External Environment Analysis

Porter’s Five Forces Model

In order to gain a competitive advantage we need to use the Porter’s Five Forces Model that will overlook all the perspectives for the business strategy of the store and thus we need to analyze the aspects that are given below, I will not explain it as we all know about the needs of knowledge application.

Discussion

What is the external organizational environment?

Since we are talking about the organizational environment, let us talk about the external environment and what is refers to. The answer would be both the strength and administrations outside the organization that theoretically can impact on the organizations and their performance.

The external organizational environment is divided into the General and Specific Environment. The Specific Environment is directly applicable to the accomplishment of the organization’s goal in relation to the customers, competitors, suppliers, and pressure groups. The general environment is referred to as the wide external conditions that can affect the organization in terms of the economic conditions, political and / or legal conditions, socio – cultural conditions, demographic conditions, technological and global conditions. Let us talk about them in detail:

Customers: It is the customer who engages the organizational outputs. They represent the potential uncertainty to an organization although their taste could become different and they can become disappointed with the organization’s products or services.

Competitors: The organizations must not ignore their competitors. The managers should be ready to reply to the competitor’s policies concerning the pricing policy of the new products, services that are offered as well as the other incentives that are addressed to the customers.

Suppliers: The parties that provide the input for the business like financial institutions that are considered to be the main providers of money, with the relation of the colleges who are considered to be the suppliers of human resources.

Pressure groups: The managers should be able to identify the special interest groups that try to effect the organization.

Economic conditions: This includes the affect of the economic factors like the interest rates, inflation, changes in disposable income as well as the general business cycle. For example, when the client’s income decreases their self-assurance about the job security declines that result in the fact that they delay the purchasing of any unnecessary things.

Political / legal conditions: The federal, state and local government influences what the organizations can and cannot do as a whole.

Socio-cultural conditions: The managers should learn to adjust their practices to the altering prospects of the public and their lifestyle.

Demographic Conditions: The trends that relate to the physical characteristics of the population such as gender, age, level of education, income, and geographical location.

Technological: This is changing the ways the organizations are working on the global market so that any business should address such an issue to its impact on the overall performance of organization.

What are the 5 dimensions / factors of the general environment?

The external environment of the organization is those factors outside the company that have an impact on the organization’s ability to operate on the market. Some external elements can …
Posted by: Shalanda Bacchus

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