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The external environment "consists of those relevant physical and social factors outside the boundaries of the organization or specific decision unit that are taken directly into consideration." [1] The external environment can be further broken into micro and macro environments.
In business analysis, PEST analysis (political, economic, social and technological) is a framework of external macro-environmental factors used in strategic management and market research. PEST analysis was developed in 1967 by Francis Aguilar as an environmental scanning framework for businesses to understand the external conditions and ...
This environmental framework also gives information about location issues. A company is thereby able to determine its location sites. Furthermore, many other strategic decisions are based on this analysis. One may also apply the BBW model. [2] [3] In addition, the factors are analyzed to evaluate external business developments. [4]
Context analysis is a method to analyze the environment in which a business operates. Environmental scanning mainly focuses on the macro environment of a business. But context analysis considers the entire environment of a business, its internal and external environment. This is an important aspect of business planning.
The situation analysis looks at both the macro-environmental factors that affect many firms within the environment and the micro-environmental factors that specifically affect the firm. The purpose of the situation analysis is to indicate to a company about the organizational and product position, as well as the overall survival of the business ...
The first two elements relate to factors internal to the company (i.e., the internal environment), while the latter two relate to factors external to the company (i.e., the external environment). [8] These elements are considered throughout the strategic planning process.
Physical environment—growth of location in which organisation is situated, access to location; Legislation; Local, national, or international events; A number of authors advocate assessing external factors before internal factors. [5] [10] [11]
An environmental factor, ecological factor or eco factor is any factor, abiotic or biotic, that influences living organisms. [1] Abiotic factors include ambient temperature, amount of sunlight, air, soil, water and pH of the water soil in which an organism lives.