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It refers the major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include the economic factors; demographics; legal, political, and social conditions; technological changes; and natural forces.
The business sector has economic relation with the government, capital market; household sector and global sector. These sectors together influence the trends and structure of the economy.
The form and functioning of the economy vary widely. The importance external factors that affect the economic environment of a business are; i Economic Conditions: Business cycles and economic growth of the economy are important factors defining the economic environment.
The economic system of a country may be capitalist, socialist, communist or mixed. Increased economic growth rate and increase in consumption expenditure, lower the general pressure within an industry and offers more opportunities then threats.
Low interest rated provides opportunities to the industries to expand whereas rising interest rates pose a threat to these institutions. When the rupee was devalued init was to make Indian products cheaper in the world market and consequently boost India's exports.
Political and Governmental Environment: The legislature decides on a particular course of action. Government is the executive and its job is to implement whatever was decided by parliament.
The judiciary has ensure that both the legislature and executive function in public interest and within the boundaries of constitution.
Legal and political environment provides a framework within the business is to function and its existence depends on the success with which it can face the various challenges constructed out of political and legal framework.
Social class and caste of a person goes a long way in deciding the business activities in relation to its production and marketing activities. Tradition, customs and social attitudes have changed the attitude and beliefs of the persons which have their effect on organizational environment.
Class and caste are influencing the purchasing pattern. Socio-cultural environment may include expectations of the society from business, attitudes of society towards business and its management, views towards achievement of work, views towards structure, responsibility and organizational positions, views towards customs, traditional and conventional, class structure and labour mobility and level of education.
Changes in temperature can impact on many industries including farming, tourism and insurance.
With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries for example, more taxes being placed on air travel and the success of hybrid cars and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.
All these demographic factors are relevant to business. These factors affect the demand for goods and services. High population growth rate indicates an enormous increase in labour supply.
Population with varied tastes, preferences, beliefs, temperaments etc. In order to survive in today's competitive world, a business has to adopt technological changes from time to time.
New technologies create new products and new processes. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances.
Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology.
Implications of global or international environment are; i Due to liberalization, Indian companies are forced to view business issues from the global perspective. World is becoming small in size due to advanced means of transport and communication facilities.Jan 04, · This screen-capture video lesson shows marketing learners how to do a PESTEL environmental analysis.
PEST and PESTLE analysis is a framework used in the environmental scanningcomponent of strategic management. PEST analysis is also known as: STEP, PESTEL, PESTLE, PESTE, PESTLIED, SLEPT, STEEPLE, STEEPLED, LE PEST C and LEPEST analysis.
PEST Analysis of Confectionary Industry The Commonwealth of Australia has stable liberal democratic. Select an organization of your choice from your country, and using the PESTEL Framework, identify which of the factors have impacted the industry/sector within which the organization is categorized.
Provide examples to support your response. Illustration: Porter’s five forces applied to the confectionery industry: The following data relate to the Indian confectionery market: Yearly spend is approximately Rs. the participants will be forced to compete against one another to increase their sales volumes.
South African and global food-processing trends: Dl tDevelopment implications Prof. Justin BarnesJustin Barnes Benchmarking and Manufacturing Analysts SA (Pty) Ltd.
Dairy Ingredients Market Analysis By Product (Skimmed Milk Powder, Whole Milk Powder, Buttermilk Powder, Cream Powder), By Application (Bakery & Confectionery, Dairy Products, Convenience Foods, - Market research report and industry analysis -