What are the methods for macro environmental analysis?

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The methods for macro-environmental analysis are SWOT, PESTLE, Porter's five forces, and scenario planning. SWOT refers to the Strengths, Weaknesses, Opportunity, and Threats that a business has to deal with. A firm should focus on its strengths, work on its weaknesses, take advantage of opportunities, and watch out for threats. PESTLE examines six key factors affect the business: political, economic, sociological, technological, legal, and environmental. The Porter's five forces refer to five factors that influence competition: new businesses, existing firms, consumers, suppliers, and substitute goods and services. Scenario planning looks at what a business must do in order to succeed and meet its main objectives in an uncertain future. All these processes are meant to protect the business from external forces that are beyond their control.

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In business, the macro environment is defined as the uncontrollable external factors that impact the organization’s operations, performance, and strategies. Due to the factor’s uncontrollable nature, the organization is forced to employ strategies that would help it adapt and continue thriving in the changed environment.

Approaches have been developed by organizations and business practitioners to help institutions analyze and make informed decisions with regards to the dynamic business environment.

The OT aspect of a SWOT analysis is one of the methods designed to address the macro environment. It deals with establishing the opportunities and threats presented by the dynamic external business environment.

PESTEL analysis is another method employed in the macro environmental analysis. The analysis framework examines an organization’s external environment to anticipate changes and facilitate the appropriate reaction.

The OT and PESTEL analyses study and examine metrics that include the following: political environment, economic environment, socio-cultural environment, technological environment, legal environment and the natural environment.

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