1. External Environment:
• Economic Factors: These include inflation rates, exchange rates, economic growth, and unemployment rates.
• Political and Legal Factors: Government policies, regulations, political stability, and legal frameworks impact business operations.
• Social and Cultural Factors: Demographics, cultural trends, societal values, and lifestyle changes can influence consumer behavior and market demands.
• Technological Factors: Advancements in technology, innovation, and the rate of technological change can affect how businesses operate and compete.
• Environmental Factors: Concerns related to sustainability, climate change, and environmental regulations are becoming increasingly important for businesses.
• Competitive Factors: The nature and intensity of competition within an industry, as well as the threat of new entrants, bargaining power of buyers and suppliers, and the availability of substitutes.
2. Internal Environment:
• Organizational Culture: The values, beliefs, and practices that shape the behavior of individuals within the organization.
• Leadership and Management Style: The approach taken by leadership and management in decision-making, communication, and overall strategy.
• Human Resources: The skills, knowledge, and capabilities of employees, as well as the organizational structure and the effectiveness of human resource management.
• Financial Resources: The availability and management of financial resources, including capital, investments, and budgeting.
• Technology and Infrastructure: The internal systems, technology, and infrastructure that support business operations.
• Products and Services: The nature, quality, and innovation of products and services offered by the business.
Examples:
1. Economic Environment: A recession leading to reduced consumer spending and lower demand for certain products.
2. Political and Legal Environment: Changes in tax policies or new regulations affecting the way a business operates.
3. Technological Environment: The introduction of a new technology that disrupts existing business models.
4. Organizational Culture: A company with a culture that values innovation and risk-taking.
5. Human Resources: Skilled and motivated employees contributing to the company's success.
6. Financial Resources: Access to funding for expansion or investment in new projects.
7. Competitive Environment: Increased competition in the market due to the entry of new players.
