...Purpose of External Environmental Analysis Organizations are affected by conditions in the environment Managers need to be aware of these conditions in order to – Take advantage of opportunities that can lead to higher profits – Reduce the impact of threats that can harm the organization’s future The external environment is made up of: 1. Macro environment 2. Industry environment 3. Competitive environment So if a company wants to analyse its external environment it must analyse the macro, industry and competitive environment. MACRO ENVIRONMENT: Influence the industry and firms inside it. These factors indirectly affect the organization but cannot be controlled by it. There are a number of common approaches how the external factors can be identified and examined. One approach could be the PESTEL analysis. PESTEL stands for political, economic, social, technological, the environmental and legal factor. The segmentation of the macro environment according to the six presented factors of the PESTEL analysis is the starting point of the global environmental analysis. Political factors • Taxation Policy • Trade regulations • Governmental stability • Unemployment Policy etc. Economical factors • Inflation rate • Growth in spending power • Rate of people in a pensionable age • Recession or Boom • Customer liquidations Socio-cultural • age distribution. • education levels. • income level. • consumerism. • diet & nutrition. • population...
Words: 681 - Pages: 3
...An organisations performance and outcomes can be affected by outside forces known as the external environment. These forces can be divided into two components, the specific environment and the general environment (Robbins et.al 2012, p.86). The specific environment includes components that are directly involved with the organisation; customers, suppliers, pressure groups and competitors. In contrast, the external environment includes economic, political/legal, sociocultural, demographic, technological and global conditions (Robbins et al. 2012, pp.87-8).The purpose of this essay is to highlight an external environmental factor that has had a significant impact on Generic and discuss how this has been managed in accordance to relevant academic theory. In particular, the scope of this paper will be confined to legal conditions that have changed in the general environment. A discussion on how this has impacted Generic Health, the management approaches of understanding environmental uncertainty and environmental influence will be presented, following a review on the effectiveness of approached used to manage impacts of the external environment. is a manufacturing company that provides generic pharmaceuticals to over 5,200 pharmacies which has been impacted by legal conditions from the general external environmental. Legal conditions refer to regulations, policies and legislation set out by federal, state and local governments which influence what organisations can and cannot do (Robbins...
Words: 1051 - Pages: 5
...External and Internal Environment Organizations normally operate in a network and are not entirely independent because of the several environments that influence their activities and actions. Some examples of internal and external factors are micro and macro environment that could influence Starbucks are; suppliers, competitors, customers, finances, economic, political, social, environmental, as well as legislation (Starbucks, 2010). Starbucks’ home market is based in the United States which is critical in understanding the internal and external surroundings that impact the organization and its growth. Statistics indicates that coffee sales has grown by 20% percent each year and 18% of it is contributed to the 18 billion dollar coffee market in the United States. At the end of 2011, coffee shops were expected to exceed well over $50,000 (e-importz.com, 2012). With that said, the growth of coffee consumption and potential maturity of the American coffee market may have influenced overcapacity and may have intensified the organizations growth plan. Tariffs and International Trade regulations has contributed to some of the environmental factors for Starbucks; due to high tariffs the company would be compromised, the ability to source quality coffee beans would affect Starbucks reputation, global sales, and competitiveness. Economical Influences pertains to the exchange rate, Starbucks import coffee, sugar, and milk; with a weaker currency the cost will eventually increase...
Words: 258 - Pages: 2
...External environments are surrounding the company received from outside factors such as the economy, technology, social, political and legal. These environments affect the company or organizations in many ways as they influence the success of the company. A lot of consideration needs to be taken by the organization in handling these external environments. For the company we interviewed, which is a consultancy company, these environments also affected them. Understanding these factors allows organizations to have proper currency-hedging plans and strategies in place. The economy inside and outside the country may affect any kind of business because financial is one of the most important part to be manage in a company or organization. So, if the economy is not doing well, the company also may be affected, which may lead to failure. So does the company we interviewed,...
Words: 1444 - Pages: 6
...Within that industry I chose a company that I am familiar with “The Adidas Group.” The Adidas group is a publically traded company in Europe and with globalization it has increased its shares in the market. Adidas being traded on the European market is what we call an overnight stock. These stocks are traded at night here in the United States and open after the New York Stock Exchange closes at 4:00 PM eastern time. I will choose two segments of the general environment business factors that I feel influence this company and the industry to assess how they affect both Adidas Group and the Sporting Goods Industry. In addition I will use the five (5) forces of competition and evaluate which two of the processes are the most significant to the corporation by evaluating how Adidas has addressed them in the recent past. I will further use the two forces to predict what the Adidas Group might do to improve their corporation by addressing these forces in future endeavors. By choosing this corporation I will identify the external threats that affect them in the industry as well as the opportunities available. By doing this I will attempt to give my opinion on the corporation’s greatest threat and opportunity to identify some of their strengths and weaknesses for future growth potential. Identifying the firm’s resources, capabilities, and core competencies will assist in these opinions. Identifying its greatest competitor will also give me an idea of the competition and what their core...
Words: 2915 - Pages: 12
...Chapter 3- Analyzing the External Environment Discussion Questions: Question Number Answer: 1) To identify opportunities and threats is an important reason why firms study their external environment- general, industry and competitor. Opportunities are conditions in a firm’s external environment that enables the firm to use its core competencies to achieve its vision. Threats are conditions in a firm’s external environments that prevent the firm from successfully using its core competencies. Firms evaluate trends in their general environment, assess the effects of competitive forces in the industry in which they compete, and study competitors to identify the opportunities and threats they face. 2) The general environment is composed of the trends in the broader society that influence an industry and the firms in it. The seven factors: 1) Demographic Trends: changes in the population size, age structure, geographic distribution, ethnic mix, and income distribution. Analyze of these trends is important to determine whether the firm might be able to serve additional customer groups with its product. 2) Economic Trends: the direction of the economy in which a firm competes or may choose to compete. These include gross nation product, interest, and inflation rates, income growth or decline, savings rate, and currency exchange rates in countries across the globe are examples of economic factors that firms examine to understand current future economic trends. Economic trends...
Words: 1422 - Pages: 6
...UNIT 19: EXTERNAL BUSINESS ENVIRONMENT Get assignment help for this unit at assignmenthelpuk@yahoo.com LO1 Understand the impact of socio-economic change on the development of commercial organisations in a business and services industry context Structure and operation of UK economy: market structure; perfect/imperfect competition; oligopoly; duopoly and monopoly; national/local factors; determinants of free-market economy Government economic policy: aims and influence; effects on employment policy; inflation; balance of payments; economic growth in industry sector; current issues Income, wealth, employment and occupational distribution: structure and composition of business and services industry; patterns of demand for business and services; the socioeconomic framework of demand; labour demand in industry sector Demographic trends: geographical pattern of labour demand; nature of employment in business and services industries; employment profiles eg age, sex Social structures: types of people employed; geographical variations; self-employed; unemployed; labour turnover; levels of pay Industry context: contexts eg hospitality and catering, hairdressing and beauty therapy, sports and leisure, travel and tourism LO2 Understand the effect of legal and political environments on business and service industries Structure, operation and influence of local government: structure; areas of control; limits of authority; interface with national government; powers affecting business...
Words: 1093 - Pages: 5
...External Environment Table of Contents Introduction 2 External Environment: laying the foundations 2 Task Environment 3 General Environment 4 Non-Profit vs. For-Profit: perspectives on competition 5 Environment Characteristics 6 Opportunity or Threat? 8 Conclusion 8 References 10 Introduction “No organization can exist in a vacuum” (“Key forces in the external environment, Chapter 3”, n.d.). To a certain extent all types of organisations; whether private or public services, governmental bodies or charitable groups, are subject to and influenced by specific environmental factors. In this day and age with many existing classes of organisations utilising different approaches to management, there is a feasible assumption that a common change in the organisational environment may likely affect two separate organisations diversely. This response will identify how the environment directly impacts organisations, in relation to leadership roles and organisational performance. For the purpose of comparison, the point of focus will revolve around two major classes of organisations namely; ‘profitable’ verses ‘not-for-profit’ groups. The primary aim of this paper is to construct a foundational view of the external environment from a manager’s perspective. Theoretical key principles discussed will attempt to identify with the following statement - “In comparison to profitable groups; not-for-profit groups possess a different degree of vulnerability...
Words: 2813 - Pages: 12
...Table of Contents Introduction 2 External Environment: laying the foundations 2 Task Environment 3 General Environment 4 Non-Profit vs. For-Profit: perspectives on competition 5 Environment Characteristics 6 Opportunity or Threat? 8 Conclusion 8 References 10 Introduction “No organization can exist in a vacuum” (“Key forces in the external environment, Chapter 3”, n.d.). To a certain extent all types of organisations; whether private or public services, governmental bodies or charitable groups, are subject to and influenced by specific environmental factors. In this day and age with many existing classes of organisations utilising different approaches to management, there is a feasible assumption that a common change in the organisational environment may likely affect two separate organisations diversely. This response will identify how the environment directly impacts organisations, in relation to leadership roles and organisational performance. For the purpose of comparison, the point of focus will revolve around two major classes of organisations namely; ‘profitable’ verses ‘not-for-profit’ groups. The primary aim of this paper is to construct a foundational view of the external environment from a manager’s perspective. Theoretical key principles discussed will attempt to identify with the following statement - “In comparison to profitable groups; not-for-profit groups possess a different...
Words: 2830 - Pages: 12
...The external or outside environment are the influences outside of the business that will affect the main internal functions and in many cases the objectives and strategies of the business (External Environment: Introduction to the external environment, n.d.). This facet of business has been ever present; however, as of recently it is even more crucial and beneficial to the success of any business. It mainly addresses the degree of competition such as with fast food giant McDonalds and Burger King. Some factors found in this aspect of business include: • Social environment – the attitudes of consumers towards health, their beliefs and attitudes. Where Burger King was once the hamburger giant, McDonalds has stepped in and took over the market by listening to its consumers and providing broader menus will healthier choices, opening more franchises across the US and in foreign countries. Competitively, McDonalds also expanded to extra value meals in competition with Taco Bells (Stewart, 2003). • Technological environment – technology has been ever changing. It is obvious of the changes that have taken place over the past decades at minimum. To compete technologically, McDonalds has revealed its intentions to test electronic terminals/kiosks that may allow customers to personally select their meals and possibly collect at another location or to be delivered to their tables. External environment are always changing due to the change of markets. External environments and markets change...
Words: 642 - Pages: 3
...with a higher institutional ownership structure. But findings also show that the negative relationship is weaker if the firm has a higher proportion of independent non- executive directors. Introduction Ownership Structure is a mechanism that aligns the interest of Shareholders and Managers. Corporate governace is the capstone of the activities that can reduce agency costs. Corporate mangers disclosure policies are influenced by firm’s ownership and governance on the level of various types of information disclosure. This is a summary of literature review on ownership structure and corporate disclosure. Studies have shown that ownership structure can be state, legal, managerial and block holder depending on the countries and cultural environment. Blockholder ownership is the percentage of shares held by substancial shareholders( that is shareholdings of 5% or more). Jensen and Meckling (1976) argue that substancial shareholders are expected to have both greater power and incentives to monitor management, as their wealth is tied to the form’s financial performance. Managerial ownership is the proportion of ordinary shares held by senior managers, including directors and supervisors. The extent of managers shareholdings can reduce agency costs as it serves to align the interests of management with those of other shareholders(Jensen and Meckling 1976). Legal person ownership with respect to legal...
Words: 1450 - Pages: 6
...HONG KONG/CHINA Bosideng International A warm and cosy stock A dominant brand with household recognition We initiate coverage on Bosideng with an Outperform, with 35% upside to our target price. Bosideng dominates China’s down jacket market with an estimated 37% market share in CY10. Its top brand is ranked the 13th most valuable consumer brand in China. We expect core revenue CAGR of 13% in FY12-14 on the back of continued penetration of down jackets in China. Additionally, Bosideng is building out a menswear business. While this makes up only 10% of revenues in FY12E, we expect it to generate organic revenue CAGR of 33% with the potential for further upside from acquisitions. High free cash flow and dividend yield Photo taken by the report’s lead analyst in rural China. “A Christmas to remember” – December 2010 3998 HK Price 27 Oct 11 12-month target Upside/Downside Valuation - PER Outperform HK$2.07 HK$ % HK$ 2.80 35.3 2.80 Bosideng is currently sitting on HK$2.8bn net cash and we forecast a free cash flow yield of 6% in FY12, rising to 10% in FY14. With a 75% payout ratio, Bosideng should generate a dividend yield of 8% in FY12. Bosideng is looking to make acquisitions in the highly fragmented menswear market. Past acquisitions have been successful and we don’t think it is likely the company will make any acquisition that depletes more than half of the cash pile at most; thus we think the dividend is secure. Market concerns are overdone Six out of...
Words: 7701 - Pages: 31
...D. Clark and M. Peers, "Music Companies Fight Back, Hoping Downloads for Fees Can Prove as Popular as Free," The Wall Street Journal(June 20, 2000): B1; L. Gomes, "Napster is Ordered to Stop the Music," The Wall Street Journal(July 27, 2000): A3; K.T. Greenfeld, "The Digital Reckoning," Time (May 22, 2000): 56. 2 D. Brittan, "Waiting for Uncle Bill," MIT's Technology Review 100(3) (1997): 69. 3 A. Serwer, "Bill Gates Gets Really Generous," Fortune (March 1, 1999): 35. 4 F. Rice, "Denny's Changes Its Spots," Fortune (May 13, 1996): 133–134. 5 M. Thomas, "Advantica Tops Fortune's List of Best Companies for Minorities," The State(June 27, 2000): 1. 6 D.R. Dalton, M.B. Metzger, and J.W. Hill, "The 'New' U.S. Sentencing Commission Guidelines: A Wake-up Call for Corporate America," Academy of Management Executive (February 1994): 7–16. 7 R.A. Melcher, "Europe, Too, Is Edgy about Imports From America," Business Week(January 27,1992): 48–49. 8 S.A. Waddock, "Building Successful Social Partnerships," Sloan Management Review(Summer 1988): 18. 9 J. Vleggaar, "The Dutch Go Back to School for R&D," The Journal of Business Strategy(March/April 1991): 8. 10 "WorldCom, Sprint Continue Antitrust Discussions," The Wall Street Journal (June 23, 2000): B6. 11 M.E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Companies (New York: The Free Press, 1980); D.F. Jennings and J.R. Lumpkin, "Insights between Environmental Scanning Activities and Porter's...
Words: 395 - Pages: 2
...An analysis of the external environment Introduction The external environment in a business set up consists of the factors outside the organization but still affect its smooth running either positively or negatively. External factors of the environment are divided into two parts namely: directly interactive forces and indirectly interactive forces. The directly interactive forces includes: owners, customers, suppliers, competitors, employees and employees union. The indirect interactive forces includes: socio cultural, political legal, technological, economic and global influences. External factors are the deep internal analysis of the environment. These factors are further grouped into two categories i.e. opportunities and threats. Opportunities are the chances that exist within the external environment and whether the organization wants to exploit them or not. The threats are four factors that threaten the smooth operation of the company. Current and Future External Factors Affecting Business Environment According to (Nebblet, p4), the external environment variables play a role in determining the opportunities and threats a firm faces are twofold. Variables originating beyond a single firm’s are operating situation and variables influencing a firm’s competitive situation. The two sets provide challenges faced by a particular firm in attempting to acquire or attract resources. These two variables are discussed below: • Economic: This reflects on...
Words: 2972 - Pages: 12
...Assignment 2: External and Internal Environments Business 499 Zavier Pyles Professor May January 30th, 2013 Vroom Vroom! This is the welcomed sound that automobile owners and manufacturers like to hear. It is the sound of completion, success, and satisfaction. But what happens when this sound is drowned out by weakened profits, customer dissatisfaction, and industry weakness? In comes the government bailout of the automobile industry. In recent years, 2008-2010, Ford, GM, and Chrysler had to be saved from self-destruction and bankruptcy through government incentives, loans, and emergency funding. In December of 2008 these 3 automakers asked the government for monetary assistance that totaled approximately 34 billion dollars (About, 2013). Ford, GM, and Chrysler asked for these funds to avoid impending job layoffs in the millions and also to avoid further financial trouble for the economy during the recession (About, 2013). All three of the car companies that had to be bailed out were American based and had for years been facing stiff competition from foreign car makers especially Honda, Hyundai, and Toyota. During this time there was quite a bit of finger pointing and blame being placed surrounding the reason for the failure of the American car industry. Was the failure based on external factors such technology, political/legal parties and organizations, or economic issues (Hitt, Ireland, Hoskisson, 2013)? Or was the failure of this industry based...
Words: 3134 - Pages: 13
