Environmental Scanning Techniques: SWOT and PEST Analysis Guide

Establishing a business is categorized as a rigorous task. It requires a significant investment of both effort and time.
The most challenging aspect of any business task is determining where and how to begin.
Challenges in Implementation:
- Even when a business owner possesses all necessary resources to operate a new venture or implement a specific plan, starting remains difficult.
The Importance of Environmental Scanning:
- It is vital for a business owner to scan his or her environment consistently.
- The purpose of this scanning is to anticipate and understand possible changes and situations that may occur, allowing the business to prepare for future scenarios.

SWOT Analysis is a vital tool used to identify a business's internal and external operating conditions.
The acronym stands for:
- S: Strengths
- W: Weaknesses
- O: Opportunities
- T: Threats
Factors are categorized based on their origin and impact:
- Internal Factors (Characteristics of the organization): These are factors the company has control over. They include Strengths and Weaknesses.
- External Factors (Elements of the external environment): These are factors the company does not control. They include Opportunities and Threats.
- Helpful Factors: Strengths and Opportunities (both help in achieving organizational objectives).
- Harmful Factors: Weaknesses and Threats (both can hinder the achievement of organizational objectives).

Strengths:
- Definition: These are the factors or characteristics that provide an organization with a competitive advantage over its competitors.
- Examples:
- Quality products and services.
- Efficient manufacturing processes.
- Positive brand image.
- Good company reputation.
- High technology used.
Weaknesses:
- Definition: These are areas of the business that require improvement. They can delay or hinder the growth of a business and the attainment of its objectives.
- Examples:
- Lack of access to technology.
- Limited customer reach.
- Poor location.
- Ineffective marketing strategies.
- Low brand awareness.
Opportunities:
- Definition: These pertain to different external factors that can help businesses obtain good performance and realize a competitive advantage.
- Examples:
- Better location.
- New target markets.
- New technologies and methods.
- New products.
- Possible business expansion.
Threats:
- Definition: These refer to different external factors that have the potential to harm the organization.
- Examples:
- Increased price of resources.
- High inflation rate.
- Entry of new competitors.
- New trends and technologies that the business does not currently possess.
- Unstable economic environment.

Step 1: Identify the specific goal of your SWOT analysis.
Step 2: Gather data regarding the business, the market, and the specific industry to which the business belongs.
Step 3: Identify and document your strengths.
Step 4: Identify and document your weaknesses.
Step 5: List potential opportunities for the business.
Step 6: List potential threats that could impede business performance.
Step 7: Analyze the data collected throughout the SWOT analysis process.
Step 8: Formulate strategies based on the gathered data and analysis.

Managers use PEST analysis to determine and assess four external factors from the macro environment that can impact the business.
These factors include Political and Legal, Economic, Sociocultural, and Technological forces.
Environmental scanning techniques also include the PESTEL framework (Political, Economic, Social, Technological, Environmental, Legal).

Political and Legal Factors:
- Definition: These refer to the government's political influence and various legal/government interventions that directly affect business operations.
- Examples:
- Labor laws.
- Minimum wage laws.
- Connections with politicians.
- Financial reporting standards.
- Political orientations.
Economic Factors:
- Definition: These refer to the different economic conditions and policies that are essential for business stability.
- Examples:
- Economic growth.
- Economic stability.
- Exchange rates.
- Demand and supply.
- Purchasing power of customers.
Sociocultural Factors:
- Definition: These pertain to the characteristics of customers regarding their demographics, lifestyle, and culture.
- Examples:
- Age and generation characteristics.
- Sex and gender.
- Social status.
- Income level.
- Customs.
Technological Factors:
- Definition: These are forces resulting from advancements in technology, science, and research.
- Examples:
- Internet development.
- Software and hardware development.
- Licensing policies.
- Patents.
- Outsourcing.

Step 1: Brainstorming: Determine the different factors affecting the business through brainstorming sessions.
Step 2: Data Analysis: Analyze the data gathered from the various macro-environment factors.
Step 3: Impact Analysis: Analyze whether the potential effects of these factors on the business are good or bad.
Step 4: Action Formulation: Formulate strategies, decisions, and appropriate actions based on the analyzed data.

Businesses often manage complex task logs which include varied categories of improvements and integrations:
- Integration Tasks: Zendesk management, Azure integration, Trello integration, Airtable in-app notification integration, Chrome integration.
- Development Tasks: Improve in-app onboarding, Build mobile NPS (Net Promoter Score) survey, Restructure onboarding flow.
- Marketing/Launch Tasks: Launch new website.

Question: Why is it recommended to conduct a SWOT analysis at least annually?
Answer (Contextual): Based on the importance of environmental scanning, an annual SWOT analysis is necessary because internal and external environments are dynamic. Frequent assessment helps business owners detect new possible changes and situations to maintain competitive advantage.
Question: What should a manager do after gathering data about PEST factors?
Answer: Following the PEST Analysis Process, after gathering data, a manager must analyze the data from the different factors, evaluate their potential good or bad effects on the business, and then formulate strategies and appropriate actions based on those conclusions.

Both SWOT and PEST analyses aim to provide business owners, managers, and decision-makers with a solid understanding of internal and external factors.
These tools clarify the potential impact these factors may have on the business to facilitate informed decision-making.