External environment

Assessing competitive opportunities

and threats

Environmental change
automotive industry
.
Industry environment specific changes in
response to competitive dynamics and affects
firms differently in each industry.
Environmental awareness
( risk of misperception )
It involves continuously scanning and
interpreting environmental trends to generate
informed forecasts.
Favorable conditions are opportunities , when
effectively exploited , will lead a firm to its
desired end.
Unfavorable conditions are threat , when not
effectively dealt can harm firms current
business profitability , future plans
Macro environment
Macro environment also known as generic
environments changes due to socioeconomic
trends and affects all businesses alike .
It comprises Economic , social , cultural ,
technological and political legal sector and
global sectors.
Economic environment
The economic sector reflects the living
standards and general well-being of a society
i.e. spending level .
Long term economic growth - GDP ,
employment level .
Near term economic growth - interest rates ,
inflation, currency exchange rates , sensex
Social environment
Social change comprises demographic and life
style trends.
Effects change in consumer needs and
preferences.

Fast paced life style no time for comfortable
Sit and eat breakfast to desk - fast , late night
socializing , eating out
Cultural environment
Changes in the customs, values,and beliefs of
a society.
Concern for health and fitness , exercise
equipment , vitamins and health food ,
cigarettes a strong negative effect.
Reports of financial wrong doings , employee
mistreatment adversely effect corporate
performance.
Technological environment
Technology refers to engineering or technical
know how , it is the process used to convert
scientific knowledge into commercial goods.
Technological change is altering the rules of
competition , lowering entry barriers and
blurring industry barriers.
Political legal barriers
Pro business sentiment creates a favourable
sentiment .
Deregulation eliminates legal barriers to entry
in an industry insurance , banking , air line ,
tele com
Global environment
It involves changes in markets , economies
and political systems of the major regions of
the world.
Shift in Indias political ideology from
socialistic to market oriented economy