Why should we decipher the external environment ? Part I

Author : Ami Fitri Utami, SE., MSM

The purpose of strategic management is to help managers win the competition in industry or its market. However, often managers tend to define competition only as a rivalry between his company and direct competitors. This will be concerned because a firm’s current external environment is not only challenging but also complex, its’ also not only contained of a singular homogenous parties but a multileveled and fragmented parties.
Discussed more about the diversity of external business environment, Hitt et al (2015) claimed that firm’s external parties not as simple as the availability of competitors and its’ industrial conditions but also the condition of the current general environment. The general environment shows how the uncontrollable parts of the environment will influence the business practice, in this vein “uncontrollable” means the business player will hard to control such aspects in that environment level which includes economic, demographic and the nature conditions. While the influence of this level of environment seems implausible, Rekettye & Rekettye Jr in 2013 postulated six prominent changes in the general business environment which may influence the business practices widely. In their research, it was claimed that the nature, economic, demographic and technological changes drives various changes both to the consumer and firm’s behaviour.

Refference :

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2015). Strategic management: competitiveness and globalization. Cengage Learning

Rekettye, G., & Rekettye Jr, G. (2013). Global trends and their influence on future business performance. International Journal of Business Performance Management, 14(1), 95-110.