THE EXTERNAL BUSINESS ENVIRONMENT

BACCOUCH INES - INGTA1E

As a business has no control over the various elements that make up its Macro environment In this
video Alanis Business Academy talks about the external business environment, identify opportunities
and threats within the external business environment, and classify changes or trends according to
one of six areas in the external business environment.

The economic, social, political-legal, technological, competitive and the global environment each of
these six environments has the potential to affect the business in some way.

The economic environment: The economic environment is the sum total of the economic conditions
and the nature of the economy in which the business has to operate and compete. This will include
the nature of the economy, the direction in which it is progressing, the availability of resources
(climate, country, capital, labor...)

The social environment: The social environment comprises of many dynamic factors such as social
traditions, cultural influences, values and beliefs prevailing in the society, social stratification, etc.
Companies, especially international companies always study the cultural and social environment of a
country before entering the market.

The political-legal environment: The political-legal environment is a combination of a lot of factors

such as the current political party in power, the degree of politicization of trade and industry, the
efficiency of the current government, government policies, current legal framework, the public
attitude towards the economy, etc.

The Technological environment: Technological change generally refers to the advancements in the
production and manufacturing process of different goods and services. Therefore, it is when we
improve the way products are made or services are delivered. In these times, there is always a new
invention or better technology around the corner.

The competitive environment: Where a business operates in a market where there are other
businesses producing the same or similar products and services. in order to make successful
decisions a business require information. Internal information about the business situation is easy to
find and to use in making a decision. External information about the market in which the business is
competing is harder to get and more difficult to interpret and to use in order to make reliable
decisions.

The global environment: includes The external environmental conditions that affect a business are
generally beyond the control of management and change constantly. To compete successfully,
business owners and managers must continuously study the environment and adapt their businesses
accordingly.