms, beliefs, values, culture, tradition, and mindset of the people. They have got a great impact on the businesses that are running their operations in a specific society. Ultimately, it would impact the sale of the product or services. Some of the main social factors are as follows;

• Wealth Distribution
• Education Level of Customers
• Domestic Structure
• Social Lifestyle of People
• Demographics
• Cultural Implications

The social factor would have a great impact in terms of the popularity of the product and how it aligns itself with the country’s cultural norms and social setup. The company should keep in mind such factors while marketing and promoting its product and service.

Technological Factors

The development in technology is excellent and the rate at which things are changing is great. The advancement in technology is also influencing businesses greatly, and they have to keep up with the changing technology . They should integrate with the latest technology to improve the efficiency of their operations. Some of the technological factors are as follows;

• Innovative tech platform
• Tech development rate
• Tech obsolescence rate
• Latest Discoveries

Companies should conduct a tech environment analysis before implementing any technology into their operations.

Legal Factors

Country’s regulations and legalities keep on changing over time, and their changes would impact the business environment. If the government regulation sets boundaries for the businesses and companies have to operate within the limits of those boundaries. However, some of the legal factors are as follows;

• Safety and health regulations
• Patent infringements
• Regulations for competition
• Employment Regulations
• Regulations of Product/services

The country’s laws and regulations have the power to shut down the business temporarily or permanently if the company isn’t following it.

Environmental Factors

The environmental factors comprise climate change and usage of scarce natural. Often, impacts the agricultural businesses, and how the company is conducting its operations. If the side effect of using a certain product or operation is impacting the environment, the company’s stakeholders would be in question. Some of the main environmental factors are as follows;

• The attitude and reaction of people towards the environment
• Regulations on Energy Consumption
• Waste Disposal Laws
• Weather and Climate
• Geographical Location

Caring and protecting the environment should be an essential part of every business plan and organization. Companies should limit the production of emissions of toxic waste that could jeopardize the natural environment.

SWOT Analysis

The swot analysis comprises four elements; strengths, weaknesses, opportunities, and threats. Their detailed study is as follows;

Internal Factors

The internal factors comprise of strengths and weaknesses of the company. The reason business experts call them internal factors is because they’re under the control of the company. For instance, if the company has a well-reputed brand name and good profitability, and they’re internal factors and they would help the company to strengthen its market position.

External Factors

External factors comprise opportunities and threats and they’re out of the control of the company. The external factors could occur at any time and the company can’t do anything to remove the competition. They just have to be aware of it and develop their strategy accordingly.

What is the Environmental Analysis Process?

Some of the main steps in the environmental analysis are as follows;

• Find out Key Environmental Factors. If you’re conducting the analysis, then first choose the key area that you should evaluate. For instance, if you’re working in the healthcare industry, then you should choose the legal factor in order to deal with the health and safety issues. While choosing the factor, you should select the one that has the maximum potential to impact your business.
• Collect Information. After choosing the factor, you should gather information relevant to your environmental factor. You should collect both verbal and written information. The verbal sources are radio broadcasting, listening, and hearing things; and written sources are newspapers and magazines. For instance, you should read health magazines online to track the updates in the health and safety regulations.
• Know Your Competitors. If your competitors are posing threats, then you gather relevant information. You can spy, and gather the information in unconventional ways. For instance, you can spy on the activities of healthcare facilities in your area; it would give you industry insight.
• Forecast the Impact on Your Business. The prediction would help you to forecast how certain environmental factors would affect your company. It means predicting potential opportunities and threats. You can employ various techniques for forecastings like surveying and brainstorming. For instance, surveying the healthcare facility allows you predict the opening of the new competitive branch in the city. It would attract some of your patients.
• Evaluate Your Strategies. Here you study the current and upcoming strategies to know how the environmental changes would impact your business. It allows you to deal with the potential challenges that have resulted from such factors. For instance, your healthcare facility should develop a new strategy in order to deal with limited clients after the opening of the new healthcare brand in the area.

Final Thoughts

After a careful study of business environmental analysis; swot analysis, pestle analysis, and various stages in the process; we’ve realized that environment study is very important for your business. If you want to conduct an environmental study for your business, then you should keep in mind the abovementioned suggestions and process.

About The Author

Ahsan Ali Shaw

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What is an environmental analysis in marketing?

Last updated

27 April 2023

Reviewed by

Marketing is a crucial component in any business. For businesses to succeed in any industry, they must be aware of various challenges, like competition, trends, new technology, and regulatory changes. 

That’s where environmental analysis comes in. It evaluates the opportunities and threats in a business environment, allowing businesses to make informed decisions. 

This article will explore environmental analysis, its purpose, and its techniques.

• What is an environmental analysis?

An environmental analysis is a strategic tool that businesses use to evaluate the internal and external factors that impact their operations. 

An analysis looks at factors like: 

Technological

This provides businesses with vital information that influences their marketing strategies.

Another important factor is social trends. Businesses need to be aware of changes in societal values and attitudes toward certain issues. For example, a beauty company may need to adjust its marketing strategy in response to the growing trend toward natural, organic products.

Technological advancements are also a crucial element in an environmental analysis. We saw the rise of e-commerce and mobile devices shift the business landscape, so it’s crucial to be aware of emerging technologies that could impact operations. 

They also need to consider how they can use technology to their advantage, such as developing new products or improving their supply chain management.

Legal and political factors are another critical consideration. Regulation changes can significantly impact businesses, particularly those operating in highly regulated industries such as healthcare or finance. 

Companies need to stay on top of legislation changes and adapt their operations accordingly.

Considering economic, social, technological, legal, and political forces means companies can make informed decisions about their marketing strategies and overall business operations.

• What is the purpose of environmental analysis?

An environmental analysis primarily aims to evaluate a business's external environment to identify opportunities and threats. With this information, a business can create a roadmap with strategies that take advantage of the opportunities and mitigate the threats. 

An environmental analysis also allows businesses to remain competitive by identifying technology, consumer, and market trends .

Environmental analysis is a critical component of strategic planning. It helps businesses understand their current position in the market and identify potential risks and opportunities. Analyzing the external environment means businesses can develop effective strategies to achieve their goals and objectives.

As we mentioned earlier, businesses must consider several factors when conducting an environmental analysis:

Political factors may include policies and regulations that impact the business.

Economic factors may include inflation, interest rates, and exchange rates.

Social factors may include cultural norms, beliefs, and demographic trends, such as population growth and aging.

Technological factors may include advancements in technology and innovation. 

Legal factors may include laws and regulations that impact the business.

Environmental factors may include climate change and natural disasters.

A comprehensive understanding of the external environment can help businesses implement effective strategies to achieve their goals and objectives.

• Environmental analysis techniques

Businesses can use several techniques to conduct an environmental analysis, which we can broadly categorize as quantitative and qualitative. 

Quantitative techniques involve mathematical models, surveys , and statistical methods to collect and analyze data. 

Qualitative techniques use interviews , focus groups , and expert judgment to gather opinions, attitudes, and perceptions.

Quantitative techniques

One of the most common quantitative techniques for environmental analysis is statistical analysis. Statistical analysis involves using mathematical models to analyze data and identify patterns and trends. This technique is handy for analyzing large data sets and identifying correlations between variables.

Another quantitative technique for environmental analysis is surveys. They’re a powerful tool for collecting data from many people. Businesses can conduct surveys online, over the phone, or in person. Survey data can identify trends and patterns in the external environment.

Qualitative techniques

One of the most common qualitative techniques for environmental analysis is expert interviews. Expert interviews involve gathering the opinions and perceptions of experts in a particular field. This technique is particularly useful for identifying emerging trends and potential threats.

Another qualitative technique in environmental analysis is focus groups. These involve gathering a small group of people to discuss a particular topic. The data from focus groups can identify attitudes and perceptions toward a particular product or service.

PESTLE analysis

PESTLE analysis is a commonly used technique for environmental analysis. 

PESTLE stands for: 

T echnological

E nvironmental

PESTLE analysis involves delving into these factors to identify potential opportunities and threats in the external environment.

SWOT analysis

SWOT analysis is another common technique for environmental analysis. 

SWOT stands for: 

W eaknesses

O pportunities

SWOT analysis involves identifying the strengths and weaknesses of a company and the opportunities and threats in the external environment.

Industry analysis

Industry analysis looks at the external environment of an industry. This technique is particularly useful for identifying potential opportunities and threats in the external environment. Industry analysis involves analyzing factors such as competition, market size, and market trends.

Competitor analysis

Competitor analysis involves analyzing the external environment of a company's competitors. This technique is beneficial for identifying potential threats in the external environment. Competitor analysis involves analyzing factors such as market share, product offerings, and pricing strategies.

Competitor analysis templates

What is an environmental analysis example.

For instance, if a business sells environmentally friendly products, it may conduct an environmental analysis to determine how government regulations may impact its operations. 

The business may evaluate the political forces to determine whether the government intends to tighten regulations or introduce new ones. It may also investigate the legal forces to check the existing regulations related to environmental issues. 

Benefits of environmental analysis

An environmental analysis offers numerous benefits to businesses:

Gaining a clear understanding of their market position and strengths and weaknesses

Identifying emerging trends and acting before their competitors gain an edge

Remaining competitive by understanding the ever-changing business environment

Limitations of environmental analysis

However, it's worth noting that environmental analysis has its limitations, including: 

It’s impossible to predict the future with certainty, so there’s always a risk of unforeseen events affecting business operations, regardless of a detailed environmental analysis.

The cost and time to conduct an environmental analysis may be challenging for businesses that lack resources.

Environmental analysis is an important tool that businesses need to master. Evaluating external forces and identifying opportunities and threats means businesses can make informed decisions and remain competitive. 

While not foolproof, environmental analysis is still worth conducting to stay ahead of emerging trends and protect businesses from unforeseen events.

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A Comprehensive Guide to Business Environmental Analysis: What is It, and Why is It Important?

• Ossian Muscad
• August 28, 2022
• No Comments

Last Updated on January 3, 2024 by Ossian Muscad

Every business exists in an environment, and it’s important to understand that environment to be successful. Unfortunately, businesses sometimes tend to ignore this importance, leading to strategic planning failures. By getting to know the business environment and conducting regular environmental analysis, businesses can make the right decisions to stay ahead of the competition.

But what exactly is environmental analysis, and how do you conduct one? This article will discuss environmental analysis, its importance, and how to use it to improve your business’ strategic planning.

What is Business Environmental Analysis?

Business environmental analysis is studying the external factors that affect a business. This includes things like the political landscape, the economic conditions, the technological environment, and more. By understanding these factors, a company can develop strategies to optimize its performance within this context. 

This environmental analysis examines industry and organizational factors that positively or negatively affect the business. By determining short-term and long-term impacts, organizations can readily respond to them when they appear. 

Purpose of Environmental Analysis

An environmental analysis helps organizations define factors that can influence their business operations. Business leaders can make better decisions about moving forward by assessing and weighing these factors.

Additionally, environmental analysis can help business leaders anticipate changes in the market and adjust their strategies accordingly. Apart from that, here are other reasons why environmental analysis is essential for businesses:

• Identifying Opportunities: Environmental analysis can help businesses spot emerging trends and changes in the market. This allows them to seize new opportunities before their competitors do.
• Mitigating Threats: By understanding potential threats in the environment, businesses can design strategies to mitigate these risks, avoiding potential pitfalls.
• Formulating Strategies: Environmental analysis provides critical insights that can shape a company’s strategic planning process, ensuring alignment with the external environment.
• Enhancing Competitive Advantage: By understanding the external environment better than competitors, businesses can leverage this knowledge for a competitive advantage.
• Anticipating Change: Environmental analysis helps businesses anticipate and prepare for changes in the market, regulatory landscape, or technology trends.

Elements of Environmental Analysis

Two main elements of a business environmental analysis are internal and external factors.

Internal Factors

Internal factors are elements within a business that can influence its operation and success. These factors are primarily under the control of the business and can be altered or manipulated according to business needs. Here are some key internal factors:

• Resources: This includes all tangible and intangible assets a company has at its disposal to use in producing goods or services. Tangible resources include physical assets such as infrastructure, raw materials, and human resources. Intangible resources encompass elements like brand reputation, intellectual property, and corporate culture.
• Capabilities: A company’s capabilities are its skills or competencies in deploying resources to achieve business goals. It involves marketing effectiveness, production efficiency, technological innovation, customer service, etc.
• Management and Organization Structure: The organizational structure and quality of its management team can significantly impact a company’s operation. Effective leadership and a well-defined structure can facilitate smooth decision-making, coordination, and control, contributing to business success.
• Business Processes and Operations: These involve the methods and procedures for coordinating and conducting business activities. Efficient processes can enhance productivity and customer satisfaction, leading to higher profitability.

Identifying and evaluating these internal factors through an environmental business analysis can help businesses leverage their strengths, address weaknesses, exploit opportunities, and ward off potential threats.

External Factors

External factors are elements outside the control of a business that can significantly influence its performance. Recognizing and understanding these external factors can help a business to react and adapt to changing circumstances. Here are the key external factors:

• Political Factors: These include government policies, regulations, and legal issues that define formal and informal rules under which the firm must operate. Political stability, tax guidelines, trade regulations, and employment laws all influence the business environment.
• Economic Factors: Economic factors are determinants of a country’s economic performance that directly impact a company and have resonating long-term effects. These include inflation rates, interest rates, foreign exchange rates, economic growth patterns, and unemployment rates.
• Sociocultural Factors: These factors encompass the societal and cultural forces that shape consumer behavior. They include population growth rates, age distribution, attitudes towards health, and cultural trends.
• Technological Factors: Technological changes can create new industries and market opportunities. A company’s ability to manage its IT infrastructure might also affect its ability to compete and its efficiency.
• Environmental Factors: Environmental factors include weather, climate, and climate change. These factors can especially affect industries such as tourism, farming, and insurance.
• Legal Factors: These are related to the legal environment in which firms operate. They include consumer law, employment law, antitrust law, discriminatory law, and copyright law.

By evaluating these external factors during an environmental business analysis, businesses can develop effective strategies that align with their operating environment, thereby improving their chances of success.

Business Environmental Analysis Process

A business environmental analysis systematically uncovers factors affecting your business and its operations. When there aren’t any fixed and definitive rules on doing an environmental assessment, the following steps can guide you into making the most out of this process:

Step 1: Identify the Environmental Factors

Every environmental analysis will need a list of the factors that will undergo evaluation. These factors will depend on the business and its specific goals for conducting the analysis. This list should include micro- and macro-environmental factors that have short- and long-term effects on business.

For example, a company selling organic products might consider environmental factors such as changing consumer preferences, government regulations on organic labeling, and the availability of raw materials.

Step 2: Collect Further Information About These Factors

After outlining which factors will be included in the analysis, the next step is to conduct research and gather more information about each of these factors. This can be done through desk research, surveys, interviews, and focus groups . Again, you can utilize various sources to ensure accurate, relevant, and up-to-date information. 

For instance, organic product companies may gather data on consumer buying patterns through surveys and consumer behavior reports. They may also research government regulations and consult with suppliers to understand the availability of raw materials.

Step 3: Check the Competitors

When conducting an environmental analysis, your research isn’t limited to your organization’s business standing. It also involves understanding your competitors and how they’re faring in the business landscape. This will give you a better idea of where you stand and what you must do to stay ahead of the competition.

For example, the organic products company may analyze its competitors’ marketing strategies, product offerings, and financial performance to identify potential threats or opportunities.

Step 4: Determine the Impacts on the Organization

Once you’ve collected all the relevant information, it’s time to determine how these environmental factors will affect your business. This is where you need to weigh the risks and opportunities of each business situation. Doing so will help you develop strategies to take advantage of the opportunities and minimize the risks.

For instance, the organic products company may diversify its product offerings and invest in sustainable raw materials to capitalize on changing consumer preferences and government regulations. They may also implement cost-cutting measures to mitigate potential risks of rising production costs due to the limited availability of raw materials.

Step 5: Formulate an Effective Strategic Plan

The final step is creating a strategic plan to guide your business decisions and actions. This plan should be based on your insights from the environmental analysis. It should also be aligned with your business goals and objectives. Having a well-informed and strategic plan allows your organization to stay adaptable and competitive in the ever-changing business environment.

For example, based on their environmental analysis, the organic products company may decide to expand their market reach and invest in innovative technologies for sustainable packaging. They may also set goals for increasing sales and reducing costs.

Types of Environmental Analysis Techniques

There are two environmental analysis Techniques: PESTLE analysis and SWOT analysis. These methods help organizations assess their strategic positions based on the business environment and a wide range of internal and external factors. 

PESTLE Analysis

PESTLE analysis is a framework that helps organizations assess the factors that can influence their business on a larger scale outside the organization. It provides essential insights into the market status based on relevant trends concerning the market, technology, customers, and more. PESTLE has six key elements:

Political factors refer to government policies, regulations, and laws that regulate business operations. It is important to conduct business in any country. Other political factors include:

• Local, federal, and state policies.
• Tax regulations
• Trade rules
• Safety regulations
• Governmental stability

Economic factors are determinants of a country’s economic performance that directly impact the organization. By assessing the economic factors, organizations can anticipate potential opportunities and challenges. These include:

• Unemployment rates
• Inflation rates
• Economic growth rates
• Interest rates
• Foreign exchange rates

Social factors reflect the society in which an organization operates. It helps organizations to understand the evolving customer needs, preferences, and behaviors. These include:

• Attitudes and opinions towards health and work-life balance
• Key demographic trends
• Consumer buying patterns
• Cultural values
• Lifestyle trends 

Technological

Technology is a significant driver of change in the business environment. It has revolutionized how businesses operate, compete, and interact with customers. Key technological factors include:

• Research and development areas
• Technological incentives
• Up-and-coming technologies
• Disruptive technologies
• Technology transfer speeds

Legal factors are the laws and regulations that govern businesses. Organizations must comply with these laws to operate legally and avoid penalties. Legal factors include:

• Employment laws
• Product regulations
• Health and safety regulations
• Antitrust laws
• Environmental regulations

Environmental

Environmental factors encompass the natural environment in which an organization operates. These factors can impact industries such as tourism, agriculture, and energy. Environmental factors include:

• Energy consumption regulations
• Environmental policies
• Climate and weather conditions
• Sustainability efforts
• Natural disasters

SWOT Analysis

SWOT Analysis is a strategic planning tool organizations use to identify their Strengths, Weaknesses, Opportunities, and Threats – hence the acronym SWOT. The technique provides a framework to evaluate an organization’s competitive position and understand how the business can leverage its capabilities to succeed.

Strengths refer to the positive internal attributes of an organization, including resources, capabilities, and advantages that give it a competitive edge over others. This can range from strong brand recognition and skilled personnel to a robust financial position.

Weaknesses are the internal factors that prevent an organization from realizing its full potential and might hinder its performance. Examples could include poor infrastructure, lack of skilled labor, operational inefficiencies, or outdated technology.

Opportunities

Opportunities include the external factors that an organization could exploit to its advantage. These include market trends, shifts in customer behavior, technological advances, or changes in government policies.

Threats involve external factors that pose challenges or risks to an organization. These could include competitive rivalry, regulatory changes, unfavorable economic conditions, or technological disruptions.

Through a SWOT analysis, an organization can gain a comprehensive understanding of its internal and external environments. Consequently, it can develop strategies that leverage strengths, mitigate weaknesses, exploit opportunities, and defend against threats. This can ultimately lead to increased competitiveness and success.

Benefits of Environmental Analysis

Environmental analysis provides a strategic advantage to organizations by offering insights into the factors that might impact their business. By understanding the internal and external environments, a business can make informed decisions and develop robust strategies to respond to potential opportunities and threats. Here are three crucial benefits of conducting an environmental analysis:

Enhanced Market Understanding

Through an environmental analysis, businesses can comprehensively understand their market, including customer needs, competitor strategies, and current trends. This information can be instrumental in identifying viable market opportunities and potential threats, allowing businesses to make proactive decisions. Moreover, it helps define the market segment, understand the competitive landscape, and set realistic targets.

Risk Management

Environmental analysis also plays a vital role in risk management. By identifying potential threats in the business environment, organizations can develop contingency plans and mitigate the impact of adverse events. This includes changes in regulatory laws, economic downturns, technological disruptions, or social and political instability.

Strategic Planning

Conducting an environmental analysis can significantly inform the strategic planning process. The insights gained can help set realistic goals, strategize market entry or expansion, optimize resource allocation, and make informed investment decisions. It also facilitates the development of strategies that leverage organizational strengths and mitigate weaknesses, thereby enhancing business competitiveness and growth.

Frequently Asked Questions (FAQs)

Q1: what is the importance of a business environmental analysis.

A business environmental analysis is crucial as it helps organizations understand both their internal and external environments. This understanding allows them to identify opportunities and threats and develop strategies to leverage them and mitigate them. It facilitates informed decision-making and proactive planning.

Q2: In what ways does technology impact business environmental analysis?

Technology significantly impacts business environmental analysis by revolutionizing how businesses operate, compete, and interact with customers. Upcoming technologies, research and development, and technology transfer speeds are all crucial factors that need to be considered in an environmental analysis.

Q3: How do legal factors affect a business’s environmental analysis?

Legal factors, including employment laws, product regulations, health and safety regulations, and environmental regulations, affect a business’s environmental analysis by determining the legal constraints an organization must operate within. Non-compliance can lead to penalties and can negatively impact a company’s reputation.

Q4: How does the SWOT analysis process fit into business environmental analysis?

SWOT analysis is a part of the business environmental analysis that focuses on the organization’s internal factors (Strengths and Weaknesses) and external factors (Opportunities and Threats). It helps organizations understand their competitive position and leverage their capabilities for success.

Q5: Why is understanding social factors important in a business environmental analysis?

Social factors are essential in a business environmental analysis because they help organizations understand evolving customer needs, preferences, and behaviors. This can include attitudes towards work-life balance, buying patterns, cultural values, and lifestyle trends.

Q6: Does the size of a business influence the need for a business environmental analysis?

Regardless of the size, every business can benefit from conducting a business environmental analysis. It provides insights into the market, aids in risk management, and informs strategic planning. However, the scale and depth of the analysis may vary based on the size and nature of the organization.

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While it may seem like a lot of work, business environmental analysis is crucial for any organization. With it, you can better understand your business’s strengths and weaknesses and the opportunities and threats of operating in a certain business environment. 

So, if you haven’t tried implementing this process in your business yet, now is the time. Use the information and insights gained from a business environmental analysis to make informed decisions, mitigate risks, and drive business growth. As the global marketplace continues to evolve, regularly conducting an environmental analysis will be essential for staying competitive and successful.

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Environmental Analysis, Types, Techniques, Importance, and Examples

Organizations can find internal and external factors that could have a positive or negative impact on their business by conducting an environmental study.

Through the examination of variables like technology and economics, firms can predict future opportunities as well as risks but developing your environmental analysis skills will enable you to create a corporate marketing plan that works.

This page defines an environmental analysis, explains its use, and walks readers through the environmental analysis procedure.

Table of Contents

What is Environmental Analysis?

A strategic tool for identifying and evaluating the internal and external components of a corporate environment is an environmental analysis, sometimes known as an environmental scan.

It looks at aspects of the industry and organizations that can have a good or bad impact on the company and its success. Anticipating both immediate and long-term effects allows the organization to be ready to react quickly when problems arise.

Organizations can identify elements that may have an impact on their business operations with the use of an environment study. They can predict the future course of their firm under the current conditions by evaluating these factors. They can create a plan that minimizes risks and seizes chances thanks to this method.

Strategic planning sessions benefit from the inclusion of an environmental study, which gives organizations a methodical approach to decision-making. In this manner, businesses can accomplish their objectives and raise the bar on their performance.

The two main parts of an environmental analysis are external variables and internal factors. They will be covered in detail in this section.

1. Internal Factors

These elements require organizations to examine themselves. Based on the organization’s goal and vision, they assess its strong and weak elements. These elements also enable companies to evaluate their goals and course of action after a predetermined amount of time, such as five or 10 years.

2. External Factors

Conversely, external variables are high-level influences that are not part of the organization. Businesses need to assess the potential and risks associated with the following areas, according to SHRM:

• Market and industry developments
• The advantages and disadvantages of the competition
• Clientele—both your clientele and your customer support
• Economic factors that can affect an organization
• Labor supply, labor markets in the regions of operation;
• Technology, technological breakthroughs that help expedite operations;
• Politics, and legal situations

Types of Environmental Analysis

PESTLE and SWOT analyses are the two most used forms of environmental analysis techniques. These methods assist companies in evaluating their strategic positioning in light of several internal and external variables. Continue reading to discover these techniques.

PESTLE Analysis

The PESTLE study, also known as the PEST analysis in short, looks at the external factors that can have a bigger impact on a firm. Based on broad trends in the market, consumers, technology, and other areas, it gives businesses insights into the state of the industry.

Six essential components make up the PESTLE approach, which provides a thorough understanding of the macro environment of the business:

• Technological
• Environmental

1. Political

Political factors examine the country’s current political situation. This frequently entails assessing whether the government is stable or likely to change shortly. Political elements to consider are as follows:

• Government policies
• Trade restrictions

2. Economical

Businesses frequently include economic issues, or the state of the economy at the time, when doing an environmental analysis. This enables them to formulate strategies according to the apparent trajectory of the economy.

For example, a business may believe the economy is doing well and contemplate building another branch if the unemployment rate is low. The following other economic elements should be considered in your review:

• Interest rate,
• Inflation rate,
• Foreign currency rate,
• Credit accessibility.

A nation’s social aspects are its attitudes, which can affect business. For example, people in some cultures follow a diet prescribed by their faith. The sales of particular foods in that area might be impacted by this. Among the social aspects are, for instance:

• Family structure
• Gender roles
• Distribution of wealth
• Education levels

4. Technological

Innovations and technological breakthroughs have the potential to alter how a firm operates. This could have a favorable effect on some businesses’ operations by using automation to expedite creation. But certain jobs may also be replaced by technology. The following technological aspects should be considered in your analysis:

• New product discoveries and launches;
• Rate of technological advancements;
• Consumer access to technology;
• Technology incentives.

Legislative changes that could affect a business’s environment are examined by legal aspects. An industry may be impacted when regulatory organizations impose new rules, as in the case of the healthcare sector. A few legal considerations are:

• Employment laws;
• Health and safety legislation;
• Patent infringements;
• Product restrictions;
• Employment Laws

6. Environmental

Environmental aspects consider the potential effects of a business’s location. A specific area’s conditions may affect trade. Things to take into account when reviewing the environment are:

• Weather conditions
• Waste disposal laws
• Energy consumption regulations
• Environmental policies

SWOT Analysis

The SWOT analysis evaluates an organization’s strategic position by taking into account both internal (strengths and weaknesses) and external (threats and opportunities) factors.

It reveals the benefits and drawbacks of a business based on its strong and weak characteristics. By doing this, businesses may create a plan that minimizes risks and optimizes opportunities.

The following components make up the 2×2 matrix used in the SWOT method:

• What advantages does your business provide?
• What special or affordable resources are available to you that are not available to others?
• In your market, what skills do clients think you possess?
• What qualities lead one to “win business”?
• What could you alter?
• What should you avoid doing?
• What shortcomings is your economy most likely to perceive in you?
• What factors are involved in the downturn of your business?

Opportunities

• What promising opportunities do you see?
• What intriguing patterns are you aware of?
• What difficulties do you face?
• What are your competitors doing?
• Is the rapid advancement of technology putting your employment at risk?
• Do you struggle with the financial flow or bad debt?

SWOT analysis can help a business challenge performance assumptions and reveal dangerous weaknesses. If a firm uses it carefully and cooperatively, it can offer new insights into where it is at and help it create the best plan of action for any situation.

Process of Environmental Analysis

While doing an environmental scan has no set guidelines, following these stages will help you get the most out of the process. An environmental analysis is a methodical approach to identifying the elements that impact your company and its operations.

• Identify the environmental factors
• Gather data regarding these variables
• Check the competitors
• Determine the impacts on the organization
• Create a tactical plan

1. Identify the environmental factors

A list of the variables to be assessed is the most important prerequisite for an environmental study. These variables will vary based on the industry and region of your company.

Micro- and macroenvironmental elements that affect their operations both temporarily and permanently should be on this list. A mining business, for instance, may describe the most recent developments in their sector and local environmental laws.

2. Gather data regarding these variables

The next stage is to collect data about the environmental factors that have been described. To ensure the material is current and relevant, you might consult a variety of sources.

You can look at your factors and conduct some studies here. Written and verbal information are the two primary categories of data that need to be gathered.

People read newspapers or magazines to receive written information, while they listen to radio broadcasts or other spoken forms of communication such as radio broadcasts.

Using the aforementioned example, this would entail looking up any updates to health and safety laws online and in medical periodicals to determine whether they would affect your medical facility.

3. Check the competitors

When doing an environmental scan, you look beyond the financial standing of your company. It’s also important to research the performance of your rivals. A competitor study can assist you in identifying potential risks to your company as well as chances to differentiate yourself from the competition.

4. Determine the impacts on the organization

You can now use the environmental data you’ve gathered to forecast potential effects on your business. By taking this step, you set your expectations and may be ready for whatever may happen should these variables materialize. When evaluating risks and their effects, it’s critical to consider the following:

• What effects does this factor have on your company?
• How much time will this last?
• Will this have a positive, negative, or no effect on the business?
• How significant is this component to the general operations of the business?

5. Create a tactical plan

You can come up with ideas and create strategies for potential changes resulting from these elements in the last phase. It entails evaluating the strategic plans you now have and making necessary adjustments in light of the knowledge you have gained about your company’s surroundings. In addition, you can list actions to reduce risks and increase possibilities.

Example of Environmental Analysis

Think of Mr. X as an analyst for the financial services company ABC Pvt. Ltd. Mr. X decided to perform an environmental analysis in response to the latest happenings in the financial business. Given that technology advancements drive the finance industry, Mr. X decided to conduct a PESTLE analysis.

Mr. X takes into account the political, economic, social, legal, and environmental elements in this analysis. He does, however, pay more attention to the technical details. He makes comparisons between the technological developments occurring in other businesses within the same industry.

The findings demonstrate the new developments in sound technological services. It reveals how reliable chatbots in the financial services industry boost company profitability. Mr. X decided to construct a strong chatbot because ABC Pvt. Ltd. does not currently have one.

According to the analysis’s answer, they must improve their after-sales services by advancing technology. After that is finished, the company’s revenue and profitability increase by 15%. The analysis is therefore considered successful.

Importance of Environmental Analysis

The following are some benefits of conducting environmental analyses for organizations:

• Identify opportunities: Organisations can identify emerging trends and opportunities to enter new markets or develop new goods or services by observing the outside world.
• Identify threats: It assists companies in identifying risks to their operations, such as emerging rivals, altered laws, or a faltering economy.
• Develop strategies that work: When organizations know how the external environment impacts their operations, they can develop strategies that work and align with their aims and objectives.
• Prepare for change: Environmental scanning assists companies in anticipating external changes and developing contingency plans for them.
• Make smarter decisions: By learning more about the external issues affecting their business, organizations can make more informed decisions.

An organization must do an environmental analysis if it hopes to succeed and remain competitive in the ever-evolving commercial world. It assists them in seizing opportunities, reducing risks, and formulating sound plans that result in expansion and prosperity.

Environmental Analysis in Marketing

Business developers and marketers utilize environmental analysis as a strategic tool to pinpoint the internal and external, controllable and uncontrolled aspects that affect an organization’s performance.

The term “marketing environmental analysis” refers to all non-marketing variables that have an impact on a company’s capacity to establish and preserve fruitful customer connections. A company can find opportunities and strengths and lessen threats and weaknesses by performing a marketing environment analysis.

In marketing, environmental study typically comes before any marketing strategy. The results of the marketing environmental study will be taken into account and used as a guide to help develop and improve the optimal business plan.

Through the continuous observation of the variables influencing the marketing landscape, marketers can anticipate shifts, seize opportunities, and fine-tune their business plans to achieve superior outcomes.

Analysis of the marketing environment is essential to a company’s success. This aids in recognizing every component linked to the enterprise and the functions that each of these components fulfills in the enterprise’s triumph.

For every business to succeed in the long run, environmental analysis in marketing is therefore not just necessary but also required.

Business Environmental Analysis

Analysis of a business’s external environment is the study of those external influences. This covers a variety of topics, such as the state of politics, the economy, the technology sector, and more. A business can create strategies to maximize its success in this environment by knowing these aspects.

The organizational and industrial elements that have a positive or negative impact on the firm are examined in this environmental analysis. Organizations can quickly address them when they arise by assessing the short- and long-term effects.

Understanding environmental analysis is a crucial skill for organizations. Businesses can make educated decisions and maintain their competitiveness by assessing external influences and recognizing opportunities and challenges.

Even if it’s not infallible, environmental analysis is nonetheless valuable for keeping up with trends and safeguarding companies against unanticipated disasters.

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Providence Amaechi

A passion-driven environmentalist by heart. Lead content writer at EnvironmentGo. I strive to educate the public about the environment and its problems. It has always been about nature, we ought to protect not destroy.

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What is Environment Analysis? Objectives, Theories and Examples

What is Environment analysis in modern-day businesses?

Environmental analysis is a dynamic process that uses a 360-degree holistic approach to analyze the variables that affect the company environment rather than sticking to just one section. With a study on business environmental analysis, organizations can uncover internal and external factors that may negatively or positively affect their company. Businesses can foresee future opportunities and challenges by considering variables like the economy and technology. This might help them create a successful marketing plan by learning how their day-to-day activities are taking place using the study from the business environmental analysis.

Environmental study is one of the most extensive methods for strategically determining all internal and external aspects that impact a business’s future. This analysis is important because external components reflect possibilities and threats, while internal components show a company’s advantages and disadvantages. The environmental analysis also considers trends and major elements, for instance, changing fashion interest and how it could impact an apparel business . These evaluations can aid companies in becoming more appealing to customers.

Such measures considerably impact effectiveness, competitiveness, administration, judgment, and the company’s overall success. They also considerably contribute to the creation of successful business plans. Companies can develop plans that align with the shifting aspects of the company’s environment by studying the components. The internal wisdom furnished by environmental analysis is also used by businesses to improve their workforce capabilities, performance , client satisfaction, preservation cost, etc. Further, the external measures help in reacting to the context favorably and aligning the blueprints according to the ideas of the association.

An exercise in scenario planning is only concerned with examining the potential effects of unknowable factors or “ambiguity” just on an organization’s future and is better employed in conjunction with an environmental analysis. To benefit from environmental analysis, it is required for a company to transform the data into a form that can be used to set goals and create a plan for accomplishing them.

Components of environment analysis

Internal and external factors are the two main parts of an environmental analysis. Since we now know that an organization’s internal environment consists of things like its value system, goals, structure, culture, workforce, labor unions, technical capabilities, etc. On the other hand, various external elements have an impact on how a firm operates. These elements make up an organization’s external environment. Let us look at these components thoroughly below:

• Internal Component : These elements demand that businesses examine themselves. Based on the organization’s objective and vision, they assess its strong and weak elements. These elements also allow companies to reflect on their strategy and intentions for a predetermined time, like five or ten years. Many internal problems in a company are analyzed internally. The environmental analysis must address the following significant challenges based on the organization’s makeup;
• Financial standing
• Roles for products and services
• Product and service excellence
• External components : External factors, on the other hand, relate to important variables outside the organization. Businesses need to assess the challenges and opportunities in the following areas, Performance management:
• Market and industry trends
• Advantages and disadvantages of competition
• Your customers, including customer service
• Economic activities that may affect the organization
• Technology advancements in technology that can simplify processes
• Supply of workers and local labor markets
• Legal as well as political environment

The objective of conducting an environmental analysis

Despite knowledge about environmental analysis, entrepreneurs still wonder why it matters to their companies. Now that it is most likely clear why conducting an environmental analysis is crucial after reading the explanation above. If we conduct this study properly, we will understand how well businesses can draw in favorable environmental elements and reduce unfavorable ones. For the following reasons, environmental analysis is needed in all businesses:

• A company’s response to variations in important environmental factors is determined by environmental analysis. 
• Businesses use this study to determine how potential changes impact their worth or market position.
• Through risk mitigation, environmental analysis may help businesses examine and monitor possible risks to your company.
• By identifying adjustments that can be made in a company to boost the competitiveness of its asset base, enhance client satisfaction, or increase performance , environmental analysis helps them find new opportunities.
• The environmental analysis informs management about the connections between an organizational framework and its operations.
• An organization can determine how the internal environment of the business is changing using environmental analysis.
• Because the environment changes so quickly, an institution’s harmony with its surroundings could be quickly upset. An environmental analysis can assist a company in identifying the root reasons for disharmony. The equilibrium point can then be achieved by making the needed modifications.
• Environmental analysis assists businesses in reducing the number of potential solutions and eliminating those manifestly incompatible with anticipated possibilities or risks. The analysis enables the removal of inappropriate options, allowing the focus to be placed on more effective alternative solutions.

An industry or business might develop efficient marketing plans and tactics to boost its competitive advantage. Doing several instances of studies based on inputs from managers, such as business plans and predictions, economic indicators on rivals and consumers, market analysis, and a range of other elements, is one technique to perform an environmental analysis. To learn more about such techniques from seasoned trainers, check out this comprehensive course on Business environmental analysis by XLRI.

Popular theories in environment analysis

For sound marketing decisions, the company’s future planning, product abandonment, new product launches, and strategic management depend on effective environmental analysis. Some of the main models used in the environmental analysis are:

• PESTLE Analysis : When we look broadly at macro issues that greatly affect the health of a particular industry or sector, this is effectively a bird’s eye perspective of business activity. This environment analysis helps entrepreneurs and strategy developers understand where their market is. It also aids in protecting the organization’s future state. Pestle analysis includes several variables that affect the workplace. It’s a macroeconomic technique utilized to grasp the external reality of a larger environmental investigation. Each letter in the acronym denotes a different element. Every industry or organization could be impacted by these elements, either directly or indirectly. PESTLE (also spelled as PESTEL) stands for the following terms:
• Political aspects – The political environment describes how the activities of the government impact corporate operations. Businesses must remain vigilant about political issues because they are typically out of control. Thus it becomes all the more important to prepare to accept its impact on their day-to-day activities. The political environment examines the following elements:
• Rules Regarding Entrance
• Tariffs and tax laws provide stability in the country.
• Rules And regulations
• Economic factors – The type and pace of economic activity in which a firm competes or conducts business are addressed. It’s crucial to take into account variables like GDP, the rate of unemployment, the exchange rate, and others. The following are a few economic factors you should research:
• Exchange rate for other currencies
• Fiscal as well as monetary policies
• Accessibility to Credit and Rate Of Unemployment
• Income Available to Prospective Clients
• Inflation Rate
• Percentage of inflation
• Social influences – Businesses must pay special attention to the rules, values, practices, culture, skills, language, tastes, and preferences of the people in this environment. The following are some of the important social and economic factors;
• Money Distributed
• Visitors’ level of education
• Domestic Organization
• Social Behavior of Individuals
• Demographic factors
• Cultural Effects of Gender

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• Technical aspects – The success of an organization is discussed through technological advancements, technological level, technology acquisition, the research and development budget, etc. The following are a few technological elements:
• Modern technology platform
• Technological progress
• Technology obsolescence rate
• Recent Findings
• Legal aspects – The legislation, laws about business, courts, and the legal system combine up the legal environment in which a company operates. Yet, the following are some legal considerations:
• Laws for health and safety
• Intrusions on patents
• Competitive regulations
• Occupational Guidelines
• Rules for Products and Services
• Environmental factors – The crucial cultural traits of worldwide markets, pertinent global marketplaces, and massive global political rallies make up a company’s global environment. These are some of the primary environmental factors:
• The way people view and respond to the environment
• Rules About Power Consumption
• Disposing of Waste Laws
• Environment and Weather
• Location-specific Information

This approach presents one of the pillars of strategic management, which goes beyond simply analyzing the market to consider an organization’s objectives and the tactics used to achieve them. This model’s entire scope is essential for whatever sector a company may operate in. The significance of each aspect may vary depending on the type of industry, but conducting the PESTLE analysis is essential for any plan a firm wishes to design because it is a much more detailed version of the SWOT analysis.

• SWOT Analysis: Before formulating a business strategy, it is crucial to carry out the SWOT analysis as a component of internal emphasis. The method for handling risks must include everything. Understanding SWOT analysis is aided by identifying the strengths and weaknesses as an internal evaluation of a business or by focusing on controllable aspects. As a result, the business’s possibilities and dangers are evaluated from the outside, considering external forces and influences that aren’t under its control.
• What benefits does your company offer?
• What exclusive or inexpensive resources can you access that nobody else can?
• What do customers in your market think you’re good at?
• What characteristics suggest you “win business”?
• What might you change?
• What must you keep away from?
• What flaws are you most likely to be viewed as having by your economy?
• What elements contribute to your business decline?
• Opportunities
• What favorable possibilities can you see?
• What fascinating trends do you know about?
• What challenges do you encounter?
• What are your rivals up to?
• Is your job at risk due to evolving technology?
• Do you have issues with bad debt or cash flow?

SWOT analysis can assist a company in exposing unsafe shortcomings and challenging hypotheses about its performance. It can provide fresh perspectives on where a company is right now and assist it in creating the ideal strategy for any circumstance if it uses it thoughtfully and in coordination.

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Process of conducting environmental analysis in your business

It is quite clear now what environmental analysis is and how it can benefit a company. Let us now understand how should an environmental analysis be done. Though it is usually an ongoing process, there are pre-defined steps. The six steps of an effective environmental study are listed below:

• List the factors: Selecting the criteria requires careful evaluation, which is the first stage in conducting an effective business environment study. Constitutional, ethical, technological, financial, and other variables may also be involved. The environmental analysis’s important factors are determined by the sector in which the company operates. An IT company, for instance, is more concerned with technological matters, while a healthcare company would wish to examine its legal considerations. 
• Analyze the elements critically: Analysts look at them while selecting the best ones for their business. Feedback on each of these criteria is gathered. They even conduct research and track the parameters. They have the option of vocally or in writing gathering information. Note-taking is one of the methods used to gather verbal data derived from on-ground research. In contrast, textual data is gathered through reading and scrutiny. 
• Examine rivals: The next step is for businesses to examine the rivals and assess where they stand in the market. This aids them in identifying risks and investment opportunities. Companies use conventional or unconventional methods to gather data on rivals. Traditionally, knowledge is gathered from either primary or secondary sources. Snooping, ideally considered unconventional, can also be used to collect this information. They observe new developments among rivals and then incorporate them into their operations . Companies also gain insight into previous errors and try to work on them, which helps them improve organizational performance shortly.
• Consider organizational implications: After businesses have done their due diligence on their competitors’ actions, evaluating the implications of this information on their daily activities is necessary. To do this, strategy makers use the power of prediction and extrapolation. This helps them to estimate how specific factors will affect a firm via prediction. This aids in spotting dangers, chances, possibilities, weaknesses, and strengths. Analysts conduct surveys, brainstormed ideas, and more to forecast the effect. Decisions are made based on these collected data sets to enhance the company.
• Create a plan: Now that basic research is done, analysts at every organization develop a strategy after inspecting all external factors and assessing organizational impacts. They issue statements and remedies on enhancing efficiency as well as company operations. This strategy can help firms accomplish their main goals.
• Put the plan into practice: Finally, it’s time for the company to implement the strategy in its daily activities once the analysts create the plan. The strategy consists of tactics that the company must adopt to boost productivity. These approaches are differentiators, which means that each issue relating to a given aspect has a unique solution. Companies can take advantage of opportunities and prevent challenges after implementing the strategy.

Limitations of Business Environmental Analysis

Every model or study has its drawbacks. Similarly, environmental analysis is also subject to some restrictions. Listed below are these restrictions:

• Need for preparation for unexpected events – Future predictions based on conducted environmental analysis are not sure to occur as predicted. When employed in a business, this study fails to do away with uncertainty. On the other hand, environmental analysis should minimize the severity and frequency of surprises that could strike a commercial organization.
• No guarantee of organizational efficiency – Environmental analysis cannot guarantee good management performance. It simply functions as a method’s evaluation and creation input. The verifiability and accuracy of information are sometimes taken for granted by management, who rely on it blindly.
• Poorly Reliable – Typically, people rely too heavily on the data gathered from environmental analysis. Yet this should not be the case in the actual world. One is liable to need clarification when information is bombarded.
• A lack of a strategic plan – The key to every organizational progress is taking calculated risks and needing to be more adventurous. Environmental analysis frequently causes someone to be overly careful in their approach, and they are more prone to fall behind the events. So, this examination needs to be done strategically.
• Time-consuming and expensive – The gathering, processing, and analyzing information for predicting takes much time and money. Hence, prediction is only helpful because the benefits are worth the effort and expense required.

The Bottom Line

Ultimately, it is vital to appreciate that environmental analysis focuses on evaluating a firm’s surroundings and potential scenarios that may or may not impact its activities. The environmental analysis procedure is often drawn out since it takes much time. But for businesses to thrive and flourish in this ever-evolving marketing climate, entrepreneurs need to sharpen their skills in conducting this study. The outcome of the procedure after learning the skill will help learners enhances their organization’s performance. These companies can profit from effective tactics that improve operational efficiency. The income and profitability of a company will also increase significantly as a result of this study

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Ecommerce · Strategy · Consulting

PESTLE Analysis: The Macro-Environmental Analysis Explained

by Martin Heubel

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Unstable market conditions are one of the biggest threats to the success of any company. For decades, managers have used the PESTLE framework to assess the opportunities and risks of their organisation’s macro environment.

Events such as the Brexit referendum or the coronavirus pandemic have had a significant impact on the way companies operate. But even smaller changes such as the introduction of new laws or technologies can pose a significant threat and force companies to react quickly.

If political and macro-economic changes are not recognised by businesses and included in their strategic planning process , attentive competitors can easily take advantage of this shortcoming.

But worry not! Today, you’re going to learn how to analyse your businesses macro environment with the PESTLE framework.

This article will cover:

Political Factors

Economic factors, social factors, technological factors, legal factors, environmental factors.

• How to do a PESTLE Analysis (incl. Template)

What is PESTLE Analysis

The PESTLE analysis is a concept first mentioned by Harvard Business School professor Francis J. Aguilar. He introduced the framework back in 1964 in his book “ Scanning the Business Environment “.

Since then, the PESTLE analysis has become a popular strategic tool to assess the macro environment of organisations worldwide.

The framework categorises the six forces of p olitics, e conomics, s ocio-culture, t echnology, e nvironment and l aw.

The PESTLE framework begins with an analysis of the political landscape. That’s because the political stability of a country is probably the biggest priority for any commercial organization.

Unstable conditions or extreme changes in government direction pose a major threat to ongoing operations. They can also lead to a dependency on political goodwill, making it almost impossible to operate economically.

While this is less likely to be the case in democratic states, totalitarian states often have centrally controlled economic systems. These severely restrict any form of business activities or even make them impossible in the first place.

For example, in conflict regions where civil wars prevail, or political power changes are frequent, companies are better off building local distribution networks than setting up nationwide production facilities.

But also relatively stable political conditions can pose challenges:

Take the European Union as an example:

Different legislative, anti-trust, and tax guidelines apply in each country. German domestic and foreign policies will differ widely from the ones in France or Poland.

Organisations need to be aware of the political movements in countries they operate in to minimise the risk of becoming the target of government action.

Typical political factors of a PESTLE analysis, include:

• Government policies
• Political stability
• Foreign trade policies
• Tax policies
• Labour laws
• Trade restrictions

In addition to the political situation, economic aspects play an important role when assessing a company’s macro environment.

The factors to be considered are manifold:

Currency stability, wealth and income distribution, unemployment rates, economic growth rates, wage costs or inflation rates are only a small excerpt of what managers should consider when analysing macroeconomic factors.

These factors can have a direct impact on the growth and profitability of a company.

Before entering a market, decision-makers must ask themselves whether the market is economically attractive and suitable for the intended operation.

Typical economical factors of a PESTLE analysis, include:

• Economic growth
• Exchange rates
• Interest rates
• Inflation rates
• Disposable income
• Unemployment rates

Following on from the economic analysis of a market, the analysis of socio-cultural characteristics provides an insight into the existing values, norms, institutions, education levels and consumption patterns of a population.

Put simply, this information allows businesses to outline the structures and values of a society.

However, managers need to take extra care in this part of the PESTLE analysis:

That’s because they often fall victim to predefined stereotypes when analysing geographically-distant markets.

The socio-cultural factors should always be assessed by several stakeholders with different backgrounds to ensure an objective evaluation of a market.

Typical social factors of a PESTLE analysis, include:

• Population growth rate
• Age distribution
• Career attitudes
• Safety emphasis
• Health consciousness
• Lifestyle attitudes
• Cultural barriers

In today’s age, almost every company is dependent on modern technologies.

Whether it’s due to the use of digital sales channels or the precise manufacturing of products with modern production facilities.

The rise in technological complexities also increasingly influence strategic decisions in companies.

When assessing environmental factors with the PESTLE framework, decision-makers must consider the technological progress of their time.

Managers can do this by asking a set of questions, like:

• Does the technological progress and infrastructure of a region meet the requirements of the plans to build a new manufacturing plant?
• Do specific technological standards exist with the entry into a new market, which must be met to build an effective supply chain?
• Are there any emerging technologies posing a threat of substitution ?

Typical technological factors of a PESTLE analysis, include:

• Technology incentives
• Level of innovation
• R&D activity
• Technological change
• Technological awareness

The legal framework is a central component in the analysis of a company’s macro environment. Even though this area is ranked at the lower end of the PESTLE framework, it is the most important for many companies.

For example, organisations within the EU have to consider at least three legal systems :

• The legislation in the country of the headquarters or production,
• The respective legal system of the country or countries in which the products are sold.
• Additional laws from the European Union that facilitate (or limit) business activities.

These legal systems often deprive managers of the flexibility they seek.

Advertising bans for certain product categories or special requirements for product design must be considered and taken into account on a country by country basis.

The resulting challenges often affect the entire marketing mix and can be costly to solve.

Typical legal factors of a PESTLE analysis, include:

• Discrimination laws
• Antitrust laws
• Employment laws
• Consumer protection laws
• Copyright and patent laws
• Health and safety laws

Environmental factors not only assess the climatic and topographical conditions of a country. They also evaluate a country’s availability of resources.

This is important, as products in regions with extreme climatic conditions have to meet different requirements than in their country of origin.

A car in the desert of Dubai has to meet different criteria than in Germany. European carmakers had to adjust their production to ensure their cars would stop catching fire in the UAE, following multiple reports back in 2005.

Geographical distances also pose a challenge for the distribution of products.

Mountains, rivers or other geographical conditions can quickly become a hurdle for transporting raw materials or goods.

Managers must carefully consider whether the ecological-geographical conditions of a region match their organisation’s strategic ambitions.

Typical environmental factors of a PESTLE analysis, include:

• Environmental policies
• Climate change
• Pressure from NGO’s

How to do a PESTLE Analysis (Free PDF Template)

Conducting the PESTLE analysis can be overwhelming. But with my easy-to-use template, it becomes a lot more manageable!

Simply print out the below template and start researching your industry.

A couple of great places to start your research are:

• statista.com
• ec.europa.eu

Free PESTLE Template

Simply click on the image to get redirected to the high-res PDF.

Over the past decades, the PESTLE Analysis has proven to be an effective concept to assess an organisation’s macro environment.

Its simple setup allows managers to anticipate future business threats and to take action to avoid or minimise their impact by incorporating them into their organisation’s strategic decision-making.

As with any analysis, it reflects the moment and is based on the current knowledge of those carrying it out. That’s why it is recommended to conduct the PESTLE analysis regularly.

Need help analysing your macro-environment?

If you want to better understand the factors that affect your business, get in touch . I offer tailored advice to help you assess your macro environment.

Enjoyed this article? Here are more things you might like:

What is Business Strategy? – Increase your chances of success and understand what it takes to build an effective business strategy.

Porter’s Five Forces Analysis – A complete guide to Michael E. Porter’s 5 Forces Analysis to help you assess your competitive landscape.

The Product Life Cycle – A complete breakdown of the individual stages of the product life cycle to plan your next marketing moves.

Global Environment Analysis

• First Online: 24 August 2022

Cite this chapter

• Rudolf Grünig 5 ,
• Richard Kühn 6 &
• Dirk Morschett 7  

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This chapter focuses on a core activity of strategic analysis and describes how to carry out an analysis of the global environment. Section 9.1 shows that the global environmental analysis looks at all aspects that affect the company and its markets. Thanks to this analysis, a clear picture of the current and especially of the future environmental conditions can be produced. This analysis is usually done with the help of two basic tools, which are presented in the following sections. First, Sect. 9.2 presents the PESTEL analysis, giving a detailed list of possible contents. Then, Sect. 9.3 explains the scenario analysis with the help of an inset with a short example. The chapter concludes with a recommendation for a process to carry out an environmental analysis in Sect. 9.4 .

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Grünig, R., Kühn, R., Morschett, D. (2022). Global Environment Analysis. In: The Strategy Planning Process. Springer, Cham. https://doi.org/10.1007/978-3-030-93918-2_9

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Environmental analysis (or PEST)—an element of your startup’s strategic plan

Researching a market? Our free online course Introduction to Market Sizing offers a practical 30-minute primer on market research and calculating market size.

An  environmental analysis , or PEST analysis, categorizes the changes and forces that affect your startup either directly or indirectly through your customers, suppliers and competitors. PEST is an acronym that stands for the Political, Economic, Social and Technological market forces. This type of analysis is usually conducted in the process of preparing a strategic plan, with the goal being to identify  threats and opportunities  for your business.

PEST is a common framework for conducting this macro-environmental scan that summarizes high-level trends as they relate to your  target customers ,  markets and technology. To perform an environmental, or PEST, analysis, answer the following questions:

1. What key political and regulatory developments are taking place now? How do these changes affect your market and customers? How do these trends affect your industry, suppliers,  partners  and customers? Focus your analysis on:

• tax regulations
• trade rules
• environmental legislation

2. Are economic changes affecting your company, your customers or your suppliers? Does this create opportunities, or does it threaten your market potential or your customers’ economy? Focus your analysis on:

• economic growth rate
• interest rates
• currency changes

3. What social and cultural changes are occurring? Focus on shifts in the demographic profile, any broad attitudinal changes, and any cultural trends that may impact the potential of your startup in the short and long term. Look for movement in:

• demographic trends such as birth rates, aging, and migration patterns
• attitudes towards healthy lifestyles, organic foods, the environment, and so forth
• attitudes on issues such as security, executive compensation, and anti-terrorism

4. What key technological trends impact your business? Consider also technology advances that affect your customers and suppliers. Do any of these changes create opportunities or threaten your potential? Focus your analysis on:

• specific technological breakthroughs
• the launch of innovative new products
• areas that undergo much research and development
• patents  that receive publicity

Schewe, C.D. & Hiam, A. (1998).  The Portable MBA in Marketing.  New York: Wiley.

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Analyzing the Organization’s Microenvironment

When we say microenvironment (or alternatively, Competitor Environment) we are referring primarily to an organization’s industry, and the upstream and downstream markets related to it. An industry is a group of firms producing products that are close substitutes. In the course of competition, these firms influence one another. Typically, industries include a rich mix of competitive strategies that companies use in pursuing strategic competitiveness and above-average returns. In part, these strategies are chosen because of the influence of an industry’s characteristics. [1] Upstream markets are the industries that provide the raw material or inputs for the focal industry, while downstream markets are the industries (sometimes consumer segments) that consume the industry outputs. For example, the oil production market is upstream of the oil-refining market (and, conversely, the oil refiners are downstream of the oil producers), which in turn is upstream of the gasoline sales market. Instead of upstream and downstream, the terms wholesale and retail are often used. Accordingly, the industry microenvironment consists of stakeholder groups that a firm has regular dealings with. The way these relationships develop can affect the costs, quality, and overall success of a business.

Porter’s Five-Forces Analysis of Market Structure

You can distill the results of PESTEL and microenvironment analysis to view the competitive structure of an industry using Michael Porter’s five forces, see Figure 3.1 . Here you will find that your understanding of the microenvironment is particularly helpful. Porter’s model attempts to analyze the attractiveness of an industry by considering five forces within a market. According to Porter, the likelihood of firms making profits in a given industry depends on five factors: (1) barriers to entry and new entry threats, (2) buyer and (3) supplier bargaining power, (4) threat from substitutes, and (5) the degree of rivalry of competitors in the industry. [2]

The industry environment has a more direct effect on the firm’s strategic competitiveness and above-average returns than the general environment. The intensity of industry competition and an industry’s profit potential (as measured by the long-run return on invested capital) are a function of these five forces of competition: the threats posed by new entrants, the power of suppliers, the power of buyers, product substitutes, and the intensity of rivalry among competitors.

Porter’s five-forces model of competition expands the arena for competitive analysis. Historically, when studying the competitive environment, firms concentrated on companies with which they competed directly (competitor groups). However, firms must search more broadly to identify current and potential competitors by identifying potential customers as well as the firms serving them. Competing for the same customers and thus being influenced by how customers value location and firm capabilities in their decisions is referred to as the market microstructure. [3]

Example 3.2 Understanding an Industry Using Porter’s Five Forces

Looking at JPMorgan Chase, Porter’s Five Forces Analysis shows that the company’s strongest force is rivalry, as there is a huge variety of banking companies to compete with JPM. Bargaining power of buyers is important too, because of the various competitors the buyers could switch to, and so JPM combats this with special offers that attract consumers. Substitutions are a large factor in the banking industry as well, and like with buyers, consumers have a great level of bargaining power as a whole. New entrants, on the other hand, are a relatively low threat to JPMorgan Chase.

Source: Investopedia, Analyzing Porter’s Five Forces on JPMorgan (JPM) , 2018Fa

Understanding this area is particularly important because, in recent years, industry boundaries have become blurred. For example, in the electrical utilities industry, cogenerators (firms that also produce power) are competing with regional utility companies. Moreover, telecommunications companies now compete with broadcasters, software manufacturers provide personal financial services, airlines sell mutual funds, and automakers sell insurance and provide financing. [4] In addition to focusing on customers rather than specific industry boundaries to define markets, geographic boundaries are also relevant. Research suggests that different geographic markets for the same product can have considerably different competitive conditions. [5]

Example 3.3 Forward or Backward Integration

In August 2017, the e-commerce giant Amazon acquired Whole Foods Market Inc. for $13.7 Billion. This acquisition allowed Amazon to gain 400 physical stores and get access to large data of consumers’ grocery buying habits, patterns, and preferences.

Source: Doctor Vidya Hattangadi, What is a business integration strategy? , 2018Fa

The five-forces model recognizes that suppliers can become a firm’s competitors (by integrating forward), as can buyers (by integrating backward). Several firms have integrated forward in the pharmaceutical industry by acquiring distributors or wholesalers. In addition, firms choosing to enter a new market and those producing products that are adequate substitutes for existing products can become competitors of a company.

Another way to think about industry market structure is that these five sets of stakeholders are competing for profits in the given industry. For instance, if a supplier to an industry is powerful, they can charge higher prices. If the industry can’t pass its higher costs onto their buyers in the form of higher prices, industry members make less profit. For example, if you have a jewelry store, but are dependent on a monopolist like De Beers for diamonds, then De Beers actually is extracting more relative value from your industry (i.e., the retail jewelry business).

Threat of New Entrants

The likelihood of new entry is a function of the extent to which barriers to entry exist. Evidence suggests that companies often find it difficult to identify new competitors. [6] Identifying new entrants is important because they can threaten the market share of existing competitors. One reason new entrants pose such a threat is that they bring additional production capacity. Unless the demand for a good or service is increasing, additional capacity holds consumers’ costs down, resulting in less revenue and lower returns for competing firms. Often, new entrants have a keen interest in gaining a large market share. As a result, new competitors may force existing firms to be more effective and efficient and to learn how to compete on new dimensions (for example, using an Internet-based distribution channel).

Example 3.4 New Entrant

Amazon’s recent acquisition of PillPack is threatening pharmaceutical market share, potentially altering the landscape of medication home delivery. Amazon serves as a threat due to its power and capacity to provide service. Existing local pharmaceutical companies now competing with home delivery will have to add tools to keep customers satisfied and to maintain trust.

Source: Pharmacy Today, Will recent announcements alter medication home delivery? , Sarah Cushing, 2018Fa

The more difficult it is for other firms to enter a market, the more likely it is that existing firms can make relatively high profits. The likelihood that firms will enter an industry is a function of two factors: barriers to entry and the retaliation expected from current industry participants. Entry barriers make it difficult for new firms to enter an industry and often place them at a competitive disadvantage even when they are able to enter. As such, high-entry barriers increase the returns for existing firms in the industry. [7]

The threat of new entrants is high when:

• Barriers to entry are low (initial capital costs, costs to scale efficiently.)
• There are no network effects (a good or service is more valuable when more people use it, e.g., the internet was of little value until more people started to use it.)
• Customer switching costs are low.
• Incumbents do not possess brand loyalty, proprietary technology, preferential access to raw materials or distribution channels, favorable geographic location, or cumulative experience.
• There are no restrictive government regulations.
• A low expectation that incumbents in the industry cannot or will not retaliate.

Buyer Bargaining Power

The stronger the power of buyers in an industry, the more likely it is that they will be able to force down prices and reduce the profits of firms that provide the product. Firms seek to maximize the return on their invested capital. Alternatively, buyers (customers of an industry or firm) want to buy products at the lowest possible price—the point at which the industry earns the lowest acceptable rate of return on its invested capital. To reduce their costs, buyers bargain for higher-quality, greater levels of service, and lower prices. These outcomes are achieved by encouraging competitive battles among the industry’s firms.

Example 3.5 Buyer Bargaining Power

Tenants and buyer of real estate in Abu Dhabi are experiencing greater bargaining power due to the oversupply of apartments and villas in the city and driving down purchase prices by 9% and rental prices by 12% overall. With  more units coming on the market in 2019, this trend is expected to remain for the foreseeable future. Meanwhile, buyers and tenants are expected to move to bigger and better apartments as property owners seek their investments.

Source: Khaleej Times, Tenants, buyers have more bargaining power in Abu Dhabi , 2019Wi

The bargaining power of buyers is high when:

• Only a few buyers exist and those buyers purchase relatively large quantities relative to the size of any single seller.
• When the industry’s products are commodities or standardized.
• Switching costs are low or non-existent.
• Buyers can reasonably threaten backward integration into the industry.

Supplier Bargaining Power

The stronger the power of suppliers in an industry, the more difficult it is for firms within that sector to make a profit because suppliers can determine the terms and conditions on which business is conducted. Increasing prices and reducing the quality of its products are potential means used by suppliers to exert power over firms competing within an industry. If a firm is unable to recover cost increases by its suppliers through its pricing structure, its profitability is reduced by its suppliers’ actions.

Example 3.6 Supplier Bargaining Power

Apple plans to move away from its Liquid Crystal Polymer (LCP) antenna technology toward a newer modified polyimide (MPI) for all phones built starting in 2019. The newer material is performs as well as the older one but has a much higher yield rate, making it more effective. The older LCP process was complicated to manufacture, prone to defects, and could be accomplished by a limited number of suppliers. Because there will be five new suppliers of the MPI antennae, Apple has greater bargaining power, will get comparable performance with fewer failures, and expects to pay lower prices.

Source: 9to5Mac, 2019 iPhones to use new combination of antenna technology , Ziqi Cao, 2018Fa

The bargaining power of suppliers is high when:

• The industry of the suppliers is more concentrated than that of the industry to which it sells.
• Suppliers do not rely on the industry as their sole source of revenue.
• Switching costs are high.
• The products offered by the supplier is highly differentiated.
• No readily available substitutes are available.
• The threat of forward integration into the industry by suppliers is reasonable.

Threat of Substitutes

This measures the ease with which buyers can switch to another product that does the same thing, such as using aluminum cans rather than glass or plastic bottles to package a beverage. The ease of switching depends on what costs would be involved (e.g., while it may be easy to sell Coke or Pepsi in bottles or cans, transferring all your data to a new database system and retraining staff could be expensive) and how similar customers perceive the alternatives to be. Substitute products are goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces. For example, as a sugar substitute, NutraSweet places an upper limit on sugar manufacturers’ prices—NutraSweet and sugar perform the same function but with different characteristics.

Example 3.7 Substitution

Boxed is a new online, membership-free wholesale retailer that allows you to buy in bulk from the comfort of your home without any membership fees. They have a curated range of products that allow them to be the low cost leader which makes for direct competition with other wholesalers such as Costco or Sam’s club. As switching costs are minimal to almost non-existent, it is very easy for customers to switch to Boxed as they not only offer the best prices, but also offer free shipping on orders over 49 dollars.

Source: Fox 4 News, On Your Side: ‘Boxed’ Bulk Delivery Service , Ariadna Archibald, 2018Fa

Other product substitutes include fax machines instead of overnight deliveries, plastic containers rather than glass jars, and tea substituted for coffee. Recently, firms have introduced to the market several low-alcohol fruit-flavored drinks that many customers substitute for beer. For example, Smirnoff Ice was introduced with substantial advertising of the type often used for beer. Other firms have introduced lemonade with 5% alcohol (e.g., Doc Otis Hard Lemon) and tea and lemon combinations with alcohol (e.g., BoDean’s Twisted Tea). These products are increasing in popularity, especially among younger people, and, as product substitutes, have the potential to reduce overall sales of beer. [8] In general, differentiating a product along dimensions that customers value (such as price, quality, service after the sale, and location) reduces a substitute’s attractiveness.

The threat of substitute products is high when:

• The substitute offers an attractive price-to-performance trade-off.
• The substitute product’s price is lower or its quality and performance capabilities are equal to or greater than those of the competing product.
• Customers face few, if any, switching costs.

Degree of Rivalry

This measures the degree of competition between existing firms. The higher the degree of rivalry, the more difficult it is for existing firms to generate high profits.

The degree of rivalry is highest when:

• There are numerous competitors or competitors are equally balanced.
• The industry is experiencing slow growth.
• Fixed costs are high in the industry.
• The industry’s products lack differentiation
• Rivals in the industry have high strategic stakes.
• Leaving the industry comes with high exit barriers.

Numerous or Equally Balanced Competitors

Example 3.8 numerous or balanced rivalry.

Coca-Cola and Pepsi have been in the “Cola Wars” for a long time. Although their portfolios are no longer limited to soft drinks, their continuing battle on a full spectrum of growth and earnings measures shows the intensity of rivalry that continues between the two. Pepsi seems to currently lead in consumer demand, showing a 43% higher return over the last five years. And while consumers are shifting their preferences to healthier options, so are these two rivals as they attempt to modify consumer perceptions of their brands. Pepsi acquired Naked, Kevita and Soda Stream. Meanwhile Coca-Cola acquired Honest Tea, Costa Coffee, MOJO Kombucha, and a minority stake in the growing Gatorade competitor Body Armor.

Source: Yahoo Finance, The Cola Wars: Pepsi vs. Coke , 2019Sp

Intense rivalries are common in industries with many companies. With multiple competitors, it is common for a few firms to believe that they can act without eliciting a response. However, evidence suggests that other firms generally are aware of competitors’ actions, often choosing to respond to them. At the other extreme, industries with only a few firms of equivalent size and power also tend to have strong rivalries. The large and often similar-sized resource bases of these firms permit vigorous actions and responses. The Fuji/Kodak and Airbus/Boeing competitive battles exemplify intense rivalries between pairs of relatively equivalent competitors.

Example 3.9 Slow Growing Industry

With the growing concern of vehicle carbon emissions, the advent of electric cars for consumer use has become inevitable. While the need for a change is clear, the market is clearly developing slowly because there isn’t the proper infrastructure for the charging of electric vehicles like the network of gas stations that currently exist. Until companies can differentiate through an increased range and charging options, the industry will continue to develop slowly.

Source: Phys.org, ‘Not right away’: Electric cars still have long road ahead , 2018Fa

Slow Industry Growth

When a market is growing, firms try to use resources effectively to serve an expanding customer base. Growing markets reduce the pressure to take customers from competitors. However, rivalry in non-growth or slow-growth markets becomes more intense as firms battle to increase their market shares by attracting their competitors’ customers.

Typically, battles to protect market shares are fierce. Certainly, this has been the case with Fuji and Kodak. The instability in the market that results from these competitive engagements reduce profitability for firms throughout the industry, as is demonstrated by the commercial aircraft industry. The market for large aircraft is expected to decline or grow only slightly over the next few years. To expand market share, Boeing and Airbus will compete aggressively in terms of the introduction of new products, and product and service differentiation; both firms are likely to win and lose battles; however, as of this writing Boeing is the current leader.

High Fixed Costs or High Storage Costs

Example 3.10 high fixed costs.

Approach Resources, an independent oil and gas company, is an example of a company hindered by high fixed costs in 2018. G&A and interest costs are the main reason these fixed costs are so high, and need to be reduced if the company wants to remain competitive. It is likely that in the future they will use some sort of debt restructuring to try and drive down these costs compared to other companies in their industry.

Source: Seeking Alpha, Approach Resources: Hindered By High Fixed Costs , 2018Fa

When fixed costs account for a large part of total costs, companies try to maximize the use of their productive capacity. Doing so allows the firm to spread costs across a larger volume of output. However, when many firms attempt to maximize their productive capacity, excess capacity is created on an industry-wide basis. To then reduce inventories, individual companies typically cut the price of their product and offer rebates and other special discounts to customers. These practices, however, often intensify competition. The pattern of excess capacity at the industry level followed by intense rivalry at the firm level is observed frequently in industries with high storage costs. Perishable products, for example, lose their value rapidly with the passage of time. As their inventories grow, producers of perishable goods often use pricing strategies to sell products quickly.

Lack of Differentiation or Low Switching Costs

When buyers find a differentiated product that satisfies their needs, they frequently purchase the product faithfully over time. Industries with many companies that have successfully differentiated their products have less rivalry, resulting in lower competition for individual firms. [9] However, when buyers view products as commodities (as products with few differentiated features or capabilities), rivalry intensifies. In these instances, buyers’ purchasing decisions are based primarily on price and, to a lesser degree, service. Film for cameras is an example of a commodity. Thus, the competition between Fuji and Kodak is expected to be strong.

Example 3.11 Commodities

Commodities are grouped into three main categories – agriculture, energy, and metals. The term “agriculture” leads one to think about this category as items such as lumber or fibers that we create clothes out of, but it also pertains to drinks, grains, and animals that are specifically raised for food.  Low product differentiation and low prices are both characteristics of commodities.

Based on this definition, buying a soft drink at grocery store presents two options — to buy a commodity or a branded item. If the customer perceives Pepsi or Coca-Cola as providing a higher quality than the generic store brand (also known as a dealer brand) of “cola”, they will pay a premium for the product. However, if the customer doesn’t perceive a value distinction then the cola is simply a commodity and they will purchase the lowest cost alternative.

Source: The Balance, What Commodities Are and How Its Trading Market Works , 2019Wi

The effect of switching costs is identical to that described for differentiated products. The lower the buyer’s’ switching costs, the easier it is for competitors to attract buyers through pricing and service offerings. High switching costs, however, at least partially insulate the firm from rivals’ efforts to attract customers. Interestingly, the switching costs—such as pilot and mechanic training—are high in aircraft purchases, yet, the rivalry between Boeing and Airbus remains intense because the stakes for both are extremely high.

High Strategic Stakes

Competitive rivalry is likely to be high when it is important for several of the competitors to perform well in the market. For example, although it is diversified and is a market leader in other businesses, Samsung has targeted market leadership in the consumer electronics market. This market is quite important to Sony and other major competitors such as Hitachi, Matsushita, NEC, and Mitsubishi. Thus, we can expect substantial rivalry in this market over the next few years.

Example 3.12 High Stakes Rivalry

After acquiring Uber’s local business in Indonesia, Grab, a top ride-hailing firm based in South East Asia, formed a joint venture with ZhongAn International and insurance company to add insurance and loan financing products for its drivers. This action by Grab is part of their ambition to become the leading South East Asia irval to Go-Jek (an Indonesian ride-hailing firm).

In recent years, these two companies have battled to provide services beyond ride-hailing. For its part, Go-Jek is expanding its business to Vietnam and Thailand compete with Grab. This rivalry has escalated since 2018 as Grab has raised $3 billion of a $5 billion capital goal while Go-Jek is close to raising $2 billion to strengthen their balance sheet.

Source: TechCrunch, Grab moves to Offer Digital Insurance Services in Southeast Asia , 2019Wi

High strategic stakes can also exist in terms of geographic locations. For example, Japanese automobile manufacturers are committed to a significant presence in the U.S. marketplace. A key reason for this is that the United States is the world’s single largest market for auto manufacturers’ products. Because of the stakes involved in this country for Japanese and U.S. manufacturers, rivalry among firms in the U.S. and global automobile industry is highly intense. While close proximity tends to promote greater rivalry, physically proximate competition has potentially positive benefits as well. For example, when competitors are located near one another, it is easier for suppliers to serve them and they can develop economies of scale that lead to lower production costs. Additionally, communications with key industry stakeholders such as suppliers are facilitated and more efficient when they are close to the firm. [10]

High Exit Barriers

Sometimes companies continue competing in an industry even though the returns on their invested capital are low or negative. Firms making this choice likely face high exit barriers, which include economic, strategic, and emotional factors, causing companies to remain in an industry when the profitability of doing so is questionable.

Example 3.13 Exit Barriers to Rivalry

Earn credit, add your own example !

Attractiveness and Profitability

Using Porter’s analysis, firms are likely to generate higher profits (and be considered attractive) if the industry:

• Is difficult to enter
• There is limited rivalry
• Buyers are relatively weak
• Suppliers are relatively weak
• There are few substitutes

Profits are likely to be low (and the industry considered unattractive) if:

• The industry is easy to enter
• There is a high degree of rivalry between firms within the industry
• Buyers are strong
• Suppliers are strong
• It is easy to switch to alternatives

Effective industry analyses are products of careful study and interpretation of data and information from multiple sources. A wealth of industry-specific data is available to be analyzed. Because of globalization, international markets and rivalries must be included in the firm’s analyses. In fact, research shows that in some industries, international variables are more important than domestic ones as determinants of strategic competitiveness. Furthermore, because of the development of global markets, a country’s borders no longer restrict industry structures. In fact, movement into international markets enhances the chances of success for new ventures as well as more established firms. [11]

Following a study of the five forces of competition, the firm can develop the insights required to determine an industry’s attractiveness in terms of its potential to earn adequate or superior returns on its invested capital. In general, the stronger competitive forces are, the lower the profit potential for an industry’s firms. An unattractive industry has low entry barriers, suppliers and buyers with strong bargaining positions, strong competitive threats from product substitutes, and intense rivalry among competitors. These industry characteristics make it very difficult for firms to achieve strategic competitiveness and earn above-average returns. Alternatively, an attractive industry has high entry barriers, suppliers and buyers with little bargaining power, few competitive threats from product substitutes, and relatively moderate rivalry. [12]

• Spanos, Y. E., & Lioukas, S. (2001). An examination into the causal logic of rent generation: Contrasting Porter’s competitive strategy framework and the resource-based perspective. Strategic Management Journal, 22, 907–934. ↵
• Porter, M. E. (1980). Competitive strategy. New York: Free Press. ↵
• Zaheer, S., & Zaheer, A. (2001). Market microstructure in a global b2b network, Strategic Management Journal, 22, 859–873. ↵
• Hitt, M. A., Ricart I Costa, J., & Nixon, R. D. (1999). New managerial mindsets. New York: Wiley. ↵
• Pan, Y., & Chi, P. S. K. (1999). Financial performance and survival of multinational corporations in China. Strategic Management Journal, 20, 359–374; Brooks, G. R. (1995). Defining market boundaries Strategic Management Journal, 16, 535–549. ↵
• Geroski, P. A. (1999). Early warning of new rivals. Sloan Management Review, 40(3), 107–116. ↵
• Robinson, K. C., & McDougall, P. P. (2001). Entry barriers and new venture performance: A comparison of universal and contingency approaches. Strategic Management Journal, 22, 659–685. ↵
• Khermouch, G. (2001, March 5). Grown-up drinks for tender taste buds. Business Week, p. 96. ↵
• Deephouse, D. L. (1999). To be different, or to be the same? It’s a question (and theory) of strategic balance. Strategic Management Journal, 20, 147–166. ↵
• Chung, W., & Kalnins, A. (2001). Agglomeration effects and performance: Test of the Texas lodging industry Strategic Management Journal, 22, 969–988. ↵
• Kuemmerle, W. (2001). Home base and knowledge management in international ventures. Journal of Business Venturing, 17, 99–122; Lorenzoni, G., & Lipparini, A. (1999). The leveraging of interfirm relationships as a distinctive organizational capability: A longitudinal study. Strategic Management Journal, 20, 317–338. ↵

Strategic Management Copyright © 2020 by John Morris is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License , except where otherwise noted.

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Bangladesh Country Environmental Analysis 2023

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Building Back a Greener Bangladesh: Country Environmental Analysis 2023

• Executive Summary (PDF)
• Full Report (PDF)

The 2023 Country Environmental Analysis (CEA) aims to support the Government of Bangladesh (GoB) in informing policies and investments for improving environmental health and pollution management, a critical step towards a green growth pathway. The CEA report focuses on the following:

• Identifying the environmental priorities of the country and assessing how they affect health and productivity
• Identifying interventions to tackle those priorities
• Assessing the strengths and shortcomings in the country’s environmental governance framework to address the environmental priorities and implement the proposed interventions
• Based on analysis, making recommendations to strengthen governance and agencies’ institutional capacity for environmental management

End Air Pollution in Bangladesh

This CEA compiles the findings and recommendations of several papers and stakeholder consultations. The report is structured in eleven chapters as follows:

• Chapter 1 introduces the report with information on the country context and the objectives, scope, and methodology of the CEA.
• Chapter 2 estimates the health effects and corresponding costs of environmental degradation. The chapter focuses on (a) outdoor and household air pollution (PM2.5), (b) lead exposure among children and adults, and (c) inadequate WASH, including arsenic contamination in drinking water and microbiological pollution.
• Chapter 3 summarizes key institutions and regulations for environmental management in Bangladesh, especially policy instruments and agencies that are relevant to the country’s environmental priorities. The chapter assesses the strengths and shortcomings of Bangladesh’s environmental governance system, including mechanisms for planning and organizational performance evaluation, interagency coordination, environmental monitoring and data management, enforcement, accountability, transparency, and public participation.
• Chapter 4 discusses the main elements of the environmental clearance system in Bangladesh, considering aspects such as the nature of environmental impact assessments, institutional leadership, and interagency coordination, screening and scoping processes, public participation, access to information, and evaluation of alternatives. The chapter assesses the adequacy of the environmental clearance system to address the country’s environmental priorities.
• Chapter 5 analyzes the costs and benefits of potential interventions to address household and outdoor air pollution; inadequate water, hygiene, and sanitation; arsenic contamination in Bangladesh; and lead exposure. Through this cost-benefit analysis (CBA), the chapter provides information for prioritizing interventions and better allocating the government’s limited resources.
• Chapter 6 analyzes air quality management in GDA and, through cost-effectiveness and CBA, identifies potential interventions to reduce human exposure to PM2.5 to the WHO’s Annual Interim Target 1 (35 ug/m3) by 2030.
• Chapter 7 discusses the prospects for green growth policies in Bangladesh that have the potential to tackle major environmental priorities—that is, air pollution and inadequate WASH. Through a CGE model, the chapter assesses potential economic, distributional, and environmental effects of the following policy experiments: (a) phaseout of energy subsidies, (b) carbon pricing (carbon tax and cap and trade system), and (c) investments in a water program (as envisaged in the BDP).
• Chapter 8 provides an overview of the physical elements of Bangladesh’s plastic-waste management system and outlines the key policy recommendations to support the transition to integrated plastic-waste management.
• Chapter 9 identifies the barriers to accessing green financing, especially to address environmental priorities, and proposes interventions to facilitate the flow of resources from green finance suppliers to sectors pursuing such resources.
• Chapter 10 identifies available environmental policy instruments, beyond traditional command-and-control, for improving environmental management in Bangladesh.
• Chapter 11 summarizes takeaways from each chapter and recommendations for policy and investment options to strengthen governance and institutional capacity to support the transition towards a green economy.

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-  Enhancing Opportunities for Clean and Resilient Growth in Urban Bangladesh : Country Environmental Analysis 2018 -  Towards a Multisectoral Action Plan for Sustainable Plastic Management in Bangladesh -  Breathing Heavy : New Evidence on Air Pollution and Health in Bangladesh -  Striving for Clean Air: Air Pollution and Public Health in South Asia

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The Omnipresence of PFAS—and What We Can Do About Them

PFAS are raising a red flag among public health and environmental advocates.

Morgan Coulson

Per- and poly-fluoroalkyl substances (PFAS)—also known as “forever chemicals”—are everywhere.

Created in the 1940s, these synthetic compounds are an unseen ingredient in many items that we use in our daily lives, like cleaning products, food packaging, nonstick cookware, cosmetics, personal care items like dental floss,  water-repellent clothing, as well as stain-resistant carpets and upholstery. Since the 1970s, they have also been used in firefighting foams and by the military.  

“Food is another potential source,” says  Carsten Prasse , PhD, MSc, assistant professor in  Environmental Health and Engineering . “Unfortunately, PFAS are also present in biosolids which are used as agricultural fertilizer,” creating a pathway from contaminated soil to produce in the grocery store.  

Because of their longevity and resistance to disintegration—a characteristic born of their carbon-fluorine chemical bonds—PFAS can last thousands of years. These “attributes also make them very resistant to degradation in our treatment systems,” says Prasse.

The most common method of destroying PFAS is incineration, but some studies  indicate that this fails to eliminate all the chemicals, and instead releases the remaining pollution into the air.

In water treatment systems, the main methods for destroying PFAS are reverse osmosis, activated carbon, and ion-exchange resins—but these technologies are costly. Other methods include  supercritical water oxidation ,  plasma reactors , and most recently,  sodium hydroxide (lye) and dimethyl sulfoxide , chemicals used in soap and as a medication for bladder pain syndrome, respectively.

But when items containing PFAS inevitably reach landfills, the compounds leach into the environment. And every day, people flush PFA-laden products—like shampoo, cleaning liquids, even some toilet papers—down the drain.

“If they're not removed in our wastewater treatment plants, [PFAS] get into our rivers, streams, and groundwater, which are commonly used for drinking water production,” Prasse says. “Around 50% of our rivers and streams contain measurable PFAS concentrations.”  

According to a  2020 study published in Science by the Environmental Working Group,  an estimated 200 million Americans are served by water systems that contain PFAS. And it’s not just public systems— a  2023 study by the U.S. Geological Survey found that approximately 20% of private wells are contaminated. 

These compounds are now so ubiquitous, that  an estimated 98% of the U.S. population has detectable concentrations in their blood. That’s concerning, since studies have shown that exposure to some PFAS may be linked to harmful health effects, both in animals and humans.

“We know today that even very low concentrations can impact the reproductive system, [have] developmental effects, increase risk of certain cancers, reduce immune response, as well as increase cholesterol levels,” Prasse says. The Environmental Protection Agency  also links the compounds to thyroid disorders, obesity, and asthma.

Individuals who may have had high exposure to PFAS—in firefighting or chemical manufacturing industries, for example—should consider blood testing, Prasse says. “I think it is valuable …  because it allows them at least to talk to medical professionals, to think about follow-up examinations, to really monitor potential health effects.”

Prasse says we still know very little about the health impacts of PFAS, especially on a population level. While these compounds have been around for some time, there is insufficient research to answer many questions that have emerged over decades.

But some action is being taken. Last year, the EPA proposed  the first federal limits on forever chemicals in drinking water. And in February 2024, the agency proposed  that nine PFAS be categorized as hazardous to human health —a designation only applied to substances that are toxic or cause cancer, genetic mutation, or embryo malformation.

“The main reason for the step that the EPA is taking is that there's increasing evidence that there are toxic effects on a variety of levels,” Prasse says. “It will hopefully lead to more research to address the presence of these compounds in the environment, but also to more efforts to really elucidate the health impacts of these chemicals.”

  The proposal would classify the chemicals as "hazardous constituents" under the Resource Conservation and Recovery Act, making it easier for the agency to clean up contaminated sites—and to allocate funds to treat affected drinking water.  

But these nine compounds are only the tip of the iceberg. 

“We estimate there are more than 12,000 individual PFAS compounds, and unfortunately for most of them, we have basically no understanding about toxicity, and we don't really know a lot about their occurrence in the environment,” Prasse says. “I think the step by the EPA is really urgently needed to protect our drinking water and ultimately our health.”

  A  small study published in Environment International this month showed that cholestyramine—a cholesterol-lowering drug—could help scrub toxic forever chemicals from the blood of people who have been highly exposed. But the most efficient way to reduce contamination is preventatively, Prasse says, by regulating PFAS production and cleaning up the environment—especially waterways—and ensuring that our drinking water facilities are equipped to remove these compounds.

  “The issue at this point is really that we don't know what levels are concerning or lead to health effects, and which don't,” Prasse adds. “That's something that only the future will tell.”

Prasse and other experts recommend a variety of actions to minimize exposure to PFAS:  

• Avoid using nonstick cookware.
• Limit use of food packaging, such as grease-resistant takeout containers.
• Filter your water at the tap, with pitchers that are certified for PFAS.
• Avoid wearing water-resistant textiles.
• Seek out PFAS-free retailers’ products—including  menstrual products and large items like carpets or furniture.

Morgan Coulson is an editorial associate in the Office of External Affairs at the Johns Hopkins Bloomberg School of Public Health.

“Forever Chemicals” and Lead Exposure: Their Threat to Public Health (video)

Study Estimates Nearly 70 Percent of Children Under Six in Chicago May Be Exposed to Lead-Contaminated Tap Water

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‘Quiet on Set: The Dark Side of Kids TV’: 5 Takeaways

The Investigation Discovery documentary takes a look at accounts of a problematic working environment at Nickelodeon.

By Shivani Gonzalez

The Investigation Discovery documentary “Quiet on Set: The Dark Side of Kids TV” is a four-part series about working at Nickelodeon, including the environment under the former producer Dan Schneider, and what some described as harmful situations that child actors and adult employees were put in. It premiered on Sunday and is streaming on Max.

Schneider, who parted ways with Nickelodeon in 2018 , doesn’t appear in the docuseries, but former writers, child stars, staffers and journalists paint a picture of the environment at the network starting in the 1990s, through his departure.

Schneider responded to the series in a video on Tuesday. “Watching over the past two nights was very difficult, me facing my past behaviors, some of which are embarrassing and that I regret, and I definitely owe some people a pretty strong apology,” Schneider said in a nearly 20-minute video posted to his YouTube channel.

In response to producers’ questions, the documentary said, Nickelodeon stated that the network “investigates all formal complaints as part of our commitment to fostering a safe and professional workplace” and has “adopted numerous safeguards over the years to help ensure we are living up to our own high standards and the expectations of our audience.”

Here are the biggest takeaways from the series.

Drake Bell publicly speaks about his abuse for the first time.

Brian Peck, a dialogue coach for Nickelodeon, was convicted of sexually abusing the “Drake & Josh” star Jared Drake Bell. Peck was arrested in 2003 in connection with the sexual abuse of a teenager over a four-month period. In 2004, Peck pleaded no contest to two felonies , according to public records. At the time of the abuse, Bell was 15 and Peck was 41; in court documents, Bell was identified as John Doe.

This is the first time Bell has publicly detailed his experience.

Bell describes meeting Peck on set and becoming friendly with him. “Brian and I became very close because he had a lot of shared interests,” Bell noted. “Which, looking back, seems calculated.”

It was Bell’s father, Joe Bell, who first felt that something was inappropriate about Peck’s interest, Joe says in “Quiet on Set.” And when he took his concerns to producers, he says, they dismissed him by saying that Peck was gay so maybe Joe was homophobic.

Joe contends that Peck could sense his suspicions, and Peck purposely drove a wedge between the father and son, telling Bell that his father was stealing his money and shouldn’t be his manager anymore.

Bell said the abuse began when Peck offered to drive him to his auditions, since his mother didn’t like to drive. He would have multiple days of auditions in a row, he said, and Peck would suggest that Bell stay over at his house.

One day, when he was 15, he said, he woke up on a couch and was being sexually assaulted by Peck.

When the producers of the docuseries asked if Bell would be comfortable sharing details, he answered: “Why don’t you imagine the worst thing someone could do to someone as sexual assault. I don’t know how else to put it.”

Bell said he felt like it was a secret that he couldn’t share, and that the abuse continued until one day he told his mother everything and she immediately called the police.

The police were able to get a confession, Bell said, by having Bell call Peck and getting him to admit to the assault.

Brian Peck had widespread support from Hollywood figures.

Kyle Sullivan, a former cast member on “All That,” said that Peck was beloved despite there being some red flags: He played Pickle Boy, a recurring character on several Nickelodeon shows, in skits that some viewed as having sexual undertones.

When Peck was arrested, Sullivan said, producers gathered cast members together after a table read to tell them. Most were shocked.

At Peck’s sentencing hearing, Drake Bell said, Peck’s side of the courtroom was filled with supporters, whereas on Bell’s side, he just had his parents.

The documentary series also recounts that celebrities — including the actors James Marsden, Alan Thicke and Taran Killam — had written letters of support for Peck. The husband-wife directing duo Beth and Rich Correll also wrote a letter in support of Peck, and worked with him on a Disney Channel series, “The Suite Life of Zack & Cody,” after his conviction.

Some of the people who wrote letters of support for Peck had previously said that they regretted writing them.

Others, like the “X-Men” producer Tom DeSanto, told People in a statement in an article last week, “I want to personally apologize to Drake and his family and emphatically state that had I been fully informed of all the accusations, my support would have been absolutely withheld.”

Joanna Kerns, an actor on “Growing Pains,” told producers of “Quiet on Set,” “Knowing what I know now, I never would have written it.”

The Corrells said in a statement to the producers that they “had no input or involvement in the casting” of Peck on “The Suite Life.” They said that when they asked Peck about the case, he “simply replied that ‘the problem had been resolved.’”

Two others who worked at Nickelodeon were convicted of sexual offenses.

The mother of one child actor, Brandi, who was on “All That,” recounts meeting Jason Handy , a production assistant who was mostly in charge of accompanying the young cast members and their parents around set. The mother, identified only as MJ, says that Handy asked for her daughter’s email address and that he eventually sent her a photo of himself naked and masturbating.

Though MJ didn’t report this to the police, she said, the authorities learned about another instance of inappropriate behavior and when they searched Handy’s house, they found a large amount of child sexual abuse imagery — 10,000 images of children.

Kate Taylor, a reporter at Business Insider who collaborated on the docuseries, noted that the police also found diaries where Handy had written, “I am a pedophile, full blown.”

Handy was arrested in 2003, just four months before Peck’s arrest. In 2004, he was sentenced to six years in prison after pleading no contest to one count of lewd acts on a child, one count of sexual exploitation of a child and one count of distributing sexually explicit material by email to a minor, according to court records. He is currently in federal prison for a later conviction, according to court records.

Additionally, in 2009, Ezel Channel, an animator at Nickelodeon, was sentenced to seven years and four months for committing lewd acts on a 14-year-old boy and showing him pornography on set . Channel was already a convicted sex offender when he was hired by the network.

Staffers detail sexism and sexual harassment.

Under Schneider’s leadership, two staff writers of “All That,” Christy Stratton and Jenny Kilgen, say there were many instances of blatant sexism and sexual harassment. They were hired as a pair, and shared a single writer’s salary despite the fact, they say, that the men on staff had a full salary. (In the video Schneider released Tuesday, he said he has never had anything to do with paying writers in his role and that it was common for writers starting out to share pay.)

Kilgen also said Schneider would play pornography on television in the writer’s room and tell her that if she gave him massages he would put her sketches on air. Kilgen describes a time when Schneider made Stratton pitch her sketch while pretending to be involved in a sexual act.

A statement included in the documentary said Schneider denied Kilgen’s claims.

In addition, a costume designer, actors, parents and others cited multiple occasions in which young women would be standing behind Schneider on set, massaging him.

Karyn Finley Thompson, an editor on “All That,” described a time when she was promised a promotion but said that Schneider instead gave it to a man who didn’t have any previous working credits.

Kilgen says she later filed a gender discrimination lawsuit against the production company behind “The Amanda Show.” She says the company settled the suit.

Cast members share uncomfortable on-set experiences.

For the child cast members, even though some of Nickelodeon’s more inappropriate jokes went over their heads, they said they were aware that they were being put in uncomfortable situations.

Sullivan, who appeared on “All That,” spoke about some “Fear Factor”-inspired sketches involving an actor lying in a bathtub with earthworms or in which a dog licked peanut butter off a child actor’s body. “They were taking something that exists in an adult context and transmogrifying it for children — when you do that, it’s an inappropriate thing to do.”

Bryan Hearne, also an actor on “All That,” recounted being part of a sketch where he was playing a fetus and needed a skin- colored suit and he overheard someone saying that the suit needed to be a “charcoal” color. (He is Black.) Tracy Brown, Hearne’s mother, also was interviewed in the docuseries, saying it didn’t seem like a coincidence that Hearne’s first sketch involved a situation of Hearne playing a role that seemed to imply that he was a drug dealer. “Oh, the Black kid gets to be the crack dealer?” Brown asked.

Shivani Gonzalez is a news assistant at The Times who writes a weekly TV column and contributes to a variety of sections. More about Shivani Gonzalez

‘Ecocide in Gaza’: does scale of environmental destruction amount to a war crime?

Exclusive: Satellite analysis revealed to the Guardian shows farms devastated and nearly half of the territory’s trees razed. Alongside mounting air and water pollution, experts says Israel’s onslaught on Gaza’s ecosystems has made the area unlivable

I n a dilapidated warehouse in Rafah, Soha Abu Diab is living with her three young daughters and more than 20 other family members. They have no running water, no fuel and are surrounded by running sewage and waste piling up.

Like the rest of Gaza’s residents, they fear the air they breathe is heavy with pollutants and that the water carries disease. Beyond the city streets lie razed orchards and olive groves, and farmland destroyed by bombs and bulldozers.

“This life is not life,” says Abu Diab, who was displaced from Gaza City. “There is pollution everywhere – in the air, in the water we bathe in, in the water we drink, in the food we eat, in the area around us.”

For her family and thousands of others, the human cost of Israel’s invasion of Gaza, launched after the Hamas attack on 7 October, is being compounded by an environmental crisis.

The full extent of the damage in Gaza has not yet been documented, but analysis of satellite imagery provided to the Guardian shows the destruction of about 38-48% of tree cover and farmland.

Olive groves and farms have been reduced to packed earth; soil and groundwater have been contaminated by munitions and toxins; the sea is choked with sewage and waste; the air polluted by smoke and particulate matter.

Researchers and environmental organisations say the destruction will have enormous effects on Gaza’s ecosystems and biodiversity. The scale and potential long-term impact of the damage have led to calls for it to be regarded as “ecocide” and investigated as a possible war crime.

The Israel Defense Forces (IDF) says it follows international law and attempts to limit damage to agricultural areas and the environment.

“The IDF does not intentionally harm agricultural land and seeks to prevent environmental impact absent operational necessity,” it told the Guardian.

‘Only soil left’

Satellite imagery, photos and video footage from the ground show how Gaza’s farmland, orchards and olive groves have been destroyed by the war.

He Yin, an assistant professor of geography at Kent State University in the US, who studied the damage to agricultural land in Syria during the 2011 civil war, analysed satellite imagery showing that up to 48% of Gaza’s tree cover had been lost or damaged between 7 October and 21 March.

As well as direct destruction from the military onslaught, the lack of fuel has led to people in Gaza having to cut down trees wherever they can find them to burn for cooking or heating.

“It’s whole orchards gone, only soil left; you don’t see a single thing,” Yin says.

Independent satellite analysis by Forensic Architecture (FA), a London-based research group that investigates state violence, found similar results.

Before 7 October, farms and orchards covered about 170 sq km (65 sq miles), or 47% of Gaza’s total land area. By the end of February, FA estimates from satellite data that Israeli military activity had destroyed more than 65 sq km, or 38% of that land.

As well as cultivated land, more than 7,500 greenhouses formed a vital part of the territory’s agricultural infrastructure.

Almost a third have been destroyed entirely, according to FA’s analysis, ranging from up to 90% in the north of Gaza to about 40% around Khan Younis.

‘What’s left is devastation’

Samaneh Moafi, FA’s assistant director of research, describes the destruction as systematic.

Researchers used satellite imagery to document a repeated process in multiple locations, she says: after initial damage from aerial bombardment, ground troops arrived and dismantled greenhouses completely, while tractors, tanks and vehicles uprooted orchards and fields of crops.

“What’s left is devastation,” says Moafi. “An area that is no longer livable.”

FA’s investigation examined one farm in rast Jabalia, close to Gaza’s north-east border, cultivated by the Abu Suffiyeh family for the past decade. The family has since been displaced to the south. Their farm has been destroyed and orchards uprooted entirely, replaced by military earthworks with a new road carved through it.

“There is almost nothing to recognise there,” says one member of the family. “No traces of the land we knew. They totally erased it .

“It is now the same as it was before: desert … There is no single tree there. No traces of prior life. If I was to go there, I wouldn’t be able to recognise it.”

Israel has indicated it may attempt to make some of its demolitions permanent, with some officials proposing the creation of a “ buffer zone ” along the boundary between Gaza and Israel, where much of the agricultural land is located.

Some demolitions have already made way for Israeli military infrastructure. The open-source investigators Bellingcat say about 1,740 hectares (4,300 acres) of land appear to have been cleared in the area south of Gaza City where a new road, referred to by Israel as Route 749, has appeared, running across the entire width of the territory.

The Israeli military says the route was a “military necessity” built to “establish an operational foothold in the area and allow the passage of forces and logistical equipment”.

An IDF spokesperson said: “Hamas often operates from within orchards, fields, and agricultural land.” They added that: “The IDF is committed to mitigating civilian and environmental harm during operational activity.”

With trees razed, even the soil that remains is threatened by heavy bombing and demolitions. According to the UN Environment Programme (UNEP), heavy bombardment of populated areas can contaminate soil and groundwater in the long term – both through the munitions themselves and as collapsed buildings release hazardous materials such as asbestos, industrial chemicals and fuel into the surrounding air, soil and groundwater.

Since the beginning of the war, Israel has dropped tens of thousands of bombs on Gaza, with satellite analysis from January indicating that between 50% and 62% of all buildings had been damaged or destroyed.

As of January 2024, the UNEP estimated that bombing had left 22.9m tonnes of debris and hazardous material, with much of the rubble containing human remains.

“This is an extremely large amount of debris, especially for such a small area,” it says. “Components of the debris and rubble can contain harmful substances like asbestos, heavy metals, fire contaminants, unexploded ordnance, and hazardous chemicals.”

Piles of waste and poisoned water

The area around the warehouse that Abu Diab rents with her family is a wasteland. Sewage leaks from a bombed-out home nearby and waste has piled up, as it has everywhere near the southern town of Rafah, which now hosts much of Gaza’s population.

“The sewage and waste around the house are a major tragedy. Cats and dogs are drawn to the waste, then spread it along the streets,” she says.

The continuing conflict and siege conditions have resulted in the total collapse of Gaza’s already fragile civil infrastructure, including waste disposal, sewage treatment, fuel supplies and water management .

Wim Zwijnenburg, who investigates the impact of conflicts on the environment for the Dutch peace organisation PAX , says: “War generally collapses everything. In Gaza, it’s making people exposed to additional risks from pollution, from polluted groundwater. It’s the destruction of anything the civilian population depends on.”

Gaza’s municipality has listed the damage to infrastructure , noting that 70,000 tonnes of solid waste had accumulated since 7 October. Impromptu landfills have sprouted around the territory as the volume of uncollected rubbishmounts; Unrwa , the UN refugee agency for Palestinians, which collects refuse in camps, is unable to operate. Zwijnenburg says PAX has identified at least 60 informal waste dumps in central and southern Gaza.

Ameer, a resident of Rafah, says people have become overwhelmed by pollution in the air as people use any wood or plastic to build fires, cars run on cooking oil, and from fumes left by the bombing itself.

“The smell is awful and the smoke coming from cars is unbearable – it made me sick for days,” he says. “The smell of gunpowder and these awful gases from the ongoing bombardments is doing both the people and the environment real harm.”

When Israel cut off fuel to Gaza after 7 October, the resulting power cuts meant wastewater could not be pumped to treatment plants, leading to 100,000 cubic metres of sewage a day spewing into the sea, the UNEP says.

‘An act of ecocide’

The scale and long-term impact of the destruction have led to calls for it to be investigated as a potential war crime, and to be classed as ecocide, which covers damage done to the environment by deliberate or negligent actions.

Under the Rome Statute , which governs the international criminal court, it is a war crime to intentionally launch an excessive attack knowing that it will cause widespread, long-term and severe damage to the natural environment The Geneva conventions require that warring parties do not use methods of warfare that cause “widespread, long-term and severe damage to the natural environment”.

Saeed Bagheri, a lecturer in international law at Reading University, says that while there are disagreements about how to apply these articles, there are enough grounds to investigate the damage done to Gaza’s environment already.

Abeer al-Butmeh, the coordinator of the Palestinian Environmental NGOs Network , says: “The Israeli occupation has completely damaged all elements of life and all environmental elements in Gaza – they completely destroyed the agriculture and wildlife.

“What is happening is, for sure, ecocide ,” she says. “[It] is completely damaging the environment in Gaza for the long term, not only for the short term.

“Palestinian people have a strong relationship with the land – they are very connected to their land and also to the sea,” she says. “People in Gaza cannot live without fishing, without farming.

FA says: “The destruction of agricultural land and infrastructure in Gaza is a deliberate act of ecocide.

“The targeted farms and greenhouses are fundamental to local food production for a population already under a decades-long siege. The effects of this systematic agricultural destruction are exacerbated by other deliberate acts of deprivation of critical resources for Palestinian survival in Gaza.”

• The age of extinction
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