External EnvironmentEssay Preview: External EnvironmentReport this essayIntroductionBusiness environment is an element that will affect all the activities of an organization. Besides, it will bring firms both opportunities and threats because of its uncertainties. Business environment is uncertain, complex & dynamics; organization should apply more flexibility & discontinuity ways to manage them. A firm cannot control the environment because it is unpredictable in its direction and speed of change, such as interest rates, rate of inflation and exchange rate.
Business environment can classifies in two categories that are internal environment and external environment. Internal factors close to the company that have a direct impact on the organizations strategy, these factors include employee, customer, suppliers, shareholder, banker etc. External environment comprises those factors and trends outside the organization that might have an influence upon an organization and its future. Many external factors can have an effect upon an organization – from changes in government legislation to the entry of new competition into a market.
All businesses and organizations operate in a changing world and are subject to forces that are more powerful than they are, and which are beyond their control. Any business strategy needs to take account of all these forces so that opportunities and threats can be identified and the organization can navigate its way to success by matching its internal strengths to external opportunities.
There are many ways and techniques that a firm can adopt to assess the external environmental forces. The most common and popular techniques are the PEST analysis and Industry Analysis
Pest AnalysisIt is useful to consider as a starting point, what environmental influences have been particularly important in the past, and the extent to which there are changes occurring, which may make any of these more or less significant in the future, for the organization and its competitors.
PEST analysis (a mnemonic for Political, Economic, Social and Technological factors) is the most frequently used tool to consider the impact of the general environment. It provides a broad framework for considering a wide range of potential factors in order to summarise the most important influences of the general environment. Beside, it can evaluate the potential impact of these influences, while the opportunities and threats to be faced. Is positive or negative.
Each of the four headings can be broken down further to suggest more detailed consideration of particular factors and changes that might influence the organization both currently and in the future. Whilst varying dependent upon the particular context, the list of factors and changes may include:
1.) Political Legal Environment:Political environment include factors that affect the confidence and sentiment of foreign investment and trade relation. Political and legal developments can expand a company’s freedom of action; it will make the environment to be more supportive of its activities. Political factors can have a direct impact on the way business operates. Decisions made by government affect our every day lives and can come in the form of policy or legislation such as competition policy, trading standards, financial regulation, planning policies. The governments Organization today among will more consider to this factors such as greater deregulation, more lenient interpretation of antitrust laws, greater environmental protection legislation, growing power etc.
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In the case of commercial real estate, if there is significant increase or decrease in foreign market demand, any of the following apply: (1) there is an increased competitive share, based on competition and/or international competition, that can be found within Europe and the Middle East, where there is an increasing number of foreign consumers; and (2) there is an increasing proportion of foreign investors in a given market (in particular the European and North American regions), the proportion that are located in those markets and their composition. For example, in 2005, Germany, France and Belgium had a large number of foreign investors which contributed to the growth in the domestic foreign exchange market. This increasing foreign competition and domestic supply side is a reason why, among the countries that met the 2000 target, the foreign stockholders of foreign fixed annuities are, for the most part, in the euro area. While the government, the European Bank for Reconstruction and Development, has said that it is not actively pursuing, as of now, specific actions that may be taken, it may still move in this direction (see “On Investing in the Financial Markets of Europe” in a subsequent article, “In the Future: International Banking Reform in the Euro Area: Germany”). Moreover, in addition to the existing market concentration, there may be greater relative competition and the share of foreign buyers in a given market can be more or less certain which is not for the benefit of the domestic holders of the fixed securities. Moreover, the government might attempt to increase the availability and quality of local and state government insurance.
(2) The impact of foreign market policy on the quality of the investments in certain sectors may have a direct and indirect effect on the quality and quantity of the investments in the sector. Therefore, an external factor that may be directly or indirectly affected by the Government would be foreign competition. For example, many private investors in private stocks could be at a loss due to an increase in foreign competition within the sector because of the more intense competition in finance. Even if a foreign investor has lost more than half of its investments, many private investors still may lack certainty on the quality of the investments and the quality of the investments could even be less than promised. There is even an interest market in which there is an increasing number of private investors in particular sectors. For example, in 2010, when Luxembourg’s national pension fund was subject to a severe reduction in its budget deficit, the budget deficit had been on the one side for more than half of the previous year and the deficit would still be on the other side by the end of this quarter, (see “Investing In the European Banking System”, “Investing in the European Stability Mechanism and Other Financial Markets in EU countries”, page 4 of “Financial Regulation in the euro area”, and paragraph 20 of this publication). The effect of this on the competitiveness of the investment market would depend (a) on the international economic competition in which the investment sector is located and (b) on the level of foreign competition in such sectors as trade and finance.
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The government of one nation cannot be expected to undertake measures to reduce, or limit
An example: Nike’s international operations are subject to the usual risks of doing business abroad, such as possible revaluation of currencies, export duties, quotas, restrictions on the transfer of funds and, in certain parts of the world, political instability. Nike’s products manufactured overseas and imported into the United States and other countries are subject to customs duties collected by customs authorities. Customs information submitted by Nike is routinely subject to review by customs authorities. Nike is unable to predict whether additional customs duties, quotas or other restrictions may be imposed on the importation of our products in the future. The enactment of any such duties, quotas or restrictions could result in increases in the cost of our products generally and might adversely affect the sales or profitability of NIKE and the imported footwear and apparel industry as a whole.
2.) Economic Environment :Economic environment has its patterns and trends in overall economic activity and world trade; movements in exchange rates, interest rates and taxation both within particular countries and internationally; fluctuations in capital markets; broad changes in market demand; industrial trends like increasing industry concentration and increased mergers and acquisitions activity. All businesses are affected by economical factors nationally and globally. Whether an economy is in a boom, recession or recovery will also affect consumer confidence and behavior. A truly global player has to be aware of economic conditions across all borders and ensure they employ strategies and tactics that their protects their business
3.) Economic Culture :Economic culture in the world is not based in any one country or even one technology industry.
People who work across all continents, the global South and the Americas are the ones who have the strongest economic culture in the world. A culture of culture and technology has always had many forms between cultures, so that one can learn more about each culture and culture and still communicate in equal manner.
4.) Economic Experience :You have to be prepared for the new world around you. Many of us are already working at other businesses with different needs, so getting better and better at a given job is always a good thing. I feel that this year I was able to give a speech in front of an audience and also said many things that I would never do in my life, all because I have done what I love and want to do. As a person and as a human being you are going to have a much better chance of getting great and great experiences if you go to different countries and different people for different needs.
5. Economic Education :Economies are built by education and are the basis of all decisions of how we make a living. In order for your own economic success to come freely, be the best way possible by doing what has been done for you and do what you love. Being an economic entrepreneur is important to getting a job and growing a business for yourself, but without being independent you will never know the extent to which others and your community have shown all sorts of remarkable success in how they were able to gain independence with you and create an independent, open economy in the international markets.
6.) Economic Environment :The level of economic activity within the international financial system is extremely high and in some cases will even surpass the current level. This means it is possible to find high-quality deals on both a large and small scale to finance a business. A large part of this is based on the knowledge that the local economic development agencies have a large number of different kinds of economic development agencies in Europe, North America and Europe to help them deal with the growth of new and large commercial sectors, but they only give the best and only way to facilitate that. In addition, the people on the streets are often very careful when they come to find loopholes that allow for these types of deals to proceed if an individual’s experience does not suit their needs and interests.
7.) Economic Culture :The economic environments are so unique that it often surprises me how much different we live and work based on the same environment. For example, it is not uncommon for a business to be based in Tokyo that requires a higher work life time. That being said, I have learned a lot since I joined my new company. As a business I have noticed that a similar phenomenon holds for other industries in the global market.
8.) Economic Environment :In order for a large business to have any chance of success and expand the opportunities they need, then they have to take measures to create a
An example: In the early 1990’s when the UK economy was in a slump, and businesses were folding repeatedly, a security company called �Dreadlocks security?to combat falling sales embarked on strategy of cutting back on labour costs, and doubling advertising expenditure. The companies?theory was that not their entire target segment was affected by the recession and he had to fight for the customers that still had the income to spend on security products.
3. Social Environment :Social environment will include changes in demographic patterns like the increasing age profile of populations in developed countries; changing social attitudes and tastes such as the way in which people spend their leisure time; patterns of spending on education and health; public concern on issues like the environment, smoking and food safety. As society changes, as behaviors change organizations must be able to offer products and services that aim to complement and benefit peoples lifestyle and behavior because these factors will affect customer needs and the size of potential markets.
An example: UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. On the other end of the spectrum the UK is worried about the lack of exercise its youngster are obtaining. These �fast