Industry environment - everything that is not a part of the industry, but has an impact on it. An industry environment is the sum of factors and processes that function in the company surroundings. These factors affect the business of a company because of the constant interactions between them. The environment is an external force towards the enterprise, while the company has no influence on some of the factors.
The company's environment can generate opportunities and threats for it, which is why it must be taken into account when building the company's strategy and setting its goals. Generally, the factors that make up the industry environment are constantly changing, so it is necessary for the company to monitor them and act accordingly.
The internal environment includes all the endogenous aspects of the company that are significantly influenced and controlled by the organization. The internal environment research needs to address all asset-related questions, overcome all problems related to resource management. It is the first step in creating a marketing strategy. All these elements create a value chain. The analysis of the value chain is predicated on the correlation between the assets of the company and its competitive positioning and explores how these components contribute to profitability.
The macro-environment relates to the factors in the larger society that impact the micro-environment. It contains aspects like demographics, economics, natural forces, engineering, politics, and society.
Political and legal environment
The political environment consists of the day-to-day processes of a country, territory, and locality, government agencies with a legal identity to serve the community and activist groups that affect and regulate the actions of different organizations and individuals in society. Government officials formulate guidelines on cleanliness. Government agencies closely monitor ethical business practices.
The economic environment is determined by the general condition of the economy. The most important indicators informing about the state of this area are:
- rate of return on capital,
- growth rate,
- interest rate,
- currency exchange rates,
- consumption rate,
- unemployment rate,
- country's debt.
The sociological environment consists of a cultural environment (traditions, ethical norms, customs, patterns, views, interpersonal relations), sociological (social structure, level of entrepreneurship, variety of social roles), demographic environment (structures diversified by sex, age, workforce, mobility) and educational (level of education, level of development and specialization), which are constantly changing.
The technological environment brings together knowledge and information about technology and technologies for processing natural goods into useful goods (manufacturing goods and services). The technological sphere affects the level of technological advancement of enterprises (technical progress), a number of functional features and useful products and their quality.
Microenvironment consists of the factors that directly affect the enterprise.
Suppliers are companies as well as individuals who provide resources (raw materials, goods, capital, human resources, information) needed by the company and its competitors.
Customer is anyone who pays for the purchase of goods or services produced by the organization. These are entities purchasing goods for their own consumption or further distribution and acquiring rights to its ownership. The customer can be a person as well as a company.
Competitors are other organizations that compete with a given organization for resources, most often for clients' money and a high-quality workforce. Most often, the resources that organizations compete for are customer money but enterprises can also compete for an educated workforce, rare raw materials or patents.
Every entity that has an impact or influence on the capacity of the organization to achieve its objectives, for example, share-holders.
- Lall S., Mengistae T. (2005), pg. 4-6
- Caescu S. C., Popescu A., Plesteanu M. G. (2011), pg. 732
- Craig T., Campbell D. (2012), pg. 121-143
- Kumar V. (2018), pg. 10-11
- Caescu S. C., Popescu A., Plesteanu M. G. (2011), Internal Enviroment Analisys Techniques, RePEc
- Craig T., Campbell D. (2012), Organisations and the Business Environment, Routledge
- Kapoor N. (2014), Principles of Marketing, PHI Learning
- Kumar V. (2018), Business Environment, Svtuition
- Lall S., Mengistae T. (2005), Business Environment, Clustering, and Industry Location: Evidence from Indian Cities, World Bank Publications
- Ogidefa I. (2015), Strategic Analysis of Internal Environment of a Business Organisation, Lulu Press
Author: Agnieszka Krztoń