All business entities are under the pressure of different factors inside and outside the organization. In order to survive in the global environment, companies in building their strategies have to aware of the outside forces such as political and economic situation inside the country and in the global community, new technologies in the market, socio and cultural influences. POLITICAL FACTORS
Political factors that affect the activity of an organization are: tax policy, employment laws, environmental regulations, trade restrictions and political stability inside the country. As company maintains sales and service organizations as well as manufacturing operations in many different countries it must deal with a great variety of laws and policies, which additionally change all the time. For example in many countries of European union now taking place dynamic changes in employment law.(Federation of European employees, 2007) Also many countries are now environment concerned and try to reduce pollution. Philips as a large manufacturer can face some problems because of that.
At the present time a lot of countries where Philips Company has its business are experiencing high levels of economic growth at the moment. For example according to bbc.co.uk, the economy of the country grew at the fastest rate for two years in the second quarter of 2006 and as it was reported by Office for National Statistics (ONS) reached 2.6% in August 2006. Inflation rate has increased to 2.5% in June 2006; however, the average inflation in 2006 is likely to around 3% that is normal for UK. Because of the high economic growth inflation and interest rates are likely to rise. In 2006 the Bank of England kept the interest rate at 4.5%. For Philips high economic growth means the increasing purchasing power of the population that is desirable for the company.
The social and cultural influences on business vary...