External environment:
- External driving forces are those things, situations, events that occur outside of the organization and affect it in either a positive or negative way.
- This occurs outside the organization and by-and-large out or beyond the control of the organization. External environment is analyzed under Task Environment and General Environment.
Task or micro or operating environment:
- The micro environment is also known as the task environment and operating environment because the micro environmental forces have a direct bearing on the operations of the firm.
- The organization gets affected by these environments and can also affect this environment.
- They are: Customers, Suppliers, Distributors, Unions, Creditors, Competitors, Regulatory Agency, Strategic allies.
- Competitors: A competitor is another business that operates in the same market. Every move of the competitors affects the business. Business has to adjust itself according to the strategies of the Competitors.
- Suppliers: An important force in the micro environment of a company is the suppliers, i.e., those who supply the inputs like raw materials and components to the company. The importance of reliable source/sources of supply to the smooth functioning of the business is obvious. They must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier.
- Customers: The major task of a business is to create and sustain customers. A business exists only because of its customers. The choice of customer segments should be made by considering a number of factors including the relative profitability, dependability, and stability of demand, growth prospects and the extent of competition. Types of Customers are Wholesalers, Retailers, Industries, Government, and Other Institutions Foreigners
- Pressure Groups/ unions: Employees are part of the internal environment, but it is very likely that a percentage of the employees will belong to a union. A union is a formal group that acts to represent the views of employees. The union will often be used when there is a disagreement with the managers, or during the process of negotiating the wages and conditions of the firm. This type of pressure group retains a fairly direct association with the large scale organization; there are other pressure groups that may operate with a less direct influence.
- Creditors: Large scale organizations require large amounts of money. This means using the financial services that are offered by banks. When a bank provides access to a loan, it is normal for certain conditions to be attached. In this way the bank (which is external to the business) can affect the operations of the large scale organization. At a simple level, a loan must be repaid, which will require the commitment of future cash flow to make this possible.
- Regulatory Bodies: While the broader impact of government policy decisions should be considered as part of the macro environment, there are often specific government bodies that will have a more direct impact on the actions of a large scale business. The regulatory bodies make regulation in consultation with the industry professionals.
Macro Environment
- Macro environment is also known as General environment and remote environment.
- Macro factors are generally more uncontrollable than micro environment factors.
- When the macro factors become uncontrollable, the success of company depends upon its adaptability to the environment.
- The successful businessman visualizes the external factors affecting the business; anticipating prospective market situations and makes suitable to get the maximum with minimize cost. Macro environment factors are discussed below:
- Economic Environment: Economic factors which have their affect on the working of the business are known as economic environment. It includes system, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth etc. Government frames economic policies. Economic Policies affects the different business units in different ways. It may or may not have favorable effect on a business unit. The Government may grant subsidies to one business or decrease the rates of excise or custom duty or the government may increase the rates of custom duty and excise duty, tax rates for another business. All the business enterprises frame their policies keeping in view the prevailing economic policies. Important economic policies of a country are as follows:-Monetary Policy, Fiscal Policy, Foreign Trade Policy, Foreign Investment Policy, Industrial Policy, etc
- Social Environment: The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. Sociological factors such as material culture, language, aesthetics, education, religion, attitudes and values and social organization, etc. have far-reaching impact on the business. These factors determine the work culture and mobility of labour, work groups etc.
- Political Environment: A political system is composed of the members of a social organization (group) who are in power. The political environment of a country is influenced by the political organizations such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy influence of primary groups etc. The political environment of the country influences the business to a great extent. Political Environment: constitution, political parties, government, government – business relationship, political risk factor, International political events.
- Legal Environment: Legal system refers to the rules, or regulations that regulate the behavior Legal systems vary from country to country. The legal environment is derived partly from the political climate in a country and has three distinct dimensions to it:
- The domestic laws of your home country
- The domestic laws of each of your foreign markets
- International law in general
- Legal environment includes flexibility and adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts. These affect the business and its managers to a great extent. Laws like; competition law, employment law, health and safety law, product safety etc are important once affecting the business.
- Technical Environment: A systematic application of scientific knowledge to practical task is known as technology. Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products. New technologies create new products and new processes Technological environment influences the business in terms of investment in technology, consistent application of technology and the effects of technology on markets
- Environmental factors: The natural environment includes geographical and ecological factors that influence the business operations. These factors include the availability of natural resources, weather and climatic condition, location aspect, topographical factors, etc. Changes in environment can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environment friendly products and processes is affecting demand patterns and creating business opportunities.
The external environment:
ReplyDeleteA business converts inputs into outputs in order to make a profit. However, the business does not exist in a vacuum, it exists within an external environment consisting of the actions of other players who are outside the business. The external environment consists of:
competitors
the economic system
the social system
the monetary system
the political/legal system
the environmental system.
Competitors actions affect the ability of the business to make profits, because competitors will continually seek to gain an advantage over each other, by differentiating their product and service, and by seeking to provide better value for money.
The economic system is the organisation of the economy to allocate scarce resources. The economy tends to go through periods of faster and slower growth. Businesses prosper when the economy is booming and living standards are rising.
The social system is the fabric of ideas, attitudes and behavior patterns that are involved in human relationships. In particular businesses are influenced by consumer attitudes and behaviours which depend on such factors as the age structure of the population, and the nature of work and leisure.
The monetary system facilitates business exchange. Monetary activity is based around earning, spending, saving and borrowing. Money has been likened to the oil that lubricates the wheels of commerce. Monetary activity involves businesses in a web of relationships involving financial institutions (e.g. banks and building societies), creditors, debtors, customers and suppliers. A key monetary influence for business is the interest rate. Higher interest rates increase business costs and act as a break on spending in the economy.
The political/legal system creates the rules and frameworks within which business operates. Government policy supports and encourages some business activities e.g. enterprise, while discouraging others e.g the creation of pollution.
The environmental system is the natural system in which life takes place. Increasingly businesses have become aware of the relationship between their economic activity i.e. making goods and services for profits and the effects that this has on the environmental system.
this classificatoin of external environment help manager to identify opportunities and threats caused by the force and conditions that originate outside the orginazation....
ReplyDeleteExternal environment :Everything outside an organization's boundaries that might affect it.They are of two types:
ReplyDeletea)General environment: The set broad dimensions and forces in an organization's surroundings that create its overall context.
b)Task environment: It specifies organization's or groups that influences an organization.
Internal environment:The conditions and forces within an organization.
Task environment:
a)Competitor:An organization that competes with other organizations for resources.
b)Customer:Whoever pays money to acquire an organizations products or services.
c)Supplier:An organization that provides resources for other organizations.
d)Strategic partners:An organizations working together with one or more other organizations in a joint venture or similar arrangement.
e)Regulator:A unit that has the potential to control, legislate or otherwise influence the organization's policies and practices.
f)Regulatory agency:An agency created by the government to regulate business activities.
g)Interest group:A group organized by its members to attempt to influence business.
The external environment of an organization is what affects the organizations ability to function properly. Customer satisfaction, economic stability, government regulations, competitor's edge and the opinion of the public are external environments that influence an organization. It is vital that an organization is aware of these external environments and conducts the proper research to maintain a proper balance of these external environments to function optimally.
ReplyDeleteTask environment:It is a kind of external environment.It is closer to the organization and includes the sectors that conduct day-to-day transactions with the organization and directly influence its basic organization and performance.
Competitors:Organization competing with the business are competitiors.
Supplier:Anyone that provides raw materials to the business is known as supplier.
Customers:People who purchase the products and services produced by a business firm paying certain money are customers.
Unions:: Employees belong to various unions. A union is a formal group that acts to represent the views of employees if any problems arises.
Regulator:A unit that has the potential to control, legislate or otherwise influence the organization's policies and practices.
Macro environment factors are uncontrollable external forces that affect how a business operates. They are largely out of the control of the business, and often require changes in operating, management, production, and marketing. Analysts often categorize them using the acronyms PEST or PESTEL. Broken down, PEST stands for political, economic, social, and technological concerns. PESTEL also includes environmental and legal factors.
ReplyDeletePolitical
Political macro environment factors include things like tax policies, government-issued safety regulations, the availability of government contracts, and even shifts in the controlling political party. International laws, such as trade agreements and tariffs, may affect the supply and demand chains and available markets for many different companies as well.
Economic
A market boom, recession, or growing inflation problem can all change the way an organization plans for the future and operates in the present. Economic factors are often difficult to assess, since economic forecasts and analyses vary widely between experts. Unemployment levels, comparative foreign exchange rates, and the state of the global economy can all help or hurt a business' ability to get needed components and maintain a stable profit.
Social
The mood and demographics of the population make up the social area of macro environment factors. For example, a society that places an emphasis on self-guided jobs with room for creativity may cause organizations to redefine job descriptions and adapt the model of the workplace to attract workers. Social trends, such as a preference for on-demand mobile media devices, can also influence which products a company manufacturers and where it chooses to spend advertising dollars.
Technological
Technological macro environment factors can influence how an organization does business. A new type of machinery, computer chip, or product created through research and development can help a company stay modernized and ahead of the market curve. Owners must be able to accurately identify which new developments will be truly useful, and which are just fads.
Environmental
Environmental concerns are important to businesses both in the short and long term. In the short-term, things like natural disasters can disrupt production and supply operations, or even destroy company assets. Programs such as environmental risk assessment can help companies prepare to handle many of the most likely short-term crises. In the long view, however, businesses may have an interest in ensuring that their supply chains are not destroyed by unsustainable practices.
Legal
Legal factors can limit or change how a business operates. For example, they may have to hire additional supervisory staff or purchase safety equipment after a new health and safety law is passed. Child labor laws often limit the hours a minor can work and require set break periods. If an organization employs several minors, it may have to hire additional help to cover the hours when the minors cannot legally work. Legal factors are determined by both local legislation and regional and national laws. In some cases, companies that do business internationally are also affected by international laws.
The External Invironment:
ReplyDeleteExternal environment are the forces, situations, events that occurs outside the organization and effects it in either positive or negative ways. It is analyzed under Task Environment and General environment.
(1) General/Macro Environment: This environment effects the organization and its task. It is also called remote environment. This environment presents opportunities, threats, and constraits for the organization.The macro emvironment factors are shortle said as PESTEL, they are as follows:
- Economic environment: Business is largely determined by the economic factors or say the country's economic system.poor economic condition can make the environment more complex and managers' job more difficult and demanding.
- Sociocultural environment: This factors includes social institutions ,class structure, desires, expectations ,beliefs, and custom of people , values and norms, and behaviour of individual which directly influences the business organization.
- Political environment: This environment mainly refers to the political structure , composition of bureaucracy , ideology of the ruling government, the political stability, public opinion amd government business relations.
-Legal Environment: This environment refers to the framework of laws, regulations, and court decisions intended to encourage , guide and control business activities.
- Technological environment: Radical developments have occured over the past several years in communication, information and automation including robotica.These developments place heavy demand on the organizationin the ever increasing compititive markets.
-Global environment: global forces are outcomes of changes in international relationship. For certain categories of business, this environment is very important. For instance, the firms dealing with import-export business are most affected by the changes taking place in the international market.
(2) Task environment:
ReplyDeleteTask environment is also known as the micro environment or compititive environment or operating environment . This environment differs from the general environment in thatit can be influenced or controlled, to some extent, by am organization.
-Competitors: A business firm faces competition in the market. Competition is therfore inevitable. Managers work out stratergies to deal with the competitors and the competing products. Rivalry between competitors is potentially the most threatening force that managers must deal with.
-Suppliers: A business firm buys raw materials frim the suppliers who are an important part of task environment. Quality and price of the raw material received from the supplier determone the quality of output.
-Customers: A customer may be an individual, a family, a business house or an institution who are not only linked with business firm but also important source for ideas , opinions, information and reactions.
-Unions: Employees are part of the internal environment, but it is very likely thst a percentage of employee belongs to a union. These unions are made to represent the views of employees, disaggrement or agrement with the decisions of the managers.
-Creditors: organizations require large amount of money to start any business this means they use financial services from the banks(external environment). This loads should be repaid in the future.
-Regulatory bodies:The regulatory bodies make regulations in consultation with the industry professionals.
-Special interest groups: The main special interest groups are environmentalists, unions ,consumer advocates and many ither professional organizations. These groups exert pressure on the business firm to advance their positions on issues like quality, service, price, waste management, environmental protection, etc. These groups influences the business firm by drawing the attention of the politicians, legislatures and the media.
- Media: A business unit draws an attention of the media which keeps an eye on the vital decisions or actions of the business firm having general public interest. Managers need to maintain good communication with the media and external audiences.
-Distributors: Distributors are organizations that help other organizations sell their goods or services to customers. The changing nature of distributors and distribution method can also bring opportunity and threat for managers.
External Environment
ReplyDelete----------------------------------
A business does not function in a vacuum. It has to act and react to
what happens outside the business.
These factors that happen outside the business are known as external
factors or influences.
They are beyond the control of a business.
Micro Environment
-------------------------
This has direct effect on a business.
1.Competition
The main factor that affects most business is the degree of competition
– how fiercely other businesses compete with the products that another
business makes.
2.Suppliers
any delay in supplies of raw materials would directly delay the production of the business
3.Customers
it is the customers who decide what to buy. if they donot like the products then it obviously affects the business.
4.Unions
Sometimes unions may hinder the business output because of the conflict with the employers.
5.Creditors
If banks donot give loan to business then it might be hard for doing some projects.
===============================================================
Macro Environment
------------------------------
This has indirect effect on a business.
1.Social
– changes to the structure of society e.g. working women, single
parent families,
how consumers, households and communities behave and their beliefs.
For instance, changes in attitude towards health, or a greater number of
pensioners in a population.
2.Legal – the way in which legislation in society affects the business. e.g.
changes in employment laws on working hours.
3.Economic – how the economy affects a business in terms of taxation,
government spending, general demand, interest rates, exchange rates
and European and global economic factors.
4.Political – how changes in government policy might affect the business
e.g. a decision to subsidise building new houses in an area
could be good for a local brick works.
5.Technological – how the rapid pace of change in production processes
and
product innovation affect a business.
External environment refers to conditions, entities, events, and factors surrounding an organization that influence its activities and choices, and determine its opportunities and risks. Also called operating environment.
ReplyDeleteExternal Factors Affecting Business Environment;
Micro environment includes;competitors,suppliers,customers,unions,creditors,regulatory bodies.
Macro environment includes;
1.Economic forces;
income,inflation,recession,exchange rate,interest rate,etc.
2.Socio-cultural factors;
values,culture,tradition,multiple lifestyle,changing structures of family
3.Political and legal environment
4.Natural environment
5.Technical environment;
technologies for nation,for products and services,for business models,etc.
A business converts inputs into outputs in order to make a profit. However, the business does not exist in a vacuum, it exists within an external environment consisting of the actions of other players who are outside the business. The external environment consists of:
ReplyDeletecompetitors
the economic system
the social system
the monetary system
the political/legal system
the environmental system.
Business case studies / Business Theory / External environment / External influences / The external environment
External environment illustration External environment theory
The external environment
A business converts inputs into outputs in order to make a profit. However, the business does not exist in a vacuum, it exists within an external environment consisting of the actions of other players who are outside the business. The external environment consists of:
competitors
the economic system
the social system
the monetary system
the political/legal system
the environmental system.
Competitors actions affect the ability of the business to make profits, because competitors will continually seek to gain an advantage over each other, by differentiating their product and service, and by seeking to provide better value for money.The economic system is the organization of the economy to allocate scarce resources. The economy tends to go through periods of faster and slower growth. Businesses prosper when the economy is booming and living standards are rising.The social system is the fabric of ideas, attitudes and behavior patterns that are involved in human relationships. In particular businesses are influenced by consumer attitudes and behaviours which depend on such factors as the age structure of the population, and the nature of work and leisure.The monetary system facilitates business exchange. Monetary activity is based around earning, spending, saving and borrowing. Money has been likened to the oil that lubricates the wheels of commerce. Monetary activity involves businesses in a web of relationships involving financial institutions (e.g. banks and building societies), creditors, debtors, customers and suppliers. A key monetary influence for business is the interest rate. Higher interest rates increase business costs and act as a break on spending in the economy.The political/legal system creates the rules and frameworks within which business operates. Government policy supports and encourages some business activities e.g. enterprise, while discouraging others e.g the creation of pollution.The environmental system is the natural system in which life takes place. Increasingly businesses have become aware of the relationship between their economic activity i.e. making goods and services for profits and the effects that this has on the environmental system
The external environment of an organization are those factors outside the company that affect the company's ability to function. Some external elements can be manipulated by company marketing, while others require the organization to make adjustments. Monitor the basic components of your company's external environment, and keep a close watch at all times.
ReplyDeleteCustomers
Your customers are among the external elements you can attempt to influence, via marketing and strategic release of corporate information. But ultimately, your relationship with your clients is based on finding ways to influence them to purchase your products. Market research is used to determine the effectiveness of your marketing messages, and to decide what changes can be made to future marketing programs to improve sales.
Government
Government regulations in product development, packaging and shipping play a significant role in the cost of doing business and your ability to expand into new markets. If the government places new regulations on how you must package your product for shipment, that can increase your unit costs and affect your profit margins. International laws create processes that your company must follow to get your product into foreign markets.
Economy
As with the majority of the elements of your organization's external environment, your company must be efficient at monitoring the economy and learning how to react to it, rather than trying to manipulate it. Economic factors affect how you market products, how much money you can spend on business growth, and the kind of target markets you will pursue.
Competition
Your competition has a significant effect on how you do business and how you address your target market. You can choose to find markets that the competition is not active in, or you can decide to take on the competition directly in the same target market. The success and failure of your various competitors also determines a portion of your marketing planning, as well. For example, if a long-time competitor in a particular market suddenly decides to drop out due to financial losses, then you will need to adjust your planning to take advantage of the situation.
Public Opinion
Any kind of company scandal can be damaging to your organization's image. The public perception of your organization can hurt sales it's negative, or it can boost sales with positive company news. Your firm can influence public opinion by using public relations professionals to release strategic information, but it is also important to monitor public opinion to try and defuse potential issues before they begin to spread.
The external environment is composed of general and task environment layers. The general environment is composed of the nonspecific elements of the organization's surroundings that might affect its activities. It consists of five dimensions: economic, technological, sociocultural, political-legal, and international. The effects of these dimensions on the organization are broad and gradual. The task environment consists of specific dimensions of the organization's surroundings that are very likely to influence the organization. It also consists of five elements: competitors, customers, suppliers, regulators, and strategic partners. Because these dimensions are associated with specific organizations in the environment, their effects are likely to be more direct and immediate.
ReplyDeleteExternal Environment
ReplyDeletethe external environment can further be classified into two interrelated sub-categories:those in the general (macro) environment, and those in the more task (micro) environment.
General Environment
the general environment affets the organization and its task environment. it is also called remote environment. it is composed of a set of forces that are outside the organization's operating system-that is, political, economic, social, legal, and technological factors. hence, they are uncontrollable factors. the general environment presents oppurtunities, threats, and contraints for the organization.
economic environment-it is largely determined by the economic system of the country. the major elements of the environment are: the system of planning and control; fiscal, monetary and industrial policies, the conditions prevailig in agriculture, industrial and service sectors; and a host of other economic conditions prevailing in the country.
sociocultural environment-it is made up of the social instututions, class structure, desires, expectations, beliefs and customs of people in a given society.
political environment-it refers to the political structure, composition of bureaucracy, ideology of the ruling government, the political stability, public opinion, and government-business relations.
legal environment-it refers to the framework of laws, regulations and court decisions intended to encourage, guide, and control business activities.
technology environment-radical developments have occured over the past several years in communication, information and automation including robotics. these developments not only present enormous opportunities for business organizations in terms of enhanced effectiveness, but also place heavy demands on them in the ever increasing competitive merkets.
global environment-international developments have their effects on domestic business. for certain categories of business, it is very important.
Task Environment
ReplyDeleteit involves factors in the immediate competitive situation of a particular organization. forces in the task environment result from the actions of suppliers, distributors, customers, and competitors. these groups affect a manager's ability to obtain resources and dispose of outputs. the task environment is also called the competitive or operating environment. the task environment differs from the general environment in that it can be influenced or controlled, to some extent, by an organization.
customers-these customers are ot only linked with the business firm for the purchase of goods and services; they are also an important source of ideas, opinions, information, and reaction.
suppliers-a business firm buys raw materials from the suppliers who are an important part of the task environment.
government- the role of the government is to regulate business systems and to protect the interest of the consumers and the general public. its role is also to protect industries ensuring adherence to free-market principles. the policies and regulations of the government have therefore, a major impact on the funtioning of the business systems.
special interest groups-the main special-interest groups are environmentalists, unions, consumer advocates, and many other professional organizations. these groups exert pressure on the business firm to advance their position o issues like quality, service, price, waste management, environmental protection, etc.
financial institutions-business firms rely on the services of institutions like commercial banks, development banks, finance companies, and insurance companies to meet their short and long-term financial needs and other service requirements. therefore, maintaining effetive working relationships with these financial institutions is essential for a business firm.
media-the media keeps an eye on the vital decisions or actions of the business firm having general public interest. managers, therefore, need to maintain good communication with the media and external audiences, and deal with them effectively and propmptly.
competitores-a business firm faces competition in the market. managers work out strategies to deal with the competitors and the competing products. information on market behaviour and ocmpetitors' strategies is gathered and analyzed to identify futured opportunities and threats for the firm. if installed properly, the marketing information system helps managers to catch the market signals in time.
Macro environment factors are uncontrollable external forces that affect how a business operates. They are largely out of the control of the business, and often require changes in operating, management, production, and marketing. Analysts often categorize them using the acronyms PEST or PESTEL. Broken down, PEST stands for political, economic, social, and technological concerns. PESTEL also includes environmental and legal factors.
ReplyDeletePolitical
Political macro environment factors include things like tax policies, government-issued safety regulations, the availability of government contracts, and even shifts in the controlling political party. International laws, such as trade agreements and tariffs, may affect the supply and demand chains and available markets for many different companies as well.
Economic
A market boom, recession, or growing inflation problem can all change the way an organization plans for the future and operates in the present. Economic factors are often difficult to assess, since economic forecasts and analyses vary widely between experts. Unemployment levels, comparative foreign exchange rates, and the state of the global economy can all help or hurt a business' ability to get needed components and maintain a stable profit.
Social
The mood and demographics of the population make up the social area of macro environment factors. For example, a society that places an emphasis on self-guided jobs with room for creativity may cause organizations to redefine job descriptions and adapt the model of the workplace to attract workers. Social trends, such as a preference for on-demand mobile media devices, can also influence which products a company manufacturers and where it chooses to spend advertising dollars.
Technological
Technological macro environment factors can influence how an organization does business. A new type of machinery, computer chip, or product created through research and development can help a company stay modernized and ahead of the market curve. Owners must be able to accurately identify which new developments will be truly useful, and which are just fads.
Environmental
Environmental concerns are important to businesses both in the short and long term. In the short-term, things like natural disasters can disrupt production and supply operations, or even destroy company assets. Programs such as environmental risk assessment can help companies prepare to handle many of the most likely short-term crises. In the long view, however, businesses may have an interest in ensuring that their supply chains are not destroyed by unsustainable practices.
Legal
Legal factors can limit or change how a business operates. For example, they may have to hire additional supervisory staff or purchase safety equipment after a new health and safety law is passed. Child labor laws often limit the hours a minor can work and require set break periods. If an organization employs several minors, it may have to hire additional help to cover the hours when the minors cannot legally work. Legal factors are determined by both local legislation and regional and national laws. In some cases, companies that do business internationally are also affected by international laws.
This comment has been removed by the author.
ReplyDeletethe external environment of an organization are as follows:
ReplyDeletecustomers
government
economy
public option
competition
external environment of an organization are
ReplyDeletecustomers
government
economy
public option
competition
External environment :Everything outside an organization's boundaries that might affect it.
ReplyDeleteExternal factors refers to all those PESTEL factor affecting the organization. PESTEL analysis stands for "Political, Economic, Social, and Technological, Environmental and Legal analysis". It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the different macro-environmental factors that the company has to take into consideration.
External factors:
ReplyDeleteSociological: Includes; the demographic status and trends, work ethics and personal values, and general cultures. (pg, 566.) This factors influences differently on how management accomplishes its jobs. The social environment presented by each country is unique and as the business becomes international, management s ought to understand these unique environments. This understanding assists the management to plan for the future and design products for particular groups of people
Economic and political: Includes; all the essential factor such as competitors, suppliers and customers in an open model of business the management must study the economy and political environment for a continual and dynamic relationship. In this system the management assumes that the business or company has both input and output. By studying the companies’ suppliers’, competitors and customers as well as current political factors, the management are capable of making effective managerial and decisions. The products designed under this should posses place, form and time utility to succeed in the mark place.
Technology: Technology has the most dramatic effect on business as changes in this external environment are often quickly felt by firm. As the market can change overnight the management should be in a position to make decisions that will put the company in a flexible poison to adapt with the technological changes (Karger, 1991).
External environmental factors are events that take place outside of the organization and are harder to predict and control. External environmental factors can be more dangerous for an organization given the fact they are unpredictable, hard to prepare for, and often bewildering. Some examples of external environmental factors are noted below:
ReplyDeleteChanges to the economy
Threats from competition
Political factors
Government regulations
The industry itself
external environment:Conditions, entities, events, and factors surrounding an organization that influence its activities and choices, and determine its opportunities and risks. Also called operating environment.
ReplyDeleteExternal environment refers to conditions, entities, events, and factors surrounding an organization that influence its activities and choices, and determine its opportunities and risks. It is also called operating environment.
ReplyDeleteExternal Factors Affecting Business Environment;
Micro environment includes;
-competitors,
-suppliers,
-customers,
-unions,
-creditors,
-regulatory bodies
Macro environment includes;
1.Economic forces;: income, inflation, recession, exchange rate, interest rate ,etc.
2.Socio-cultural factors;: values, culture, tradition, multiple lifestyle, changing structures of family
3.Political and legal environment
4.Natural environment
5.Technical environment: technologies for nation, for products and services, for business models, etc.
External forces are those things, situations, events that occur outside of the organization and affect it in either a positive or negative way.
ReplyDeleteExternal Factors Affecting Business Environment;
Micro environment includes;competitors,suppliers,customers,unions,creditors,regulatory bodies.
Macro environment includes;
1.Economic forces;
income,inflation,recession,exchange rate,interest rate,etc.
2.Socio-cultural factors;
values,culture,tradition,multiple lifestyle,changing structures of family
3.Political and legal environment
4.Natural environment
5.Technical environment;
technologies for nation,for products and services,for business models,etc.
Macro environment factors are uncontrollable external forces that affect how a business operates. They are largely out of the control of the business, and often require changes in operating, management, production, and marketing. Analysts often categorize them using the acronyms PEST or PESTEL. Broken down, PEST stands for political, economic, social, and technological concerns. PESTEL also includes environmental and legal factors.
ReplyDeletePolitical
Political macro environment factors include things like tax policies, government-issued safety regulations, the availability of government contracts, and even shifts in the controlling political party. International laws, such as trade agreements and tariffs, may affect the supply and demand chains and available markets for many different companies as well.
Economic
A market boom, recession, or growing inflation problem can all change the way an organization plans for the future and operates in the present. Economic factors are often difficult to assess, since economic forecasts and analyses vary widely between experts. Unemployment levels, comparative foreign exchange rates, and the state of the global economy can all help or hurt a business' ability to get needed components and maintain a stable profit.
Social
The mood and demographics of the population make up the social area of macro environment factors. For example, a society that places an emphasis on self-guided jobs with room for creativity may cause organizations to redefine job descriptions and adapt the model of the workplace to attract workers. Social trends, such as a preference for on-demand mobile media devices, can also influence which products a company manufacturers and where it chooses to spend advertising dollars.
Technological
Technological macro environment factors can influence how an organization does business. A new type of machinery, computer chip, or product created through research and development can help a company stay modernized and ahead of the market curve. Owners must be able to accurately identify which new developments will be truly useful, and which are just fads.
Environmental
Environmental concerns are important to businesses both in the short and long term. In the short-term, things like natural disasters can disrupt production and supply operations, or even destroy company assets. Programs such as environmental risk assessment can help companies prepare to handle many of the most likely short-term crises. In the long view, however, businesses may have an interest in ensuring that their supply chains are not destroyed by unsustainable practices.
Legal
Legal factors can limit or change how a business operates. For example, they may have to hire additional supervisory staff or purchase safety equipment after a new health and safety law is passed. Child labor laws often limit the hours a minor can work and require set break periods. If an organization employs several minors, it may have to hire additional help to cover the hours when the minors cannot legally work. Legal factors are determined by both local legislation and regional and national laws. In some cases, companies that do business internationally are also affected by international laws.
this classification of external environment help manager to identify opportunities and threats caused by the force and conditions that originate outside the origination.
ReplyDeleteExternal Factors Affecting Business Environment;
Micro environment includes;
-competitors,
-suppliers,
-customers,
-unions,
-creditors,
-regulatory bodies
Macro environment includes;
1.Economic forces;: income, inflation, recession, exchange rate, interest rate ,etc.
2.Socio-cultural factors;: values, culture, tradition, multiple lifestyle, changing structures of family
3.Political and legal environment
4.Natural environment
5.Technical environment: technologies for nation, for products and services, for business models, etc.
Interesting indeed. The reactions I find here are wonderful and go to build our intellectual minds on such topic.
ReplyDeleteNice points on Internal Environment.
ReplyDeleteNic. read also about External Environment of Marketing.
ReplyDelete