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Stategic Management

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Strategic Management

Environment of any organization can be considered as “the aggregate of all conditions, events and influences that surround and affect it”. Environment is complex as it consists of a lot of factors arising from different sources. The nature of environment is one of dynamic as it keeps changing continuously. The impact of environment on organization is deep and far reaching.
Environmental Factors
Environmental factors can be classified as: i) Macro environmental factors and ii) Factors, which are specific to the given business i.e., task environment.
Concept of Environment
The external environment provides opportunities and threats to organization whereas the internal environment holds the key to strengths and weaknesses. 1) An opportunity is a favorable situation, which enables an organization to strengthen its present position. For example, access to new markets is an opportunity arising from WTO. 2) A threat is an unfavorable situation which results in risk and damage to an organization, For example, the entry of MNCs into domestic market due to WTO, poses stiff competition to existing players 3) Strength is an inherent capacity, which can be used for developing strategic advantage. Fro example, superior R & D facilities used for developing new enzymes and molecules is a strength for companies like Ranbaxy and Biocon. 4) A weakness is an inherent constraint, which creates disadvantage for firms. For instance, supply of goods to one single buyer (government) is a risky one when there is change of government.
Macro Environmental Factors
Demographic Environment
Demographic factors such as population growth, age composition, family size, family life cycle, income level and religion have significant implications for business. The demographic environment differs from country to country,

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