Understanding the external environment

External Environment The external environment constitutes factors and forces which are external to the business and on which the marketer has little or no control.

Organizations are an open system and are tightly bounded to its external environment. These factors include the GDP, GNP, interest rates, inflation, income distribution, government funding and subsidies, and other major economic variables.

However the flow on affects of drought will eventually work their way through to all businesses in the effected community. Not only will competitors come and go, but they will also change marketing strategies, product lines and prices. Assets The internal environment of the organisation can be made richer or poorer by its assets.

This environment includes the sales department, marketing department, the manufacturing unit, the human resource department, etc. Permits and licenses can also be expensive, adding to your cost of doing business.

Understanding your organization's external environment helps you proactively take advantage of opportunities and nimbly sidestep threats. The external environment is of two types: When an organisation is a for-profit business that operates in a very competitive environment, its organisation structure may help or hinder the ability of the organisation to react to change.

Environmental uncertainty should be used to predict the future course of the environment and plan appropriately to reduce its adverse impact. Social-Cultural Environment The social-cultural aspect of the macro environment is made up of the lifestyle, values, culture, prejudice and beliefs of the people.

Threats and Opportunities A sound knowledge of the market environment often gives a first mover advantage to the marketer as he makes sure that his business is safe from the future threats and taps the future opportunities.

Five Components of an Organization's External Environment

This is vital because their competitors are seeking to gain market share at their expense. Often such changes are not heralded and business managers must be alert as to what competitors are doing.

Marketing Environment: Explanation, Components, & Importance

Consumer Tastes Customers tastes can be fickle, influenced by fads and trends, among other things. The marketer needs to research about every aspect of the environment to create a foolproof plan. For example, a sport club which once prospered can begin to decline as the local area has less and less children.

Despite however good other internal factors may be, it is very difficult for an organisation that is too short of cash to implement strategies within the strategic plan.

Organization Design or Reorganization: Certified Educator It is important for managers to understand the external environment for five main reasons, as discussed below: If your business offers an affordable staple such as food or clothing, customers may be more likely to choose it over more luxurious alternatives when times are hard.

Technology The technology available to your business affects what you're able to do and how you're able to do it.

Organization’s External Environment

Customers likes and dislikes changes rapidly, people live in a tight social system that create and encourage trends. If you vend at farmers' markets selling wine or beer, you'll be more likely to succeed if your local government allows you to sample alcohol, than if sampling is prohibited.

Five Components of an Organization's External Environment

They are the end-users of the product and services, the most critical aspect of the environment. It is important to know all the competitors, their organizational size and skills pool, their competitive advantages, their marketing strategies, offshore development etc. They must know what their competition is willing to pay qualified personnel, and they must be ready to do the same so they can attract first-rate candidates to their enterprises.

Digital photography gave photographers the opportunity to snap and choose from a great many more photos, and new medical devices enhance the ways that doctors treat maladies. Organization’s External Environment.

The external environment of an organization comprises of all the entities that exist outside its boundary, but have significant influence on its growth and survival.

Understanding the External Environment Changing Patient Demographics Changes in lifestyle, such as diet, urbanization and exercise habits, combined with increasing life expectancy in many countries, are leading to increased prevalence of non-communicable diseases (NCDs), such as cancer, cardiovascular disease and diabetes.

understanding of the external environment within the context of the strategic process. It is useful to consider the notion that the business environment conforms to. Organization’s External Environment. The external environment of an organization comprises of all the entities that exist outside its boundary, but have significant influence on its growth and survival.

Organization’s External Environment

An understanding of the external environment and careful planning can help to ensure the success of your business. Notable Terms Micro environment: consists of the factors that directly impact.

Environmental Factors in Strategic Planning. For any business to grow and prosper, managers of the business must be able to anticipate, recognise and deal with .

Understanding the external environment
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