THE EXTERNAL ENVIRONMENT
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 the nature and direction of the economy in which a firm operates. Because consumption patterns are affected by the relative affluence of various market segment, in strategic planning each firm must consider economic trend in the segment that affect its industry. 2. Social Factors
The social factors that affect a firm involve the beliefs, values, attitudes, opinions, and lifestyles of persons in the firm’s external environment, as developed from cultural, ecological, demographic, religious, educational, and ethics conditioning. Like other forces in the remote environment, social forces are dynamic, with constant change resulting from the efforts of individuals to satisfy their desires and needs by controlling and adapting to environment factors. One of the most profound social changes in recent years has been the entry of large numbers of women into labor market. Second, social change has been the accelerating interest of consumers and employees in quality-of-life issues. Third, social change has been the shift in the age distribution of population. A consequence of the changing age distribution of the population has been a sharp increase in demands made by a growing a number of senior citizens. 3. Political Factors...