Introduction
This research is based on the ways that the external environment can influence the operation of a business, and the aim of this research is how to protect a business operation from the influence of external forces. An external environment is composed of all the outside factors or influences that impact the operation of business. The business must act or react to keep up its flow of operations. The importance of the external environment analysis especially for managers is to fully understand the aspect of the business environment because it can affect and have an impact on their firm and how it operates. External environment plays a critical role in shaping the future of individual businesses as well as to keep the business ahead
…show more content…
For example: an increase in the inflation rate of any economy would affect the way companies’ price their products and services. Adding to that, it would affect the purchasing power of a consumer and change the demand-supply patterns for that economy. Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth patterns etc.
Moving on with the social factors : they represent the culture of the society and civilization that a business operates within .These impact on the consumer’s need and the potential market size of an organization’s goods and services. An example for that can be buying trends for Western countries just like Greece where there is high demand during the holiday season. Social factors may include, age distribution, population growth rates, level of education, distribution of wealth and social classes, living conditions and
…show more content…
References
Paul Mckinney. (). Internal and External Environments of Business. Available: http://study.com/academy/lesson/internal-and-external-environments-of-business-lesson-quiz.html. Last accessed 20/12/2015.
Jim Downey. (). Strategic Analysis Tools. Available: http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_strategic_analysis_tools_nov07.pdf.pdf. Last accessed 20/12/2015.
S.Markwell. (2009). Assessing the impact of political, economic, socio-cultural, environmental and other external influences. Available: http://www.healthknowledge.org.uk/public-health-textbook/organisation-management/5b-understanding-ofs/assessing-impact-external-influences. Last accessed 20/12/2015. Tan Chee Teik. (2013). PESTLImportance of the External EnvironmentE - Macro Environmental Analysis. Available: http:/http://m360.sim.edu.sg/article/pages/Importance-of-the-External-Environment.aspx/www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31. Last accessed
Wilkinson, R. M. (2003). Social determinants of health - the solid facts. [S.l.]: World Health Organization.
Social – Social factors that affect a company is in regards to the culture of the external environment. The culture of the external environment is developed from the ecological, demographic, religious, educational, and ethnic conditioning. The company’s social factors involve the beliefs, values, attitudes, opinions, and lifestyles of the people included in the external environmental culture.
Wilkinson, R.G. & Marmot, M.G. 2003, Social determinants of health: the solid facts, World Health Organization.
PEST Analysis of Sony Pest analysis is another marketing tool. Pest analysis examines the changes in the marketplace caused by political, economic, social and. technological factors. Political factors change from one party to another who are in control. The sand is a sand. For example, rises in private healthcare and privatisations.
A firm?s external environment is divided into three major areas : the general, industry and competitor environments. Below is an elaboration in further detail regarding the firm?s opportunities and threats in these three environments.
Organizational Change "The effectiveness of organizational change is greatest when a firm’s strategy is consistent with environmental conditions and there is internal consistency." (D A Nadler, 2003:204) The only thing that is constant in this world is change and this is widely acknowledged by many in the world, may it be a corporation or a social forum or a governmental body. What comes in this world has to experience change in the light of environmental elements and pressures and influences, internal or external. The study of organizational behavior gives that environmental factors are the political, legal, economic, demographic, technological, social and societal. While these are the external environmental factors that are and cannot be counted among the controllable factors for an organization, they do in fact influence organizational structure, policies and strategies. In turn, the internal environment of the organization, that is very much controlled by the management of the organization and comprises of the top to bottom managerial levels, the staff, the employees, the board of directors, the owners etc. this internal environment, is to a great extent the result of external environmental factors, the change of which results in the direct impact on the internal environment of the organization. As such in lieu of external environmental factors; change agents with in the organization tend to accept the change in their external factors and tries to bring about a compatible change within the internal environment of the organization. The effectiveness of the change that is being brought about with in the organization as a result of the changing external environmental forces is best when, as described by Nadler, the internal facto...
The health of an individual and their communities is affected by several elements which combine together. Whether an individual is healthy or not, is determined by their circumstances and environment.1 To a greater extent, factors such as where an individual lives, their relationships with family and friends, the state of their environment, income, genetics and level of education all have significant impacts on health, however the more frequently considered factors such as access and use of health care facilities regularly have less of an impact.6 Determinants of health is a term which was introduced in the 1970s as part of a broader analysis of research and policy on public health. Researchers argued that there was a lot of attention and too much expenditure on health being dedicated to individuals and their illnesses, and little or no investment in populations and their health. It was decided that public health should be more concerned with social policies and social determinants than with health facilities and the outcomes of diseases.7 The determinants of health include social and economic environment, physical environment and an individual’s behaviour and characteristics. The environment of an individual determines their health, holding responsible an individual for having poor health or acknowledging them for good health is inappropriate. Individuals are not likely to be able to control several of the determinants of health. These determinants that make individuals healthy or not include the factors above, and numerous others.6
In recent decades, the world economy has undergone an unprecedented level of integration. Previously, I have provided a list of knowledge management tools that can be utilized to analyze many questions and trends, as well as the reason why these tools are important in the global economy. These tools are essential of international relations as being able to examine global problems beyond the headlines. This paper further demonstrates how these tools could be applied to solve the problem or to bring the business opportunity to fruition in today's Japanese business environment.
The world has grown increasingly complex, resulting from the greater interdependence among world economies (Thompson, 2002). Successful organization is largely determined by how well the organization adjusts all its tangible and intangible properties to keep itself on track with its surrounding (Armenakes & Bedeian, 1999). Strategy was concerned to manage firm’s activities and resources to the environment in which it operates. This essay will analyse the micro and macro external environment in the part five years (2000 to 2006) of IBM Company by using PESTEL and five forces model to analyse in the first part. The second part will discuss about the advantages and disadvantages of the two possible alternative strategies for IBM.
In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization's supply and demand levels and its costs (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). The "radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization" (Tsiakkiros, 2002). A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry. A PEST analysis is one of them that is merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000).
A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation sector:
PESTLE analysis, which is sometimes referred as PEST analysis, is a concept in marketing principles. Moreover, this concept is used as a tool by companies to track the environment they’re operating in or are planning to launch a new project.product, or service etc.
Employment relations refer to the relationship between the employer and the employee. Employment relations are governed by the provisions of the employment contract and/or collective agreement where applicable, common law principles and legislative provisions governing specific situations. Many factors in the external environment have an effect on the employment relations within an organization, which they need to monitor and possibly adapt to the necessary changes. The external environmental factors that would influence employment relations are political, economic, social, technological, legal and environmental.
Analysis of the external environment is very important for the development strategy of the organization and a very complex process requiring a process tracking and assessment factors and also the establishment of links between those factors and the strengths and weaknesses as well as opportunities and threats. External environment has its complexity and uncertainty. It is obvious that without knowing the environment the organization can not exist. The organization studies the environment in order to secure a successful progress towards its goals.
The first phase of a strategic analysis, Macro Environmental Analysis, commonly referred to a PESTLE framework, is the assessment of opportunities and threats to the industry where the firm belongs that is outside the control of our industry. The PESTLE stands for Political, Economic, Socio-cultural, Technological, Legal and Environmental (Pestle-Macro environmental analysis, 2012), describes a framework of macro-environmental factors used in the environmental scanning component of strategic management, forming part of the external analysis when making a strategic analysis; it basically gives an overview of the different macro environmental factors that the company has to consider. Strategic PESTLE Analysis helps us identify the growth or decline tendencies, business position, possible threats, and direction for operation.