General External Environment Analysis Essay

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- Laka Muralidharan

General external environment is composed of dimensions in the broader society that influence an industry and the firms within it. These dimensions can be can be grouped into the following six environmental segments: demographic, economic, political/legal, sociocultural, technological and global segments.

1) Demographic segment
China and India account for 1/3rd of the population and experts believe that they will remain the top two populous countries at least until 2050. China and India would contribute 65 million and 142 million new workers respectively to the global workforce by the year 2020. Both countries offer large, educated, relatively low-cost workforces, and as
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However, since the recovery is just a few months old, there is still a lot of skepticism about whether it is for real and whether it has some legs to run further. I think the worst is behind us, but the future is still uncertain. I believe that it would take quite a while, at least a couple of years to get back to the economic levels (unemployment rate and housing market) of 2006.

3) Political/Legal segment
This segment is an area where organizations compete for attention, resources and a voice in overseeing the body of laws and regulations guiding the interactions among nations. As the politics of regulations change, this segment influences the nature of competition through changing rules. An example is the global trend toward privatization of government-owned or regulated firms. Firms must carefully analyze new political administration’s business-related policies and philosophies. Often, firms develop a political strategy to influence government policies and actions that might affect them.

In the global scenario, more countries continue to join the World Trade Organization (WTO) as they seem to believe that free trade across nations serves the best interest of individual countries and their citizens. Down the line, many years from now, we would see a scenario where all countries in the globe become members of organizations like WTO and there is a fair trade across all countries
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