Understanding the environment your business operates in is a key part of planning and will allow you to discern the threats and opportunities associated with your area of business.
An external analysis looks at the wider business environment that affects your business.
An internal analysis looks at factors within your business such as your strengths and weaknesses.
Examining your internal and external analyses together gives you a complete picture of your current situation and the steps you can take to plan your marketing.
PESTLE external analysis
A PESTLE analysis helps you to identify the main external opportunities and threats in your market:
- Political changes such astrade agreements between countries
- Economic factors such as interest rates, exchange rates and consumer confidence
- Social factors such as changing attitudes and lifestyles, and the ageing population
- Technological factors such as new materials and growing use of the internet
- Environmental factors such as environmental law and impact on the environment
- Legal factors such as new and existing legislation
SWOT internal analysis
You also need to understand your internal strengths and weaknesses.
A SWOT analysis combines external and internal analysis to summarise your strengths, weaknesses, opportunities and threats.For example, a new business may note the following:
- Strength: enthusiastic employees or a unique product
- Weakness: no existing customer base and limited finances
- Opportunity: potential customers with problems the product solves, interested investors
- Threat: competition from established businesses with a bigger budget
You need to look for opportunities that play to your strengths. You also need to decide what to do about threats to your business and how you can overcome important weaknesses.
For example, your SWOT analysis might help you identify the most promising customers to target. You might decide to look at ways of using the Internet to reach customers. And you might start to investigate ways of raising additional investment to overcome your financial weakness.
To find out more about strategic analysis, seemeasure performance and set targets.
Invest NI's Business Direction Tutorial includes a chapter on how to use SWOT analysis to assess your business. See the video below:
FAQs
An external analysis looks at the wider business environment that affects your business. An internal analysis looks at factors within your business such as your strengths and weaknesses.
What is an external analysis in marketing? ›
External analysis, also called environmental analysis , is the process by which businesses objectively assess the changes in their industry and the broader world that could affect their current business operations. Companies do this to ensure they can adapt to changes and continue to succeed within an industry.
What is the internal and external analysis? ›
Internal analysis can include reviewing historical or recent profit and sales for the company, the brand or product positioning, and employee capabilities. External analysis can include reviewing market demographics, the economy, current technology, customers, and suppliers.
What are the internal and external factors of marketing? ›
The internal environment includes factors such as company culture, resources, and goals. External factors include the macro environment (which includes economic, political, legal, and technological influences) and the microenvironment (which includes customers, competitors, suppliers, and distributors).
What are the 3 C's of the internal analysis on a marketing plan? ›
This method has you focusing your analysis on the 3C's or strategic triangle: the customers, the competitors and the corporation. By analyzing these three elements, you will be able to find the key success factor (KSF) and create a viable marketing strategy.
Is SWOT analysis internal or external? ›
A SWOT analysis helps you assess internal factors that might affect your business (strengths and weaknesses) and external factors (opportunities and threats).
What is the internal analysis of marketing? ›
Internal Analysis is a component of Situational Analysis and the strategic marketing plan. In it the organisation, marketing and financial situation are analysed. The outcome of the analysis serves as input for SWOT.
What is the internal analysis of a business plan? ›
An internal analysis is the thorough examination of a company's internal components, both tangible and intangible, such as resources, assets and processes. An internal analysis helps the company decision-makers accurately identify areas for growth or revision to form a practical business strategy or business plan.
What is external marketing examples? ›
Some examples of external marketing are: websites. social media interaction. print, TV, and radio ads.
What should an internal analysis include? ›
An internal analysis is a powerful tool that can give you a comprehensive view of your company's internal workings. It gives you insight into the resources you have, resource capabilities, organizational structure, company culture, current processes, and so on.
An internal analysis is a process where all the components that interact within an organization are evaluated in order to identify failures and areas of opportunity. The main objective of this type of analysis is to find out the strengths and weaknesses of your organization.
How to conduct an external analysis? ›
Here are five keys to analyzing a company's external environment.
- Identify the latest trends. To get a good idea of the latest market trends, several approaches can be used. ...
- Assess market shares. ...
- Analyze the competitive environment. ...
- Identify threats. ...
- Draw up a realistic picture of your situation.
Examples of internal marketing
Common internal marketing efforts include: Ensuring that all employees know that their contributions are essential to its success. Educating all employees about the company's products and services. Reinforcing the concept that customers are the source of employees' salaries.
What are examples of external and internal factors? ›
External factors include political, economic, sociocultural, technological, environmental, and legal factors. These are factors that happen outside of the company but still, impact its ability to do business. Internal factors include culture changes, management changes, and employee morale.
Is marketing internal or external? ›
Marketing as it is commonly known is actually external marketing, whereas communicating your brand identity to your employees is considered internal. Though brand identity and values should be communicated for both purposes, the difference between internal and external marketing is huge.
What is internal and external in business plan? ›
An internal business plan is the tool used to communicate these goals in a clear, effective, and calculated manner. External business plans serve the purpose of raising capital. Banks constantly visit with small businesses desiring a loan to finance a new project.
What does internal analysis mean in marketing? ›
An internal analysis is a process where all the components that interact within an organization are evaluated in order to identify failures and areas of opportunity. The main objective of this type of analysis is to find out the strengths and weaknesses of your organization.
What is the internal analysis of the market? ›
Internal Analysis is a component of Situational Analysis and the strategic marketing plan. In it the organisation, marketing and financial situation are analysed. The outcome of the analysis serves as input for SWOT.
What is an internal marketing plan? ›
Internal marketing is the promotion of a company's objectives, products and services to employees within the organization. The purpose is to increase employee engagement with the company's goals and foster brand advocacy.
