Pestle Analysis

Topics: Strategic management, SWOT analysis, Business Pages: 15 (4860 words) Published: September 21, 2012
International Bulletin of Business Administration ISSN: 1451-243X Issue 12 (2011) © EuroJournals, Inc. 2011

External and Internal Environments of Businesses in Nigeria: An Appraisal Obiwuru Timothy Chidi Department of Actuarial Science, University of Lagos, Nigeria E-mail: Oluwalaiye, Olusola Babatunde Department of Economics, Banking and Finance, Babcock University, Nigeria E-mail: Okwu, Andy Titus Department of Economics, Banking and Finance, Babcock University, Nigeria E-mail: Abstract This paper appraised business external and internal environments, with specific reference to the Nigerian business environment. The methodology adopted is basically theoretical and narrative based on aggregative and specific SWOT Matrix and PESTLE Analysis models, respectively, from previous studies. A review of related literature and exploration of theoretical framework provided more insight into the various factors of the environments of business. The appraisal showed that both external and internal factors exert influence on and shape the life, growth and development of the business; external environment bears more relevance to strategic management, and businesses adjust to external environment but control internal environment. It further revealed that the government now plays more of regulatory role in the business environment in some sectors of the economy, and that, though certain measures had been put in place at various levels to engender conducive business environment for private sector participation, external factors such as multiple tax system, policy summersault, non-passage of the Freedom of Information (FOI) Bill into law, high cost of capital, high interest and inflation rates, volatile exchange rates, susceptibility of the economy to external shocks, infrastructure decay, dismal power supply, etc., escalated cost of doing business in Nigeria and, thus, posed serious threats to firms and industries. While many business organizations had leveraged on their strengths and explored opportunities in their environment, many more were overwhelmed by their weaknesses and, thus, failed before the growth and maturity stages, with the attendant implication that many small and medium scale enterprises did not grow, develop and transform into large and mega scale corporate businesses. Consequently, reconsideration of such environmental factors that impose unnecessary constraints on businesses in Nigeria was recommended.

Keywords: Environments of Businesses, Nigeria, Appraisal


1. Introduction
Business operates in an environment. As a social institution, business has an intricate and important relationship with the environment with which it interacts (Hellman et al, 1999). For the business, the main purpose of such interactions is to maximize profit and well-being of a firm’s constituents. The mechanism of interaction is the interface between the business and its environment; the business and environment gain from each other. This typifies interdependence between business and environment. The dynamic environment in which a business operates provides opportunities for it to grow, develop and create value and wealth. It also poses some threats to the business. The primary concern is how the business affects people and natural environment as it produces and sells products necessary to satisfy customers, stakeholders and other constituents. By building key stakeholder relationships among government agencies, consumer entities, environmental groups and other constituents, a business can anticipate and manage issues and concerns that might otherwise have gone undetected until they had grown into major problems (Rainey, 2008). These entail conscientious analysis of both external and internal environment by the business. Businesses are faced with challenges of social considerations which focus on specific issues that relate to their...
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