The two terms are utilized by economists to provide a detailed explanation of conditions that

characterize a specific financial sector or the wider external factors the influences the
operation of an organization. Example of these conditions includes taxation and the
purchasing power of the consumer. The distinction of general and industry environment lies
in the universality and scale of a company operation (Vossos, 2015). The general environment
represents those elements in the broader society that can influence all industries and the firms
that compete in those industries; it represents elements or segments that firms cannot directly
control. The general environment is composed of the following segments: demographic,
economic, political/legal, sociocultural, technological, and global segments. The industry
environment is the constellation of factors that directly influences a firm and its competitive
actions and responses. Firms are influenced by these factors and should attempt to establish a
position in the industry that enables the firm to favourably influence the factors or to
successfully defend against the factors’ influence. These factors are: threat of new entrants,
bargaining power of suppliers, bargaining power of buyers, threat from substitute products,
and intensity of rivalry among competitors. It is a kind of external environment. It is closer to
the organization and includes the sectors that conduct day-to-day transactions with the
organization and directly influence its basic organization and performance. Therefore, the
purpose of the assignment is to differentiate between general and industry environment.
Similarities between general and industry environment
Businesses in both the two environments are affected by external forces. The similarities of
the general and industry environments is that they are a potential source for opportunities in
the firm which when harnessed properly might foster the development of the firms. Also both
environments influence the strategic decisions and actions the organization will take.
Differences between general and industry environment
Industry environment, in comparison to the general environment, has more direct effect of
firm’s strategic competitiveness and above-average returns. The five forces model of
competition includes the threat of entry, the power of suppliers, the power of buyers, product
substitutes and the intensity of rivalry amongst the competitors. The firm finds a position in
the industry where it can influence the forces in its favour to achieve strategic
competitiveness and earn above-average returns.
Another difference between the general and external environment is that the general
environment is larger than the industry environment. In addition, the general environment is
beyond the control of the firms while the industry environment is within the control of the
firm. The general environment is uncertain compared to the industry environment, which is
more predictable and certain. The industry environment is affected by the porter’s
competitive forces whereas General environment entails the impact of government
regulations on a business.
Moreover, the general environment may refer to external conditions that may affect an
organization and go beyond the boundaries of a single industry. It particularly describes how
society can affect a business or industry in general. These may include government

. consumers can go for other products when. competitors and the customers. sociocultural. Furthermore. employment and taxation or even the economic climate: whether consumers have the purchasing power and willingness to buy products and services. Therefore an industry's environment is seen to describe all those conditions that can affect a business within the strict boundaries of a financial sector.regulations on trade practices. A firm with a competitive advantage is one that is able to develop and practice successful strategies that enable it to gain from the opportunities available to it and protects itself from the threats. whereas the Industry environment also includes sectors that the organization interacts directly to make a direct impact on the organization's capability to reach its goals through its operations and performance. it is where a company operates within the second sub environment that actually lies outside of the business. Industry environment is greatly concerned with porter’s five forces whereas general environment address government regulations. political/legal. whereas the general environment is the layer of the external environment that will only affect the organization indirectly. the threat of new entrants. It literally encompasses "Porter's Five Forces. as without an alternative." such as rivalry between the industry's firms. people must buy gasoline for their transportation and gas heat. suppliers. To add on. But in the case of food producers. performance and the competitive edge of the organization. the bargaining power of customers and the bargaining power of suppliers. raw materials and market sectors. growth. Take an example of Gas providers who literally don't have to care about the bargaining power of customers for example. It is the one that is furthest away from the widely dispersed organization and is defined as the outer layer. Conclusion In all. policies and strategic plans to foster the survival. The organization is indirectly affected by the general environment and parts of it include demographic. and the threat of substitute products. Both parties can gain from opportunities and both can suffer detrimental outcomes (from threats). no matter what the cost. while it sometimes includes techniques of production. for example. Both industry and general environment affects the operation of a business. the price of tomatoes rises dramatically. they must provide competitive prices. as with an abundance of substitutes. and global segments. This Industry environment normally includes the industry. It is affected by the variables in the market environment and these affect the business. economic. Some organizations will also have human resources and the international sector as part of this environment. There is a mutual relationship between a firm and its environments. technological. the general and the industry environments have an impact to the success of the organization and the factors of this environment should be considered critically in order to make informed decisions. the general environment can affect anyone in an industry. making it important for the management to react on opportunities and pressure in the market environment. A firm that is active and manages sustainable positive results is likely to be the one that studies and regularly monitors changes to its environments.

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