Explain How the General Environment Affects a Business Strategic Decision.
Explain How the General Environment Affects a Business Strategic Decision.The general environment includes Demographic Trends, Socio-cultural Forces, Economic Forces, Technological Forces, Political and Legal Forces, Global Forces. All of them effect the business strategic decision. But different forces have different effect influences.
For Demographic Trends, the most visible, easily quantifiable and predictable forces. But, surprisingly, not the most thoroughly examined. For examples: The population pyramid (aging trends); increased diversity/immigration; geographic distribution/migration to sun-belt states, etc.
In socio-cultural, awareness of and compliance with the values, beliefs, and lifestyles of society can help organizations prepare for the future, and changes in society can create opportunities for and threats to an organization’s growth. Just like Quality of Education; Crime Levels; Foreign Investment levels; Environmental awareness, etc.
Economic forces can influence demand for products and services, and the costs of producing / providing them. Such as interest, Inflation, Exchange rates, Tariffs and so on.
The technological also cover invention, innovation, basic innovation and technological Forecasting. Invention is an idea with commercial potential. Innovation is An invention that can or will be commercialized. The basic innovation always impact more than one industry and technological forecasting is Monitoring industry trends.
For business strategic decision, in political and legal forces, the government can macro-control economy, decided to commercial center of gravity, encourage new business formation, force organizational restructurings, close or punish companies. There is a global trend toward deregulation and privatization. But for different industries, Industries differ in the degree to which political and legal forces exert influence, like nuclear energy, airlines, etc.
The last force is global, to do a business strategic decision, the global force is very important part, it decided a company faces the word...