The document discusses various aspects of a firm's external environment. It begins by stating the objective is to identify forces and elements that make up a firm's environment. It then defines a firm's external environment as all outside institutions and forces that have actual or potential interest or impact on the firm's ability to achieve its objectives. These include competitive, economic, technological, political, legal, demographic, cultural, and ecosystem factors. The document also discusses PEST analysis and its use in understanding macroenvironmental factors affecting a business.
5. – the sum of all the elements and
forces present in its immediate and
remote surroundings which have a
potential impact on its ability to
achieve its objectives.
6.
7. Internally, an organization can be viewed
as a resource conversion machine that
takes inputs (labor, money, materials and
equipment) from the external environment
(i.e., the outside world), converts them into
useful products, goods, and services, and
makes them available to customers as
outputs.
8. The second level of the management system
involves the organization's external
environment. It consists of all the outside
institutions and forces that have an actual or
potential interest or impact on the
organization's ability to achieve its
objectives: competitive, economic,
technological, political, legal, demographic,
cultural, and ecosystem.
External Environment
The second level of the management system involves the organization's external environment. It consists of all the outside institutions and fo
External Environment
The second level of the management system involves the organization's external environment. It consists of all the outside institutions and fo
9. PEST analysis stands for "Political, Economic, Social, and
Technological analysis“
Framework of macro-environmental factors used in the
environmental scanning component of strategic
management.
Some analysts added Legal and rearranged the mnemonic to
SLEPT, inserting Environmental factors expanded it to
PESTEL or PESTLE, which is popular in the UK.
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10. The model has recently been further extended to
STEEPLE and STEEPLED, adding education and
demographic factors.
It is a part of the external analysis when conducting a
strategic analysis or doing market research, and gives
an overview of the different macro environmental
factors that the company has to take into
consideration.
It is a useful strategic tool for understanding market
growth or decline, business position, potential and
direction for operations.
11. Globus Inc.
is a leading
manufacturer
of baby
products.
It has decided to venture
into the market of
cosmetics with the launch
of a new brand of
cosmetics ‘Glaze’ in the
market.
However, before Globus can actually
make the final decision of venturing
into a new market, it needs to find
out the things that are working in its
favor and the aspects that can lead to
the failure of its new venture.
12. Globus Inc.
is a leading
manufacturer
of baby
products.
It has decided to venture
into the market of
cosmetics with the launch
of a new brand of
cosmetics ‘Glaze’ in the
market.
However, before Globus can actually
make the final decision of venturing
into a new market, it needs to find
out the things that are working in its
favor and the aspects that can lead to
the failure of its new venture.
13. Globus can do
a SWOT
Analysis of its
position in the
market.
Carrying out a SWOT
Analysis will help Globus
understand the company’s
strengths, weaknesses,
opportunities and threats.
SWOT Analysis would help Globus
understand its strengths that would be
helpful in the new venture, its
weaknesses that need to be overcome
to be successful in launching the new
products, the opportunities that it has
at hand to succeed in the new venture
and the threats that it perceives to the
success in the new venture.
14. Introduction
Globus can do
a SWOT
Analysis of its
position in the
market.
Carrying out a SWOT
Analysis will help Globus
understand the company’s
strengths, weaknesses,
opportunities and threats.
SWOT Analysis would help Globus
understand its strengths that would be
helpful in the new venture, its
weaknesses that need to be overcome
to be successful in launching the new
products, the opportunities that it has
at hand to succeed in the new venture
and the threats that it perceives to the
success in the new venture.
15. What is SWOT Analysis?
SWOT Analysis is a technique founded by Albert Humphrey who led a research
project at Stanford University in the 1960s and 1970s.
The acronym ‘SWOT’ stands for:
S W
O T
18. Strengths
S W
O T
W
O T
Strengths are:
• Characteristics of the business or team
that give it an advantage over others in
the industry.
• Positive, tangible and intangible
attributes, internal to an organization.
• Beneficial aspects of the organization
or the capabilities of an organization,
which includes human competencies,
process capabilities, financial resources,
products and services, customer
goodwill and brand loyalty.
24. Tip
Matching and converting is one way of utilizing SWOT.
‘Matching’ is used to find
competitive advantages by
matching the strengths to
opportunities.
‘Converting’ is to apply
conversion strategies to
convert weaknesses or
threats into strengths or
opportunities.
Finding new markets is an
example of a conversion
strategy.
Moreover, if the threats or
weaknesses cannot be
converted, then an
organization should try to
minimize or avoid them.
25. Steps of SWOT Analysis
Perform SWOT Analysis & Document:
This step includes the following:
1. Establish the objectives
2. Select contributors
3. Allocate research & information
gathering tasks
4. Create a workshop environment
5. List SWOT Analysis
6. Evaluate listed ideas againstObjectives
7. Carry your findings forward
Let us look at each in detail.
Perform SWOT Analysis
& Document
Analyze Internal &
External Environment
Prepare Action Plans
Perform SWOT Analysis
& Document
26. Searching
extensively
for
competitors
Effective SWOT Analysis
Searching Extensively for Competitors:
• It is critical for conducting an effective SWOT Analysis that
you do not overlook any competitor, both current as well
as future competitors.
• You should consider all competitors including the
following:
o Product competitors
o Generic competitors
o Total budget competitors
30. What is the role of business in
the environment, and how the
environment affects the firm
31. Business is hugely important in a country’s
economy because it is the main economic
engine for the country.
Businesses are a very important part of the
circular flow of any market economy. They buy
resources from households in the resource
market and sell to households in the product
market. This makes them indispensable to the
economy.
32. Businesses also allow the economy to work
more efficiently.
When businesses compete with one
another, they improve their efficiency
and help the economy grow.
They also help the economy growth through
innovations of various sorts. No market
economy can thrive without businesses
33. 33
Domestic business: a business that
acquires all its resources and sells its
products or services within a single
country.
International business: a business
that is primarily based in a single
country but acquires some
meaningful share of its resources or
revenues (or both) from other
countries.
34. 34
Multinational business: one that has a
worldwide marketplace from which it
buys raw materials, borrows money,
and manufactures its products and to
which it subsequently sells its products.
Global business: a business that
transcend national boundaries and is
not committed to a single home
country.
35. 35
Exporting: making a product in the firm’s domestic
marketplace and selling it in another country.
Importing: bringing a good, service, or capital into the
home country from abroad.
Licensing: an arrangement whereby a firm allows
another company to use its brand name, trademark,
technology, patent, copyright, or other assets in
exchange for a royalty based on sales.
36. 36
Strategic alliance: a cooperative
arrangement between two or more
firms for mutual gain.
Joint venture: a special type of
strategic alliance in which the partners
share ownership of a new enterprise.
37. 37
Direct investment: when a firm headquartered
in one country builds or purchases operating
facilities or subsidiaries in a foreign country.
38. 1.What is the role of the firm’s
environment in the life of the
student?
2.What contributions student
may extend to help our
environment healthy?
39. Describes the following business:
1. Domestic business
2 Multinational business
3. Global business
Rubrics:
Content 5
Org. 5
Relevance 5
15
41. 41
Government stability is important to
managers seeking international
opportunities. No business wants to set up
shop in a foreign market only to see its
investment disappear in the face of
government nationalization or civil unrest.
42.
43. 43
Government stability is important to
managers seeking international
opportunities.
No business wants to set up shop in a foreign
market only to see its investment disappear
in the face of government nationalization or
civil unrest.
44. The definition of economic development
given by MichaelTodaro
is an increase in living standards,
improvement in self-esteem needs and
freedom from oppression as well as a greater
choice.
45. The most accurate method of measuring
development is theHuman Development
Index which takes into account the literacy
rates & life expectancy
which affect productivity and could lead to
Economic Growth.
It also leads to the creation of more
opportunities in the sectors of education,
healthcare, employment and the conservation
of the environment.It implies an increase in
the per capita income of every citizen.
48. A sole proprietorship is owned and run
by one individual who receives all
profits and has unlimited responsibility
for all losses and debts.
/
49. Filing taxes as a sole proprietorship is relatively
easier than that of a corporation.
Sole proprietorships typically require
less capital to set up and have easier payroll
requirements.
Sole proprietorships are not as heavily
regulated as other forms of organizations.
50. The owner of a sole proprietorship is solely liable
for all debts and actions of the company.
All personal wealth is linked to the business.
Financial statements are not required in a sole
proprietorship as are typically required of
a corporation, meaning a lack of financial control is
very probable.
It is difficult to find outside investors to fund sole
proprietorships, meaning growth potential is very
limited beyond a certain point.
51. A partnership, of which various forms exist, is an
arrangement where parties agree to cooperate
to advance their mutual interests.
The three typical classifications of for
profit partnerships are:
general partnerships,
limited partnerships, and
limited liability partnerships.
52. A general partnership exists when partners divide
responsibility for management and liability as well as the
shares of profit or loss according to their internal
agreement.
A limited partnership is a form of partnership similar to a
general partnership, except that in addition to one or
more general partners (GPs), there are one or more
limited partners (LPs). General Partners carry more liability,
and in cases of financial loss, the GPs will be liable.
A limited liability partnership (LLP) is a partnership in which
some or all partners (depending on the jurisdiction) have
limited liability. In an LLP, one partner is not responsible or liable
for another partner's misconduct or negligence.
53. Partnerships are relatively easy to establish.
With more than one owner, the ability to raise funds may
be increased.
The profits from the business flow directly through to the
partners' personal tax returns.
The most obvious advantages to a partnership are the
ease in which they may be established, the combination of
a wider pool of skills and knowledge, and the increased
ability to raise more funds with more partners.partner.
The business usually will benefit from partners who have
complementary skills.
54. As an artificial being created by operation of
law.
As artificial being, its powers, attributes and
properties are limited to those expressly
authorized by law or incident to its existence.
Has separate juridical personality
55. Is an association of persons who have
voluntarily joined together to achieve a
common end through the formation of a
democratically controlled organization,
making equitable contributions to the capital
required and accepting a fair share of the
risks and benefits for the understanding in
which the members actively participate.
