This is the third week of lecture for our Strategic Management subject. In this week I learn about the external environment that influence the business strategy. Every business will facing a different circumstances, so, in this topic, I learn how the company observe the environment so that they can improve their company or use their resources to the maximum. What is the definition of external environment? External environment is conditions, entities, events or factors surrounding an organization that influence it activities and choices and determine the opportunities and risks. There is two types of environment in terms of business, which is macro and micro. Macro-environment encompasses the broad environmental environmental context which the firm has no direct control. Question about what are the strategically relevant factors in the macro-environment.
Before we answer the question, we use PESTEL analysis to analyze relevant external factors in macro-environment. PESTEL analysis focuses on principal components.
Beside PESTEL analysis, an organization also use The Five Competitive Forces to observe how strong are the industry's competitive forces. The Five Competitive Forces is:
Before we answer the question, we use PESTEL analysis to analyze relevant external factors in macro-environment. PESTEL analysis focuses on principal components.
- P olitical factors
- E conomic conditions (local to worldwide)
- S ociacultural forces
- T echnological factors
- E nvironmental factors (the natural environment)
- L egal/regulatory conditions
Beside PESTEL analysis, an organization also use The Five Competitive Forces to observe how strong are the industry's competitive forces. The Five Competitive Forces is:
- competition from rival sellers
- competition from potential new entrants
- competition from producers of substitute products
- supplier bargaining power
- customer bargaining power
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