The External Environment ( Strategic Management)

1786 WordsNov 23, 20128 Pages
Review THE EXTERNAL ENVIRONMENT (STRATEGIC MANAGEMENT) A host of external factors influence a firm’s choice of direction and action, ultimately its organizational structure and internal factors. These factors, which constitute the external environment, can be divided into three interrelated subcategories there are as follows: A. REMOTE ENVIROMENT The remote environment comprises factors that originate beyond and usually irrespective of any single firm’s operating situation: economic, social, political, technological, and ecological factors. That environment presents firm with opportunities, treats, and constraint; but rarely does a single firm exert any meaningful reciprocal influence. 1. Economic Factors Economics factors concern…show more content…
And also gives executives another basis on which to evaluate their firm’s goals. In defining industry boundaries is very difficult task. The difficult stems from three sources: 1.The evolution of industries over times creates new opportunities and threats, 2.industry evolution creates industries within industries, and 3. Industries are becoming global in scope. Having developed a preliminary concept of the industry executives flush out its current component. * Industry Structure Structural attributes are the enduring characteristics that give an industry its distinctive character. To explaining the variation among industries can doing through examining the variable that industry comprises such are concentration, economies of scale, product differentiation, and barriers to entry. * Competitive Analysis Usually have objectives such are to identify current and potential competitors, to identify potential moves by competitors, and to help the firm devise effective competitive strategies. C. OPERATING ENVIROMENT The operating environment, also called the competitive or task environment, comprises factors in the competitive situation that affect a firm success in acquiring needed resources or in profitably marketing its goods and services. Competitive Position Assessing its competitive position improves a firm chance of designing strategies that optimize its environmental opportunities. Customer Profiles Developing a profile of a firm’s
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