BUS 800 Lecture 2: CHAPTER 2
Document Summary
The business environment" of a firm consists of all the external influences that affect its decisions and performance. Environmental influences can be classified by source , that is, political, economic, social, technological, ecological, and legal factors (pestel analysis) Recognizing these forces is important in understanding and predicting how an industry might change and evolve over time. Political ex: licences, standardization, restrictions on usage. Economic ex: the level of economic activity, the rapid take- up of mobile technologies in developing economics. Social ex: health scares, changes in fashion. Important factors in shaping industry conditions: for a firm to make a profit it must create value for customers. In creating value, the firm acquires goods and services from suppliers. Therefore, it must understand its suppliers and manage relationships with them: the ability to generate profitability depends on the intensity of competition among firms that compete for the same value- creating opportunities.
