LO 2) What external focuses influence a firm’s strategy?
There are 3 major types of external environments that a firm must focus on: business, remote and competitive. Failure to recognize and evaluate these forces will affect a firm 's success.
The business environment is all the eternal factor in a general form, things that a firm can recognize while creating a strategy but cannot change themselves.
The remote environment is a specific part of the business environment; including changes in the economy, technology, demographics and legal/regulatory changes. Economic changes can be affected at many levels, local, regional and globally. When the economy is strong, businesses will usually expand and during not so good economic times, such as recessions, businesses usually struggle a bit more. The book shared an example that is contradictory to this though; in a recession stores that are low priced such as Dollar Tree, Dollar General, etc., experienced growth during the recession because they offer goods at an extremely low price. However, I actually learned that these prices are lower because the quality and quantity of the goods is less, which I found interesting. For instance, say you go to Dollar Tree to get some tupper ware; this will come in smaller packs, therefore it is cheaper. Bakers may sell Tupperware in 4-packs while Dollar Tree sells it in a 2-pack and that 's why it can be priced at $1. I 'm sure this isn 't true for everything but some things in
environment are able to become main forces for transform in the competitive environment. (Henry, 2011)
When manipulating a business’s strategy, it is important to focus on the external factors in the environment. An external analysis is where a business conducts environmental scanning that present a company with the key external forces influencing the organization. The facets of external forces examined are the business environment, remote environment, or the competitive environment. A business environment is all of the external factors in the general environment that a firm cannot control, but can affect their strategy. The remote environment is the forces that affect most firms. Lastly, a competitive environment is the firm’s specific industry and its entirety. The external analysis is pertinent to a company called Dick’s Drive- In; without it, Dick’s would not be a thriving popular business today.
The external environment affects a firm’s strategic actions. Essentially, if a company decision has created a disaster in the environment, they
External environment consists of forces that directly or indirectly influence organization’s business activities. The actors and forces outside marketing that affect management’s ability to build and maintain successful relationship with target customers.
A business organization cannot survive in its industry if it does not keep an eye on what is happening in its internal and external business environment. The analysis of business sector or environment acquaints an organization with the issues, challenges, and external factors that have a direct or indirect impact on its business operations and profitability. On the basis of this analysis, the organization can formulate its future strategies and compete in the industry in a more effective and vigilant manner (Cadle, Paul & Turner 2010).
External influences cover a wide variety of factors, and their influence can differ between business types. These include the following:
These factors influence the internal environment of an organisation and they help in identifying the past and the present of the company, It also provides a frame work for reviewing strategy position and direction of the company.
External environment refers to external aspects of the surroundings of business enterprise, which have influence on the functioning of business. The external environment can provide both facilitating and inhibiting influences on organizational performance. Key dimension of the external environment principally consists of a micro environment and a macro environment.
A businesses environment creates many opportunities as well as problems for prospering businesses. The environment determines what a business can do by shaping and channeling its development. Businesses function within an environment by allowing entrepreneurs to raise capital and create profits freely. The supply of money available within a business as well as the economic stability through times of growth and recession have strong effects on businesses. Not only is the physical environment, including natural resources, pollution and energy as discussed previously, important, but many other
In this term of our discussion we’re talking about business environment. It’s like an overview of the whole business environment. Simply environment of a business means the external forces including the business decisions. They can be forces of economic, social, political and technological factors.
Q3) In terms of the external environment analysis, we will focus on three areas, namely, general environment, industry environment and competitor’s environment.
How can the environment influence the company? How can the current environment influence the company?
An analysis of the external environment includes the factors in a business’s external environment about a business's industry, competition, and political and social environments, and affects the firm’s strategy (Aaker, 2001).
In today's world, no business operates in isolation without interacting with the environment where it operates. Irrespective of the nature of business whether public or private organization; manufacturing; service industry; local or international firm, its operations are inhibited by the environment in which it operates.
An organization is an open system; therefore it interacts with its environment. To manage the relationship with the environment, a large part of strategic planning is concerned. The environmental factors can be divided to 2 main categories, which is MACRO and MICRO .Macro environmental factors seriously affect an organization business practice, profitability and future progress. It can