اَلسَّلاَمُ عَلَيْكُمْ وَرَحْمَةُ اللهِ وَبَرَكَا تُهُ
WHAT HAVE I LEARNED TODAY
THE EXTERNAL ENVIRONMENT
↣ The firm operates can sometimes provide business with conditions that can either help the organization improve its performance.
↣ Example: increase in fuel prices around the world resulted in changes in the strategies employed by firms in various industries.
↣ There is two type of EXTERNAL ENVIRONMENT:
- The general environments
- The industry environments
💬 Known as the MACROENVIRONMENT, include all the environmental factors that have an impact on all organization and firms within the economy.
💬 Represents factors that will influence directly or indirectly all firms regardless of industry :
💁 P - POLITICAL FACTORS
💁 E - ECONOMIC FACTORS
💁 S - SOCIO-CULTURAL FACTORS
💁 T - TECHNOLOGICAl FACTORS
💁 E - ENVIRONMENTAL FACTORS
💁 L - LEGAL FACTORS
EXAMPLE FOR THE PESTEL FACTORS
1. POLITICAL FACTORS
■ Employment laws
■ Tax policies
■ Consumer Protection
2. ECONOMIC FACTORS
◆ Taxation Levels
◆ Inflation rates
◆ Production levels
3. SOCIO-CULTURAL FACTORS
🔴 Lifestyle change
🔴 Education levels of population
🔴 Fashion
4. TECHNOLOGICAl FACTORS
🔲 Genetics
🔲 Research
🔲 Communications
5. ENVIRONMENTAL FACTORS
► Glowing warming
► Pollution of air
6. LEGAL FACTORS
⬜ Minimum wages
⬜ Price control act
FACTORS IN THE INDUSTRY ENVIRONMENT
🔵 The industry environment or the microenvironment refers to the factors that directly affect the firm and its competitive responses
🔵 Have the ability to affect the firm's profitability and shape the competition in an industry.
🔵 The FIVE FORCES MODEL BY MICHAEL PORTER comprises of :
- Threats posed by new entrants
- Bargaining power of suppliers and buyers
- Substitute products
- Intensity of rivalry among competitors
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