When appraising the external environment of the organization you will typically start with its general environment. But what does this mean? The general environment is composed of dimensions in the broader society that influence an industry and the firms within it. We group these dimensions into six segments: political, economic, social, technical or technological, environmental, and legal. You can use the simple acronym, PESTEL, to help remind you of these six general environment segments. Examples of elements analyzed in each of these segments are shown in Table 3.1. Show
Table 3.1 PESTEL Analysis
Firms cannot directly control the general environment segments and elements. Accordingly, successful companies gather the information required to understand each segment and its implications for the selection and implementation of the appropriate strategies. For example, the terrorist attacks in the United States on September 11, 2001, surprised businesses throughout the world. This single set of events had substantial effects on the U.S. economy. Although individual firms were affected differently, none of them could control the U.S. economy. Instead, companies around the globe were challenged to understand the effects of this economy’s decline on their current and future strategies. A similar set of events and relationships was seen around the world as financial markets began to struggle one after the other starting in late 2008. Example 3.1 Impact of PESTEL Factors on an Entire IndustryManagement consulting services allow businesses to focus on their unique business plan while considering broader external information. Consulting firms gather information from an outsider’s persepctive and alert businesses how they’re seen by the larger society and the general public. By reflecting this information generically, they can sell their services to a variety of related businesses. They reflect the kind of impact those firms are making and how they can adjust accordingly, to implement beneficial changes. The idea is that one factor in the external environment can create a competitive advantage that makes the company more profitable than a competitor. As demand for such information has risen, so have the profits of the entire management consulting industry, with an estimate of $343B by 2025 in Europe according to this report. Expect to see further consolidation in the industry as it continues to get bigger. Source: EIN Newsdesk, Management Consulting Services Market to Hit $343.52 Billion by 2025, 2019Sp Although the degree of impact varies, these environmental segments affect each industry and its firms. The challenge to the firm is to evaluate those elements in each segment that are of the greatest importance. Resulting from these efforts should be a recognition of environmental changes, trends, opportunities, and threats. Which of the following is part of the general environment of an organization?The general environment is composed of the nonspecific elements of the organization's surroundings that might affect its activities. It consists of five dimensions: economic, technological, sociocultural, political-legal, and international.
Who are part of the general environment?In particular, PESTEL reflects the names of the six segments of the general environment: (1) political, (2) economic, (3) social, (4) technological, (5) environmental, and (6) legal.
Which of the following is not a part of an organization's general environment?Answer and Explanation: The correct answer is D) competitors. Competitors are not categorized as part of an organization's environment; they are not involved in organizational decision-making and development strategies.
Which of the following is a part of the general environment quizlet?The general environment consists of the economy and the technological, socio-cultural, and political/legal trends that indirectly affect all organizations.
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