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General Environment Essay
PESTEL analysis is one crucial tool that executives will rely on to manage elements within the overall situation and to determine how these factors affect industries and those firms within them. PESTEL is the anagram, meaning it is a language that made by using parts of different languages. In particular, PESTEL reflects the names of these six sections of the national situation: (1 ) political, (2 ) economical, (3 ) cultural, (4 ) technological, (5 ) environmental, and (6 ) legal. Smart executives carefully analyze each of these six sections to determine better opportunities and threats and then change their firms ’ strategies accordingly (number 3.3 “ PESTEL ” ).
According to Henry (2008 ) , the organisation has just two important environments i.e common and competitive environment. The competitive environment comprises of business and markets at which the organisation operates. General situation is also described as macro-environment. The name Macro-environment is because the variations that happen in the situation, can have the effect that get beyond the boundaries of the firms and industries. The below figure shows the relation between competitive and national situation of the business as per Henry (2008 ) :
Internal and external forces: External forces are due to its general environment (international, economic, socio cultural, and political legal dimensions) and task environment (competition, customers, suppliers, regulators and strategic allies) which make change, called exogenous change. The internal forces are proceeding from within and derived internally (culture, organizational strategy) and are sometimes reflection of external environment. Internal forces create change which is called endogenous change. - As measurement/solution to complex problems in organization e.g.
Economic Environment What is economic environment? Economic environment is an external environment of a company that includes the factors that determine the income and wealth-generating ability of the economy. It is a factor that will affect customer purchasing power and spending pattern. However not only economic factor affect customer purchasing power and spending pattern but it must also depend on the ability and willingness to buy a product. It was because everyone has their own ability to
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Level: Business School
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