Organizational Business Behavior

p ORGANISATIONAL BUSINESS BEHAVIOUR

2007

Strategic analysis is basically concerned with the structuring of the relationship

between a business and its environment . The environment in which business operates

has a greater influence on their successes or failures . There is a strong linkage between the changing environment , the strategicresponse of the business to such changes and the performance . It is therefore important to understand the forces of external environment the way they influence this linkage . The external environment which is dynamic and changing holds both opportunities and threats for the

organisations . The organisations while attempting at strategic realignments , try to capture these opportunities and avoid the emerging threats . At the same time the changes in the environment affect the attractiveness or risk levels of various

investments of the organizations or the investors

4 .2 BROAD DIMENSIONS OF EXTERNAL ENVIRONMENT

The macro environment in which all organizations operate broadly consist of the economic environment , the political and legal environment , the socio cultural aspects and the environment related issues like pollution , sustainability etc . The technological temper and its progress has been the key driver behind the major changes witnessed in the external environment making it increasingly complex

These factors often overlap and the developments in one area may influence aevel opmenls in other . For examzletiae

o\y a cteasefhe cornpeX 'on between private and public firms . This forced the indian government to revisit its economic policies . Under its new liberalization policy and economic reforms of 1991 . regulations like MRTP , which restricted the size of the business and therefore inhibited their efficiency and competitive levels , were removed with a positive impact on the indigenous industries . However , the delay in addressing to the policies like Indian companies act or Exim policies , organisations both from domestic and abroad still find the Indian business environment not so conducive for business , The current political developments are sureto have more uncertainties in the minds of business people regarding the future policy direction in certain sectors . The social considerations in the context of a developing country like India also plays a critical role in deciding the broad dynamics of the business environment . The clash of ideologies between preserving the Indian ethos and culture and giving a freedom of choice to people often create problems and confusion for business

43 PESTEL FRAMEWORK

Careful analysis of the above factors will help in identifying major trends for different industries . Exhibit-i shows the PESTEL framework which is most popularly used for such analysis

The external forces can be classified into six broad categories Political , Economic , Social , Technological , Environmental and Legal Forces . Changes in these external forces affect the changes in consumer demand for both industrial and consumer products and services . These external forces affect the types of products produced , tile nature of positioning them and market segmentation strategies , the

types of services offered , and choice of business . Therefore , it becomes important for the organizations to identify and evaluate external opportunities and threats so as to develop a clear mission , designing strategies to achieve long-term 6bje ives...