Market/Environment Research

This section helps you to research and assess the business environment using the most common business analysis tools. In fact, environmental analysis should be continuous and feed all aspects of planning and forecasting. Every company exists in multiple environments. Your business is both affected by, and shapes, those environments.

The societal environment can be examined using the PEST analysis of the following factors: political, economic, sociocultural, and technological;

The task environment can be examined using Porter’s Five Forces analysis;

The internal factors affecting the organization; and, then

A SWOT analysis brings together the most essential external and internal environment factors that are relevant to your business.

Business Tools

The summary of these tools is briefly described below and links to additional resources can be found on this page. While you may not report all the elements of this analysis in your business plan, you will need to summarize the high points of your business strengths / opportunities and weaknesses / threats. Lenders, potential partners, and investors will want to be aware of the downside (worst case scenario) of your new venture.


PEST Analysis

a. Political Factors

The political arena has an influence upon the regulation of business, and the spending power of consumers and other businesses. Consider the following issues in light of your business proposal:

How stable is the political environment (home and host)?
Will government policy influence laws that regulate or tax your business?
What is the government’s position on marketing ethics or consumer protection?
What is the government’s policy on the industry sector?
Is the region involved in creating trade agreements: EU, NAFTA, BC/Alberta TILMA, others?
b. Economic Factors

Businesses and their marketing departments need to consider the state of the trading economy in the short and long-terms. You will need to look at:

Interest rates
The level of inflation
Employment level per capita
Housing starts / real estate prices
Financial institution restraints / constraints on various industry sectors
c. Sociocultural Factors

For your target market and the region in which you will distribute your product, consider the following questions:

Technology drives creation of new industries and challenges the mature industry — how are you poised to take advantage of this fact?
Technology is one tool for withstanding competitive threats.
How does the uptake / change in technology affect your relationships and communications with suppliers, customers, networks, communities, media, governments, and stakeholders?

Porter’s Five (or Six) Forces Analysis

Porter’s Five Forces is a framework for industry analysis and business strategy development (Michael Porter, Harvard Business School, 1979). It works effectively for big or small businesses, and by design is generally used to analyze the micro-environment of your business. Each of the forces can be given a value of a low, medium, strong, or very strong rating and together provide a strategic ‘picture’ of your business.


The bargaining power of customers
buyer volume
buyer information availability
price of total purchase
buyer price sensitivity
buyer switching costs relative to firm switching costs


The bargaining power of suppliers
brand recognition
supplier concentration to firm concentration ratio
degree of differentiation of inputs
cost of inputs relative to selling price of the product
geographical coverage


The threat of new entrants
brand equity
switching costs
access to distribution
learning curve advantages
government policies / regulations
capital requirements
geographical coverage
incumbents’ resistance


The threat of substitute products
buyer propensity to substitute
relative price performance of substitutes
buyer switching costs
perceived level of product differentiation


Intensity of competitive rivalry
number of competitors
ate of industry growth
exit barriers
diversity of competitors
informational complexity and asymmetry
brand equity
fixed cost allocation per value added
level of advertising expense


The relative power of other stakeholders

The relative power of other stakeholders is a sixth force that can be particularly relevant to obtaining resources on Crown Land, for instance, and may be relevant to your business case. is a sixth force that can be particularly relevant to obtaining resources on Crown Land, for instance, and may be relevant to your business case.


Internal Environment Analysis

People, with their knowledge, know-how, and managerial skills, are seen to be the new competitive advantage. Is your business structured in a manner that harnesses employee power, or drives it away?


How does your organization structure compare to your competitors – especially the ones that are known for their best practices in human resources management?



What is your organizational culture? Does it set you apart in the industry and lead to a competitive advantage?



What are your organizational resources in the following areas (do a size-up or examine the strengths / weaknesses):
Research and development
Operations and logistics
Human resource management (recruitment / retention)
Information systems

SWOT Analysis

STRENGTHS: attributes of the organization that positively impact its ability to achieve business objectives
WEAKNESSES: attributes of the organization that negatively impact its ability to achieve business objectives.
OPPORTUNITIES: external conditions that potentially assist the business in achieving the objective
THREATS: external conditions that potentially threaten the success, in the present or future, of a business.

It is important to note that opportunities and threats are often beyond the control of a business, and therefore should prompt the business to adapt, evolve, and innovate to either take advantage of the opportunity, or to mitigate the damage of the threat. Here is a chart that you can use to formulate your analysis:

Examples of SWOTs

Strengths or Weaknesses
resources / technology prowess
customer service / loyalty
staff productivity
corporate culture
management expertise
delivery time
price point
relationships with customers / suppliers
brand strength
multi-lingual capabilities
patents, licenses, permits
distribution networks
Opportunities or Threats
changes in government policy
tax increases / decreases
currency fluctuations
interest rates
industry mergers or joint ventures
change in customer demographics
strategic alliances
expectations of shareholders / public
technology advances
geographic markets
changing customer tastes