The external business environment reflects the outer factors that an organization is incapable of controlling or influencing, but rather has to learn how to predict or adapt to them. Following the ideas of Alanis Business Academy, the external business environment incorporates different sub-environments. However, analyzing everything outside the main business context that might affect one’s organization and its performance is indeed a complicated task. These sub-environments include economic, social, technological, competitive, political-legal, and global environments. Altogether, they are considered to have the power to affect the business in a certain way.
The external economic environment implies the conditions of the economy in which business primarily operates. The social environment includes demographics, consumer needs, preferences, and the critical interests of the target society. The technological environment is defined by the changes in the technological sector and how the business utilizes them to provide value to its customers. The competitive environment is a highly determining factor that considers actions taken by the key competitors that offer similar services. The political-legal environment stands for legislative and regulatory standards. Finally, the global environment involves international economic circumstances, natural disasters, and political unrest. When referring to the Dess et al. chapter, the main focus remains on creating a competitive advantage. As such, the video highlights the importance of being aware of what the competitor is doing, which could be difficult. Such a strategy helps assess whether it ultimately matters to take particular actions towards creating a competitive advantage and define the steps needed to make a change and surpass the dominant players.
Works Cited
“The External Business Environment.” YouTube, uploaded by Alanis Business Academy, 2015, Web.
Dess, Gregory, et al. Strategic Management: Text and Cases. 9th ed., McGraw-Hill Education, 2018.