The document discusses the business environment and its influence on organizations. It defines key terms like business, objectives, and environmental forces. It explains that the environment provides inputs that organizations process into outputs. Environmental analysis is important for understanding changes, making strategic decisions, and strategic thinking. The environment has multiple components that organizations monitor through environmental scanning. These include the microenvironment of customers, competitors, and suppliers, and the macroenvironment of political, economic, technological and other factors analyzed using PESTLE. Organizations respond strategically to environmental opportunities and threats with different levels of resistance or dynamism. Competitors are also part of analyzing the competitive environment.

1. “Strategic
Management”

2. CHAPTER 1 BUSINESS ENVIRONMENT
TERMS OF PROFIT.
OBJECTIVES OF A BUSINESS
SURVIVAL STABILITY GROWTH EFFICIENCY PROFITABILITY
occupation or profession purchase, sale, manufacture,
processing, and/or marketing of
products and/or services.
BUSINESS
Peter F Drucker
MANAGED BY PEOPLE

3. ENVIRONMENTAL INFLUENCES ON BUSINESS
INPUTS
Human
Physical
Finance
Technology
PROCESSING
Transformation of
inputs to outputs
OUTPUTS
Product/
Services
ENVIRONMENTAL FORCES
PROBLEMS
DIFFERENT INFLUENCES UNCERTAINTY COMPLEXITY

4. WHY ENVIRONMENTAL ANALYSIS?
BASIC GOALS
UNDERSTANDING
CHANGES
PROVIDE INPUTS
FOR STRATEGIC
DECISION MAKING
FACILITATE AND
FOSTER
STRATEGIC THINKING
CHARACTERISTICS OF
BUSINESS ENVIRONMENT
COMPLEX DYNAMIC
MULTI-FACETED FAR REACHING
IMPACT

5. COMPONENTS OF BUSINESS ENVIRONMENT

6. RELATIONSHIP BETWEEN ORGANISATION AND ITS ENVIRONMENT
EXCHANGE
OF
INFORMATION
EXCHANGE
OF
RESOURCES
EXCHANGE
OF
INFLUENCE AND POWER
ENVIRONMENTAL SCANNING
organizations
monitor
identify
opportunities
and
threats
taking
strategic decisions
INFORMATION Gathering Analysing Forecasting

7. MICRO
ENVIRONMENT
Consumer/Customer
Competitors
Organization
Market
Suppliers
Intermediaries

8. MACRO
ENVIRONMENT
Demographic
Economic
Government
Legal
Political
Cultural
Technological
Global

9. THE PESTLE MATRIX
POLITICAL
• Political stability
• Political principles and
ideologies
• Current and future
taxation policy
• Regulatory bodies and
processes
• Government policies
• Government term and
change
• Thrust areas of political
leaders
ECONOMIC
• Economy situation &
trends
• Market and trade cycles
• Specific industry factors
• Customer/end-user
drivers
• Interest and exchange
rates
• Inflation and
unemployment
• Strength of consumer
spending

10. SOCIAL
• Lifestyle trends
• Demographics
• Consumer attitudes and
opinions
• Brand, company,
technology image
• Consumer buying
patterns
• Ethnic/religious factors
• Media views and
perception
TECHNOLOGICAL
• Replacement
technology/ solutions
• Maturity of technology
• Manufacturing maturity
and capacity
• Innovation potential
• Technology access,
licensing, patents
• Intellectual property
rights and copyrights
THE PESTLE MATRIX

11. THE PESTLE MATRIX
LEGAL
• Business and Corporate
Laws
• Employment Law
• Competition Law
• Health & Safety Law
• International Treaty and
Law
• Regional Legislation
ENVIRONMENTAL
• Ecological/environmental
issues
• Environmental hazards
• Environmental legislation
• Energy consumption
• Waste disposal

12. STRATEGIC RESPONSES
TO THE
ENVIRONMENT
LEAST
RESISTANCE
PROCEED
WITH
CAUTION
DYNAMIC
RESPONSE

13. COMPETITIVE
ENVIRONMENT
• Who are the competitors?
• What are their product and services?
• What are their market shares?
• What are their financial positions?
• What gives them cost and price
advantage?
• What are they likely to do next?
• Who are the potential competitors?