Please enable JavaScript.
Coggle requires JavaScript to display documents.
EXTERNAL ANALYSIS MACRO - ENVIRONMENT - Coggle Diagram
EXTERNAL ANALYSIS
MACRO - ENVIRONMENT
INTRODUCTION
Definition & Importance
The broad environment outside an organization’s industry and markets
Beyond the control and influence of the individual organization but have a significant impact on the micro-environment (industry and market)
Benefits
Increasing understanding of the context in which industries and markets function;
Improving resource allocation decisions
Increasing managerial awareness of environmental changes;
Facilitating risk management;
Focusing attention on the primary influences on strategic change
Acting as an early warning system, providing time to anticipate
opportunities and threats and devise appropriate responses
Challenges
Assessing what should be included
Assessing what should be left out;
Determining how the information should be
organized in a rational and meaningful way
RULE
Be aware of the limitations and inaccuracies of macro-environmental analysis
Carry out the analysis or update it continuously
Constantly seek to improve sources of information and techniques for its analysis;
Use the information as one source of organizational learning
Use the information to inform future strategy
STEPS
Scanning:
for warning signs and possible
Monitoring:
for specific trends and patterns
Forecasting:
future directions of environmental changes
Assessing:
Current and future trends in terms of the effects such Assessing changes would have on the organization
STEEP ANALYSIS
Socio-cultural
: social culture, demography, social structure
Technological
: understanding of the effects of changes in technology on: Products and services; Operational processes; Information and communications; Transport and distribution; Society, politics and economics
Economic
:
fiscal policy and monetary policy
alongside influence from international markets, determine the economic climate in the country in which a business operates
Environmental
: concerns about ecology and ‘green issues’, global climate change, ozone depletion, deforestation. Might raise companies’ costs and drive companies to more efficient and eco-friendly technologies
Political
: Governments have direct control or influence over: Legislation and regulation, Economic policy, Government-owned businesses, Government international policy