There are many external environmental factors that can affect your business. It is prevalent for managers to assess each of these factors proximately. The aim is always to take better decisions for the firm’s progress. Some mundane factors are political, economic, gregarious and technological (kenned as PEST analysis). Companies additionally study environmental, licit, ethical and demographical factors.
The political factors affecting business are often given an abundance of paramountcy. Several aspects of regime policy can affect business. All firms must follow the law. Managers must find how upcoming legislations can affect their activities.
The political environment can impact business organizations in many ways. It could integrate a jeopardy
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The vicissitude can be economic, licit or gregarious. It could additionally be a commix of these factors.
Increase or decrease in tax could be an example of a political element. Your regime might increase taxes for some companies and lower it for others. The decision will have a direct effect on your businesses. So, you must always stay au courant with such political factors. Regime interventions like shifts in interest rate can have an effect on the ordinant dictation patterns of company.
Certain factors engender Inter-linkages in many ways. Some examples are:
• Political decisions affect the economic environment.
• Political decisions influence the country’s socio-cultural environment.
• Politicians can influence the rate of emergence of incipient technologies.
• Politicians can influence acceptance of incipient technologies.
The political environment is perhaps among the least prognosticable elements in the business environment. A cyclical political environment develops, as democratic regimes have to pursue re-election every few years. This external element of business includes the effects of pressure groups. Pressure groups incline to transmute regime
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This is especially true for the companies which operate internationally.
For example, a truculent takeover could overthrow a regime. This could lead to riots, looting and general disorder in the environment. These disrupt business operations. Sri Lanka was in a homogeneous state during a civil war. Egypt and Syria faced perturbances additionally.
MITIGATION OF JEOPARDY
Buying political risk indemnification is a way to manage political jeopardy. Companies that have international operations use such indemnification to reduce their peril exposure.
There are some indices that give a conception of the peril exposure in certain countries. The index of economic liberation is a good example. It ranks countries predicated on how politics impacts business decisions there.
THE PARAMOUNTCY OF OBSERVING THE POLITICAL ENVIRONMENT
Firms should track their political environment. Transmutation in the political factors can affect business strategy because of the following reasons:
• The stability of a political system can affect the appeal of a particular local market.
• Governments view business organizations as a critical conveyance for convivial
Political and legislative decisions directly impact the work environment in a variety of ways. A candidate for political office can affect the workforce significantly through zoning ordinances, taxes, trade legislation, existence or lack of health, safety, and illegal discrimination regulations. They may also affect public investment (or lack of) in infrastructure, worker’s right to organize unions, levels of unemployment, and existence of unemployment insurance.
From even before the arrival of some of the first pilgrims to the eastern coast of the Americas, to the effects of Chief Justice Marshall’s court decisions, and FDR’s new deal. The American political system has been actively changing since over a century before the United States was founded and will more than likely continue to evolve in our present day and future. The changes of our political system can be due to multiple reasons including fear of establishing a tyrant state, such as Great Britain in the 17th and 18th century, the failure of the Articles of Confederation, the economic state of the Nation and several key historical persona with great ideologies that have molded not only politics but our Nation as a whole.
Technological change, change in economic climate, natural occurrences and such-like are matters that concern the macro-environment of a business. These external, uncontrollable, influences can and will impact hugely on the success or failure of a business. One of the tools that are applicable in considering these factors is PESTLE. Political; Environmental; Social; Technological; Legal and Economic considerations will need to be engaged in order to prepare the business for macro-environmental influences. For this reason, PESTLE will be the most appropriate tool to use to identify and outline the main macro-environmental factors that may affect my business.
Organizational Change "The effectiveness of organizational change is greatest when a firm’s strategy is consistent with environmental conditions and there is internal consistency." (D A Nadler, 2003:204) The only thing that is constant in this world is change and this is widely acknowledged by many in the world, may it be a corporation or a social forum or a governmental body. What comes in this world has to experience change in the light of environmental elements and pressures and influences, internal or external. The study of organizational behavior gives that environmental factors are the political, legal, economic, demographic, technological, social and societal. While these are the external environmental factors that are and cannot be counted among the controllable factors for an organization, they do in fact influence organizational structure, policies and strategies. In turn, the internal environment of the organization, that is very much controlled by the management of the organization and comprises of the top to bottom managerial levels, the staff, the employees, the board of directors, the owners etc. this internal environment, is to a great extent the result of external environmental factors, the change of which results in the direct impact on the internal environment of the organization. As such in lieu of external environmental factors; change agents with in the organization tend to accept the change in their external factors and tries to bring about a compatible change within the internal environment of the organization. The effectiveness of the change that is being brought about with in the organization as a result of the changing external environmental forces is best when, as described by Nadler, the internal facto...
The political element in PESTLE represents how the government can influence the economy by setting rules and regulations which they have to adhere. An example of this is that the national minimum wage increases and now due to a new law in place, companies must provide pensions to eligible employees and every company needs to comply with this and stay within the law. Another factor is the political unrest in certain countries. This can take effect on the hospitality industry which can in turn affect the economy and business environment. The threats of terrorism are still very much alive; an example of this was the terror attacks in London on the 7th of July 2005 where the suicide attacks left more than 700 people injured according to The Guardian (2005) which brought concern for the people and the economy. It leaves a fear in people’s minds and the way the marketers can adapt to this is by promoting UK based hotels and holidays companies, with the increased threat of terrorism and political instability people will be more concern about their safety and decide not to travel abroad.
which is under the conservative government. Economic factors changes include changes such as a recession creating activity at the lower end of the product price range. Also for instance the rate of interest rates rising depressing businesses. causing redundancies and lower spending levels. Social factors change include changing lifestyles and attitudes.
Environmental – External environmental factors are forces or trends that can affect a business whether it is an opportunity, threat, or constraint. They can be divided into three interrelated subcategories of remote, industry, and operating environments. The remote environment includes factors beyond a company’s operating situation such as the economic, social, political, technological, and ecological factors. The industry environment includes factors that have more of a direct influence on a company’s business such as entry barriers, competitor rivalry, the availability of substitutes, and the bargaining power of buyers and suppliers.
Recently, multinational companies have lost their standing in the community and many view businesses as part of the problems plaguing the society. Nonetheless, the reduction in public sector resources and its power has put more pressure
The contemporary business environment is dynamic, ever-changing and increasingly competitive. Their is potential for success, but even more for failure. Businesses are heavily influenced by the changing organisational environment and this intern creates much uncertainty for managers and organisations. With increasing uncertainty in the external environment, the more important it is that managers engage in continual planning. (Robbins 2012 p. 32) Businesses must be flexible and evolve in accordance with their external environment.
This paper will discuss the political frame. The political frame views companies as jungles and focuses on the powerful members in an organization who negotiate and influence others. The political frame also looks at the dynamics of alliances and opponents and how they interact.1
In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization's supply and demand levels and its costs (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). The "radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization" (Tsiakkiros, 2002). A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry. A PEST analysis is one of them that is merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000).
Macro Environment consists of Political (P), Economical (E), Social (S) and Technological (T) factors that affect the Company. Continuous monitoring of these variables is an important marketing function. As Corporations today, Ecover is also sensitive to Macro Environmental changes. Some of the PEST factors that affected Ecover are discussed below.
The political environment can affect organizations. Political components influence buyer certainty and purchaser and business spending. Stability of political environment is essential for organizations
Environmental factors cater for the protection of the environment. A business must carefully be able to look at its surroundings to see for benefits and ensure that its daily production does not interfere with society.
Most of the time Legal ingredients are separated from the political ingredients mostly because of the growing legal influences external in the national political system, such as European and regional legislation (Strategy Survival Guide).