Chapter 2: The Environment
Environmental influences can be thought of as layers around an
organisation, with the outer layer making up the macro-environment, the
middle layer making up the industry or sector and the inner layer strategic
groups and market segments.
The macro-environment is the highest-level layer. This consists of broad
environmental factors that impact to a greater or lesser extent on almost
all organisations.
The industry or sector forms the next layer within this broad general
environment. This is made up of organisations producing the same sorts
of products or services.
Competitors and markets are the most immediate layer surrounding
organisations.
The Macro-Environment
The macro-environment can be analysed in terms of PESTLE factors, from
which key drivers of change can be identified. Alternative scenarios about
the future can be constructed according to how the key drivers develop.
PESTLE
Politics highlights the role of the state or other political forces. The
state is often important as a direct economic actor, for instance as
potential customer, supplier or owner of businesses.
Economics refers to macro-economic factors such as exchange rates,
business cycles and differential economic growth rates around the
world. It is important for a business to understand how its markets are
affected by the prosperity of the economy as a whole.
Social influences include changing cultures and demographics.
Technological influences refer to influences such as internet, nano
technology or the rise of new composite material.
Legal embraces legislative and regulatory constraint or changes.
Ecological stands specifically for 'green' environment issues, such as
pollution, waste and climate change.
Key drivers for change
Megatrends are large-scale social, economic, political, ecological or
technological changes that are typically slow to form, but which
influence many other activities and views. A megatrend typically
shapes other trends.
Environmental influences can be thought of as layers around an
organisation, with the outer layer making up the macro-environment, the
middle layer making up the industry or sector and the inner layer strategic
groups and market segments.
The macro-environment is the highest-level layer. This consists of broad
environmental factors that impact to a greater or lesser extent on almost
all organisations.
The industry or sector forms the next layer within this broad general
environment. This is made up of organisations producing the same sorts
of products or services.
Competitors and markets are the most immediate layer surrounding
organisations.
The Macro-Environment
The macro-environment can be analysed in terms of PESTLE factors, from
which key drivers of change can be identified. Alternative scenarios about
the future can be constructed according to how the key drivers develop.
PESTLE
Politics highlights the role of the state or other political forces. The
state is often important as a direct economic actor, for instance as
potential customer, supplier or owner of businesses.
Economics refers to macro-economic factors such as exchange rates,
business cycles and differential economic growth rates around the
world. It is important for a business to understand how its markets are
affected by the prosperity of the economy as a whole.
Social influences include changing cultures and demographics.
Technological influences refer to influences such as internet, nano
technology or the rise of new composite material.
Legal embraces legislative and regulatory constraint or changes.
Ecological stands specifically for 'green' environment issues, such as
pollution, waste and climate change.
Key drivers for change
Megatrends are large-scale social, economic, political, ecological or
technological changes that are typically slow to form, but which
influence many other activities and views. A megatrend typically
shapes other trends.
