BSHM 4-4 BSHM 151

CHARACTERIZING
THE EXTERNAL
ENVIRONMENT
GROUP 2 Janine Kristine Maricel Eloisa Jovel
COMPONENTS:
1) Strategic Fit and Strategic Intent
2) Environment Characteristics
3) Environment Dimensions
4) Environment Types 2
 Introduction

EXTERNAL ENVIRONMENT
Firms manage both external and internal conditions, with the
outer climate affecting people, firms, frameworks, and
organizations. Changes from this climate arise from the
exuded powers, which can introduce potential risks or open
doors. Organizations that monitor and evaluate these changes
have a more formalized approach to climate filtering,
ensuring a balanced approach to managing external and
internal conditions.

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Background

Overview

The internal environment of a firm is influenced by its internal climate, which includes three parts:
human resource, organizational functional, and organizational level. The useful part includes operations,
sales and marketing, human resource, materials management, and administration, while the authoritative
level pertains to products and administrations, objectives, and the employee-organization cycle.
Organizations should adapt to the changing environment by aligning their internal assets with potential
opportunities and addressing potential threats. This process is known as SWOT analysis, which identifies
strengths, weaknesses, opportunities, and threats within the firm's internal climate. SWOT analysis
provides a comprehensive view of the company's current situation in a given market.

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Strategic Fit and Strategic Intent

The SWOT analysis is a tool developed by Albert

Humphrey from Stanford University to help
businesses understand their position in a market,
identify opportunities, and mitigate risks. It provides a
framework for assessing an organization's strengths,
weaknesses, and opportunities, ensuring they can
effectively navigate potential opportunities and risks.

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 Strategic Fit and Strategic Intent

Hamel and Prahalad (1989) proposed "Strategic

intent" as a strategy for organizations to gain a
competitive advantage by utilizing key assets and
capabilities to identify opportunities and threats. This
approach helps companies identify valuable
opportunities and risks early, enabling them to acquire
and develop necessary skills to address these
opportunities and risks, ultimately driving the
company to investigate and innovate.

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ENVIRONMENTAL VULNERABILITY

- refers to the difficulty of predicting future events and

identifying potential risks. Higher vulnerability increases the
difficulty in predicting events. The company's current
situation is described as hostile, violent, and dynamic.
Ecological aggression refers to problems in general or large-
scale climates, while market aggression refers to problems
at the task and industry levels. Climate disturbance refers to
the extent of change in the company's outer climate classes.

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 Environmental Dimension
is crucial in understanding the fragility of ecological and
biophysical systems, which can suffer damage and
deterioration under hazardous conditions. However, it is often
overlooked due to socioeconomic factors and lack of awareness
on causes of environmental degradation. Fresh water
ecosystems, such as rivers, lakes, and wetlands, are the most
altered and threatened globally. Dams and reservoirs disrupt
essential characteristics, affecting not only ecosystems and
species but also humans. The loss of floodplain inundation
patterns affects human communities due to changed run-off
patterns and settlements on "former" floodplains.

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ENVIRONMENT TYPES
The article categorizes the environment into geographical and manmade subsets, which are described in detail.

Geographical environment, a terrestrial

creation of complex natural and environmental
conditions, reflects the interaction between
nature and human society. It encompasses
climatology, geology, and biogeography, and
includes the earth's surface, rivers, mountains,
deserts, land, water, oceans, and volcanoes.

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ENVIRONMENT TYPES
The article categorizes the environment into geographical and manmade subsets, which are described in detail.

Man-Made Environment
Man creates his own environmental
conditions, known as a man-made or human-
made environment, to adapt to his
geographical surroundings, also known as a
social environment, with two types.

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ENVIRONMENT TYPES
The article categorizes the environment into geographical and manmade subsets, which are described in detail.

Man-Made Environment
The inner environment, also known as the'social heritage', is the social environment that
endures as long as society cherishes it and has a profound impact on human lives. It is
dependent on human social influence.
The outer environment, on the other hand, is the physical environment created by man
through evolving technology and science, including city infrastructures, houses, social
amenities, transport, and communication. The outer environment changes more rapidly than
the inner one due to human influence.

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BSHM 4-4 BSHM 151

UNDERSTANDING THE
MACRO
ENVIRONMENT
GROUP 2 Janine Kristine Maricel Eloisa Jovel
COMPONENTS:
1) The Political/ Legal Environment
2) The Economic Environment
3) The Sociocultural Environment
4) The Technological Environment
5) The Ecological Environment 14
 The Political/Legal Environment
Political and administrative factors significantly influence
how businesses operate and grow in local and global
business sectors. Western legal frameworks have enabled
companies to diversify for global growth. HR, nature,
innovation, copyright, patent, and market factors impact
firms. Travel industry organizations' HR and natural
perspectives are crucial from local and global perspectives.
Legal issues related to HR from diverse ethnic backgrounds
and orientation-related issues should be considered from a
representative relations perspective.

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 The Key Variables/Issues to Track and Analyze in the General Environment
Political/Legal Policies related to corporate and personal taxation
• Change in government
• Change in government
• Terrorism
• Terrorism
• Wars
• Wars
• New regulations impacting businesses, including
• New regulations impacting businesses, including minimum
minimum wage, manufacturing and consumption of
wage, manufacturing and consumption of indigenous products,
indigenous products, and so on.
and so on.
• Policies related to protectionism.
• Policies related to protectionism.
• International trade-related policies
• International trade-related policies
• Health-related policies
• Health-related policies
• Labor law and hiring workforce locally versus from
• Labor law and hiring workforce locally versus from abroad
abroad
• Policies related to the ecology including global warming,
• Policies related to the ecology including global
greenhouse gas emissions, and so on
warming, greenhouse gas emissions, and so on
GROUP 2 • Policies related to corporate and personal taxation
 The Economic Environment
An economic environment refers to the economic
factors that influence a company's profit and
performance, varying depending on the business
type. For instance, weather can impact
agricultural businesses, while the rise of the
Internet may impact newspaper businesses due to
competition. The economic environment includes
macroeconomic and microeconomic factors.

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• Unemployment rates: A country's employment rate can have an effect on the economy. A low
rate of unemployment generally indicates that the economy is healthier.
• Inflation: Inflation describes an increase in the cost of goods in an economy that occurs over
time. Rapid inflation is generally seen as a sign of economic instability, while gradual
inflation is a normal economic factor.
• Interest rates: Interest rates refer to the amount of return that money invested in a country's
financial system generates. High-interest rates indicate that the country's currency has a
higher value.
• GDP growth: GDP, or gross domestic product, is the overall value of the goods and services
that a country produces. Economists usually calculate this annually as a way of measuring the
health of the general economy in a country.
• Taxes: Companies are liable for various taxes and charges that the government sets. Changes to the rates
companies pay can have an effect on the economy.
• Exchange rates: It's a normal factor of the economy that exchange rates between different currencies fluctuate over
time. A rapid change in the exchange rate can indicate a weak economy.
• Customers' discretionary income: Societal changes can affect the amount of extra income that customers have
available after paying expenses such as rent and utilities. This can have an effect on the economy, which can
become weaker if consumers have less money to spend.
• Retail sales: Retail sales indicate how much the population of a country is spending as a whole and is an indicator
of an economy's health. Business traders can watch spending reports to determine whether retail sales have
dropped, which could show that the economy is in trouble.
• International trade: The level of international trade that a country is doing can also be a clue as to the state of the
economy. Countries that export more products than they import can raise the price of their goods as there is a
strong demand for them, indicating a healthy economy.
• Environmental factors: Environmental factors, such as natural disasters, can also have an impact on the economy.
For example, spending in certain industries might decrease after a natural disaster, such as an earthquake, while
other industries might experience an increase in sales.
The Sociocultural Environment
The sociocultural environment significantly
influences businesses by shaping attitudes,
behaviors, and values, which are closely linked
to population, lifestyle, culture, tastes, customs,
and traditions. This complex web, inherited
across generations, requires thorough analysis
and strategic alignment to ensure businesses
are well-positioned to thrive in this evolving
landscape.

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The Sociocultural Environment
Aging Population
The global population is aging
rapidly─as fertility rates decline
worldwide, those in the 65 years
and older age bracket are
steadily increasing in numbers.
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DEMOGRAPHIC CHANGES
Death rates
Immigration Rate Medical provision significantly
Immigration rate is another factor
influenced population growth and
that can affect population growth.
economic development. In the 19th
When people move into a region, i
and early 20th centuries, rapid
t can increase the population size,
improvements in treatments led to a
while emigration can decrease it
decrease in death rates and an
increase in life expectancy due to
improved treatments.
The Sociocultural Environment
DEMOGRAPHIC CHANGES

Education Gender related issues

Birth rate
involves teaching, learning skills, and Gender issues can be deeply personal
is the number of live births per 1000
knowledge, influencing lifestyles, and trigger memories of past or current
inhabitants per year, determined by experiences. Addressing identity issues
thoughts, and work practices. State-
population fertility and age structure. requires careful consideration of
wise, education levels vary, but
Age-specific birth rates are sensitivity and responsibility. Engaging
generally increase in many countries.
calculated separately by age for discussions with youth groups requires
Population education and literacy
women at childbearing ages. careful consideration of the audience
indicate the quality of a potential
and the appropriate handling of 'who' in
workforce.
the room.

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The Sociocultural Environment
PSYCHOGRAPHIC CHANGES

"Baby boomer" refers to a member of the generation born
between the end of World War II and the mid-1960s.
Because of their large numbers and the relative prosperity
of the U.S. economy during their working careers, baby
boomers as a group remain economically and politically
influential.
But as more and more baby boomers reach retirement age,
many are facing serious financial challenges.
Generation X includes those born between 1965 and
1981, during the reconstruction of Europe after the war.
Their life has not been easy, since, after a period of
upheaval, finding a job was a great challenge. To work
and produce was their philosophy of life, leaving no
room for idealism. Individualism, ambition and an
addiction to work — or being a workaholic — are the
values with which they grew up

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The Sociocultural Environment
CULTURAL CHANGES

The term "cultural change" is used by sociologists and in

public policy to denote the way society is changed. The
society takes on new cultural traits, behavior patterns, and
social norms, and creates new social structures as a result.
This level of societal change occurs from contact with
another society (for example, through war or mass
migration), invention and diffusion of innovations
(automobiles or a smart phone in every pocket?), and
discovery.
Multiculturalism refers to the social and cultural
diversity among a population, encompassing racial,
ethnic, religious, and other characteristics. It is a
form of political integration that acknowledges
minority groups' rights and needs within the
mainstream, with practical adoption varying across
nations.

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The Technological Environment
Technological environment refers to the
changes in the output, production
methods, use of equipment and quality
of the product. It includes force related
to scientific innovations and
improvements in products as well as
production technology.

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The Ecological Environment

Ecology is a scientific field that focuses

on the relationship between living
things and their environment, aiming to
minimize environmental issues and
ensure the sustainability of life by
examining both positive and negative
effects.

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THANK YOU
FOR
LISTENING!