It is increasingly important to stay one step ahead to ensure the survival and prosperity of an organization. In this scenario, the ability to adapt and evolve plays a crucial role, and this derives mainly from sound strategic planning, where environmental analysis is an integral part.
Companies can carry out this process to detect internal and external factors and thus identify opportunities and challenges, taking into account elements such as economics and technology.
In this article, we will see what environmental analysis is, what it is for and how you can identify opportunities and threats within strategic planning based on it.
Environmental analysis, also known as PESTEL (Political, Economic, Social, Technological, Environmental and Legal) analysis, is a tool that allows organizations to scan and monitor the external environment in which they operate.
It is not just a data collection process, but an in-depth and comprehensive study that seeks to identify the various external factors and trends that could significantly impact the company's business and performance.
These elements can include everything from the economic climate and market trends to technological changes and legal regulations that could affect the way a business conducts its activities.
Environmental analysis plays an essential role in a company's strategic planning by providing a clear and thorough understanding of external business factors and how they may affect the organization in the future.
There are many ways in which analysis aids strategic planning:
Analyzing the environment allows companies to more easily detect the risks and opportunities present.
This is key because the market changes rapidly and abruptly and organizations must be able to adapt to it.
The process of defining a strategic plan makes it possible to know the current and desired positioning in a specific time frame. From this, leadership, commitment and collaboration are required throughout this process in order to achieve good results.
Once the opportunities and threats have been identified, this information can be used to formulate strategies that exploit the positive areas and mitigate the negative ones.
For example, if a company identifies a new emerging technology as an opportunity, it can formulate a strategy to adopt and take advantage of it before its competitors.
Environmental scanning provides companies with the information they need to make informed decisions.
If the environmental scan reveals that the economy is in recession, a decision can be made to delay expansion until there is a recovery.
It also helps organizations prepare for the future. By constantly monitoring the business environment and being aware of emerging trends and changes, businesses can prepare for and adapt to these changes, rather than being blindsided by them.
Finally, it can help businesses stay competitive in the marketplace. By understanding the environment and adjusting their strategies accordingly, businesses can stay one step ahead of their competitors.
Identifying opportunities and threats is a fundamental component of strategic planning, which is carried out by taking into account some steps that we at London Consulting Group consider indispensable:
The current situation of the company must be known; for this purpose, it is important to hold interviews with the company's top management and go deeper into how they are managing the company, in order to know what should change and why, according to their objectives.
Once this is done, it is possible to move on to the next element.
Strategic planning is not a static process, but a dynamic route that takes the organization from its current situation to its desired future vision.
Therefore, the strategic roadmap is divided into critical stages that ensure a smooth and effective transition:
Exploration and preparationThis is the starting point and consists of:
First, conduct an environmental analysis (research and analyze market conditions, competition, trends and other external factors that could influence the strategy).
Then, understand the expectations of stakeholders, i.e. all the people involved in a company, and how they relate to the company's objectives.
Finally, the vision and mission must be defined in order to know where the company wants to go and what it wants to achieve.
It is important to know what the weak and strong points of each team or member are in order to strengthen it and get results.
Team collaborationWork sessions should be held to discuss, question and define the key elements of the strategy.
With this, it will be easier to determine the main findings and decide the next steps in the strategy based on what is being achieved or desired.
Implementation and follow-upThe final phase is critical to bringing the strategy to life. A follow-up model must be established to monitor and control the implementation of the strategy with any adjustments or decisions made.
The strategy must also be implemented, using available resources and ensuring that the objectives are achieved as planned.
At this point, once the current situation and what should be considered in the strategy have been understood, the action and operation plans must be created and developed, connecting the strategy, in order to follow up the process.
To achieve this, some essential points must be considered, such as:
Conducting an analysis of the environment is very important for businesses; otherwise, they will most likely fall behind and will not be able to prosper or achieve ambitious long-term goals.
If you want the benefits of this process, but have doubts, at London Consulting Group (LCG) we have a solid and proven methodology to help you with strategic planning and environmental analysis.
Our approach is based on a deep understanding of your business, your goals and your mode of operation with all the factors (internal and external).
We offer a pre-diagnosis, where we assess the current state of your business strategic plan through initial interviews with senior management. From this, we develop a Strategic Planning Roadmap, detailing the key stages where we can add value, from exploration to implementation.
Throughout this process, we organize Collaborative Workshops, which are working sessions in which all participants can actively contribute. This not only helps to identify opportunities and threats but also fosters collaboration and shared decision-making.
At London Consulting Group, we not only help you understand your environment and formulate an effective strategy, but we also provide you with the tools and support you need to implement that strategy and achieve your business objectives. Contact us!