Analyzing the External Environment of the Firm Chapter 2 1) Because of to minimize or eliminate threats and exploit opportunities, so managers should analyze the external environment 2) This involves a continuous process of environmental scanning and monitoring as well as obtaining competitive intelligence on present and potential rivals. These activities provide valuable inputs for developing forecasts. In addition, many firms use scenario planning to anticipate and respond to volatile and disruptive environmental changes. 3) The general environment consists of factors that can have a dramatic effect on a firm's strategy. Typically, a firm has little ability to predict trends and events in the general environment, and even less ability to control them. We divide the general environment into six segments: demographic, socio-cultural, political/legal, technological, economic, and global.
A. THE DEMOGRAPHIC SEGMENT
Demographics are the most easily understood and quantifiable elements of the general environment. Demographics include elements such as the aging population, rising or declining affluence, changes in ethnic composition, geographic distribution of the population, and income level disparities.
B. THE SOCIOCULTURAL SEGMENT
Socio-cultural forces influence the values, beliefs, and lifestyles of a society. Examples include a higher percentage of women in the workforce, dual-income families, increases in the number of temporary workers, greater concern for healthy diets and physical fitness, greater interest in the environment, and families postponing having children. The section also addresses the increased educational attainment of women in the workplace.
