In chapter 3 , I learn about " Evaluating a Company's External Environment " topic . In summary, this topic is about thinking strategic about a firm in external environment .
Have two concept in this chapter which are macro-environment and PESTEL analysis . Macro - environment means encompasses the broad environmental context in which a company's industry is situated. While , PESTEL analysis focuses on the six principal components of strategic significance in the macro - environment .
- Political factors and Economic factors in the firms general environments ( local , country , regional and worldwide ) .
- Sociocultural forces , Technological factors and Environmental factors ( concerning the natural environment )
- Legal / Regulatory conditions
These components has the potential to affect the firm's more immediate industry and competitive environment .
Others subtopic is about Immediate Industry and Competitive Environment . Competitive pressure on companies within an industry come from five sources . These include :
- competition from rival sellers
- competition from potential new entrants to the industry
- competition from producers of substitute products
- supplier bargaining power
- customer bargaining power
In brief , using these five sources have three steps involve .
- steps 1 : identify different parties involved , along with the specific factors that bring about competitive pressure
- steps 2 : evaluate how strong the pressures stemming from each of the five sources either strong , moderate or weak .
- steps 3 : determine whether the strength of the five forces , overall , is conducive to earning attractive profits in the industry .
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