Why is Environmental Analysis Framework important?
Discuss about the Environmental Analysis Framework.
Marketing environment of an organization refers to both internal and external factors within an organization that can affect its level of performance (Song, et al, 2017). The process by which these factors are identified is referred to as environmental analysis, it involves identifying possible strengths, opportunities or related threats that might be present to either affect the organizations performance positively or negatively. It’s important for every organization or a given business unit to carry out an environmental analysis to enhance effective decision making process, that in return helps in aligning organizations strategic development objectives. There are various environmental analysis tools that an organization can use to enhance its strategic planning activities, the most commonly used is PESTLE analysis.
PESTLE analysis represents various factors that can affect the organizations environment activities directly or indirectly to evaluate level of its performance. These include political, economic, social, technological, environmental and legal factors (Anton, 2015). Marketing managers and other strategic evaluators in different organizations use this analysis framework tool to help identify the level of their market at that specific moment. It’s also important to help them identify with other future marketing activities relating to their marketing structure. These factors are important in enhancing strategic marketing activities of an organization as discussed below.
Political factors. These are current political issues within the country or other related global factors existing in the political scene that can affect the marketing performance of an organization. They include the existing business policies among them taxation laws, regulations governing entry mode as well as the level of government stability (Eberlein, et al, 2014). This impacts on strategic decision making as it depends on the type of leadership governing the state in which the organizations exist. Economic factors refer to determinants of the level of economy depending on the environment. They include level of inflation, rate of foreign exchange, rate at which credit can be accessed among others. This helps the organization to develop strategies that can cope positively with the changing economy. Social factors vary from one environment to the other as every target group in any given market has a distinctive mindset. Some of these factors include different social lifestyles, varying education levels, gap between the rich and the poor among others and can affect the rate of product and service distribution in the market (Sirianni, et al, 2013). They help the organization in coming up with strategies of how to distribute the existing products in the market.
Tools Used for Environmental Analysis Framework
Technological factors. Technology advancing rate is increasing on a daily basis thus influencing the level of business marketing activities within an organization. Innovative business platforms and other new business discoveries are some of the technological factors that can affect the performance of an organization. This is important to an organization to help keep trend of consumers feedback relating to the new trends in the market to enhancing development of their structure. Environmental factors mainly refers to the location of the organization, this influences the level of trading activities relating to other business units as well as the target market. Place as one of the marketing mix Ps refers to availability of the product at a specific location. It’s important for the organization to be located at a specific location to help assess consumer reactions towards a particular product offering in the market (Singh, et al, 2014). Legal factors mainly refers to legislative issues or changes that may take place affecting the business environments. Some include product formulation and distribution laws, laws governing competition, employment laws among others. This is important to the organizations strategic planning activities to help set strategies that are in line with the new regulations in the market from the existing regulatory body.
Nike is a US based company that provides trendy functional sportswear in the world with an aim of inspiring innovativeness to every athlete across the globe. Despite being a significant sportswear provisional company in the world, it has the responsibility of guarding the high levels of competition in the market. PESTLE analysis analyzed below looks at the environmental factors that affect Nikes organizational performance (Yuan, 2015).
Political factors in the US as Nikes home country make favorable policies important for the growth of the company, though sometimes subjected to changes in tax agreements with increased political conflicts that affect its import and export processes. Economic factors make Nike less vulnerable as it sells a well-respected range capacity, though a collapse of its market will signify danger in its performance and also a fall of cheap labor dependency. Social factors relates to public relations activities of the company, with high and better lifestyles , the target market will need high quality products a situation that improves Nikes level of performance (Brohi, et al, 2016). Technological factors relating to innovative social media platforms have enhanced an easier means of connection with their customers as they provide relevant information about their existing products as they also encourage online shopping. Legal factors in this case ensure that the company is entitled to paying taxes and enhances legal marketing practices with the appropriate products. Environmental factors, Nike is accessible to its target market but has massive aerial pollution during its production processes, with the current strategies put in place the company shows signs of change.
PESTLE Analysis Framework
Brand positioning refers to consumers benefit regarding to a specific brand. PESTLE analysis greatly enhances the level of organizations strategic planning activities in the market to enhancing a successful brand positioning. Political factors enhances the level of strategic decision making of the organization business activities, this ensures that the consumer is put at the center of every business activity that is to take place within that organization (Jewell and Saenger, 2014). As the main stakeholder and target of the various activities enhanced, consumers satisfaction is a factor that every organizations business activities is set to ensure. Economic factors ensure pricing sensitivity towards the targeted consumer in the market, social factors ensure that the needs and requirements of every consumer relating to his or her taste and preferences are maintained. Technological factors on the other hand ensures that the consumer remains in the know how about a desired product and its existing market, environmental factors ensures that the market is strategically placed for the consumers to access the product any time the need arises, While legal factors ensure only the legal products are allowed in the market for consumption to protecting the immediate consumer (Ahmed, et al, 2015). All the six PESTLE analysis framework factors ensure that the consumer benefits appropriately from the existing market important to enhancing a successful brand positioning.
PESTLE analysis framework is important in developing organizations strategies important in enhancing the level of business performance. If my colleague employs this framework in analysis of his business environment, the business unit will relevantly benefit in various ways as follows. Improved decision making process as the management can understand the existing political issues affecting the business world. Enhance consumer satisfaction measures important to ensuring the consumers remain loyal to the existing products as directed by the existing marketing economy. Innovative business platforms like online shopping platforms will ensure the consumer is on know how about the product within his business unit. Understanding the various needs of the consumers and their rights in the market is also important to enhance a positive relationship as he only provides legal products. This is important in enhancing per capital income important to improving business performance level.
Strategic planning is important for every organization to enhancing a positive business marketing strategy. Environmental analysis framework ensures that the set strategies to conduct the organizational business activities enhance a successful brand positioning of a specific brand in the market (Reinhardt, et al, 2017). PESTLE analysis as the commonly used framework enhances an understanding of both macro and micro factors within the business environments by outlining their strengths, weaknesses, opportunities and threats that may influence the level of organizational performance. The six factors as discussed above directly or indirectly affect the organizational activities to establishing its strategic plan, this is important to ensuring the existing brand benefits the target market who are also the consumers of the product (Maarit Jalkala and Keränen, 2014). As a result, all organizations either profit making or non-profit making should enhance a positive environmental analysis framework to help understand their level of performance towards achieving the set goals and objectives.
Ahmed, R.R., Kumar, R., Baig, M.Z. and Khan, M.K., 2015. Impact of Digital Media on Brand Loyalty and Brand Positioning.
Anton, R., 2015. An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces, Diamond, PESTEL, and SWOT Analysis.
Brohi, H., Prithiani, J., Abbas, Z., Bhutto, A.H. and Chawla, S.K., 2016. Strategic Marketing Plan of Nike.
Eberlein, B., Abbott, K.W., Black, J., Meidinger, E. and Wood, S., 2014. Transnational business governance interactions: Conceptualization and framework for analysis. Regulation & Governance, 8(1), pp.1-21.
Jewell, R.D. and Saenger, C., 2014. Associative and dissociative comparative advertising strategies in broadening brand positioning. Journal of Business Research, 67(7), pp.1559-1566.
Maarit Jalkala, A. and Keränen, J., 2014. Brand positioning strategies for industrial firms providing customer solutions. Journal of Business & Industrial Marketing, 29(3), pp.253-264.
Reinhardt, R., Domingo, S.G., García, B.A. and Christodoulou, I., 2017, June. Macro environmental analysis of the electric vehicle battery second use market. In European Energy Market (EEM), 2017 14th International Conference on the (pp. 1-6). IEEE.
Singh, J., P. Kalafatis, S. and Ledden, L., 2014. Consumer perceptions of cobrands: The role of brand positioning strategies. Marketing Intelligence & Planning, 32(2), pp.145-159.
Sirianni, N.J., Bitner, M.J., Brown, S.W. and Mandel, N., 2013. Branded service encounters: Strategically aligning employee behavior with the brand positioning. Journal of Marketing, 77(6), pp.108-123.
Song, J., Sun, Y. and Jin, L., 2017. PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable and Sustainable Energy Reviews, 80, pp.276- 289.
Yuan, C.M., 2015, July. PEST Analysis of Digital Fitness Equipment Market Based on Internet of Things Technology. In 2015 International Conference on Artificial Intelligence and Industrial Engineering. Atlantis Press.
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