-Managers can mitigate threats.
Importance of Analyzing -Managers can leverage opportunities.
the External Environment -Gain understanding of potential impacts.
-Understand the source / proximity of factors.
-Groups environmental factors
into six segments:
--Political
--Economic
--Sociocultural
The PESTEL Model --Technological
--Ecological
--Legal
These factors can create:
--Opportunities
--Threats
-Processes & actions of government bodies
-Firms can shape this factor through:
--Lobbying
--Public Relations
--Contributions
Political Factors --Litigation
Example: Tesla
-Has a build-to-order sales model
-Cuts out dealers
-Dealers are lobbying for new legislation
Society's cultures, norms, and values
-Are constantly in flux
-Differ across groups
Sociocultural Factors Demographic trends
-Present opportunities and threats
-Population characteristics related to age, gender,
family size, ethnicity, sexual orientation, religion, and
socioeconomic class
Application of knowledge
-To create new processes
-To create new products
Innovations in process technology:
Technological Factors -Lean manufacturing, Six Sigma quality, and
biotechnology
Innovations in product technology:
-Smartphones, computer tablets, and high-
performing electric cars such as the Tesla Model S
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