Om (10-03-2023)

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which involves observing the environment and gathering important data from the it that can influence business.

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environmental scanning

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states that the environment in which a business operates is a major consideration.

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Cabrera, H.F. et al

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refers to all the internal and external factors affecting a business organization. It is commonly divided into the External (Macro) and Internal (Micro) Business Environment. The Market Environment is a component of the micro environment of business with a more specific and direct impact on business.

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Business Environment

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includes all the factors outside of the business organization that may affect its operations and performance either in a positive or negative way. These factors include the nature of the government, economy, national events, culture, social activities and other factors outside of the business firm.

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External or Macro Business Environment

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a part of the microenvironment that includes all the factors that have a significant and direct effect on business such as the customers, suppliers, shareholders and other stakeholders or people who are directly affected by the business.

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Market Environment

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includes all the factors inside of the business organization that may affect its operation and performance either positively or negatively. These factors include the nature and activities of the business organization itself, its organizational structure, policies, administration, goals and performance.

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Internal Business Environment

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include the political system in a nation (democratic, socialist, communist) as well as the political activities and system of administration.

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political factors

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include all the economic situations in a nation that affect the business organization and management practices such as the type of economic system, current performance and activities of the economy which includes conditions such as inflation, employment rate, rate of interest, stock markets, prices, demand and supply of goods, national production, currency value and even individual economic behavior.

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Economic factors

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includes values, culture, taste and preferences of the society or community particularly of the customers.

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Sociocultural factors

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a category of the sociocultural business environment, include the nature and characteristics of the populations particularly the buyers such as their age, gender, income, educational level, residence, and geographic origin.

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Demographic factors

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includes the availability and use of varied types of equipment, inventions or innovations that can improve business operations and productivity.

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Technological factors

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include the national and local laws, policies and regulations that may positively or negatively impact a business.

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Legal factors

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includes environmental and natural conditions around the world that influence business including global competitors.

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Ecological/World/Global factors

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people who are affected by the activities of the business organization.

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Stakeholders

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people who patronize the products and services of the organization.

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Consumers

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ensure the organization’s supply flow

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Suppliers

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special interest groups that exert influence on the organization’s decisions and actions

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Pressure groups

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provide the business with financial support

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Investors

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people who work for the organization

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Employees

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commonly used to analyze it which involves identifying the Strengths-Weakness-Opportunities and Threats of the firm.

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SWOT analysis

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the type and traits of the business organization. For instance, if the business organization is a sole proprietorship, partnership or a corporation

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Organizational structure

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the short- and long-term goals, action strategies of the organization. An example of this are the production quota and performance targets

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Organizational goals and targets

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regulations that dictate business and company operations

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Organizational policies

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includes the behavior or actions and beliefs of the staff.

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Organizational culture

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includes the financial, human, informational and technological assets of the organization

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Organizational resources

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is the industry to which the business firm belongs whether it is in retail, manufacturing or a specific type of service.

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Local business environment

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includes the business activities of the firm in foreign locations including its foreign competitors.

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International business environment

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refers to a group of companies offering similar products or services.

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Industry

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Porter’s Five Forces Model

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Industry competition

Suppliers (Producers)

Buyers (Consumers)

Potential industry entrants

Substitutes

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the greater the number of competitor companies existing in a given industry, the more intense the competition which can be difficult for the firm.

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Industry competition

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the lesser number of suppliers or producers of a given product or service creates a high demand and bargaining power for the supplier over prices.

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Suppliers (Producers)

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the greater number of buyers of a given product or service and limited suppliers create bargaining power for the buyers over prices

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Buyers (Consumers)

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the threat of new entrants to the industry which increases competition.

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Potential industry entrants

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the threat of substitute products and services that also exist as competitors of the business firm.

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Substitutes

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the management of business and organizations activities across several countries.

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global management

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is the ability of the business or organization to outperform and excel over its competitors in an industry whether in the local or global arena.

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Competitive Advantage

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PESTLE COMPONENTS

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political

economic

sociocultural

technological

legal

ecological

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is the series of fluctuations of the economy between periods of growth and contraction.

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economic cycle

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stage when the economy experiences relatively rapid growth, production is increasing.

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Expansion

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stage when production and economic growth hits its maximum rate.

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Peak

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decrease or decline in production and economic activities

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Recession

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stage when productionandthe economy hit a low point and growth begins torecover.

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Trough