For the following question illustrate your answers with indu

For the following question, illustrate your answers with industry and company examples. You may wish to draw from the popular business press such as the WSJ, etc.

Describe the segments of the general (remote) environment, and discuss with examples how environmental trends may affect some industries for the better and others for the worse.

Solution

Taking the example of PETROLEUM INDUSTRY, the industry is also, commonly known as oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transporting and making of PETROLEUM products.

Now, let us briefly understand the segments of general environment and the way in which they affects several Businesses in the economy.

Their are 6 elements of general environment abbreviated as PESTEL Analysis, in particular PESTEL reflects the name of the six segment of the general Environment ; 1) Political 2) Economic 3) Social 4) Technological 5) Environment 6) Legal.

It is also commonly known as six segment analysis.

The six segment analysis is a framework to analyze the general environment of a firm. The framework is frequently used in the analysis of competitive statergy. It can help managers identify potential opportunities and theats. In contrast to Michael Porter\'s five force analysis, which focuses on the competitiveness of a specific industry. Six segment Target on broader macro-environmental trends. Such trends could potentially affect the profitability of the industry as a whole and influence the sustainability of the competitive strategies of a company.

By exampling PESTEL, some firms will gain valuable advantages and some will not.

The General advantages, regardless of industry, of PESTEL are:

1) cost effective

2) providing a deeper understanding of business

3) alertness to threats

4) Enables company to assess implications and entering new markets both globally and nationally

5) Aids and encourages the development of startegic thinking within your organization

Disadvantages os PESTEL are:

1) user can over simplify the information that is used for marketing decisions.

2) The process has to be conducted regulary to be effective and often involves investments

3) user\'s access to quality external information is often restricted because of the cost and time needed to collect it.

Coming back to the example of PETROLEUM INDUSTRY, let us talk of a particular company i.e, Indian Oil corporation limited of the industry, broadly all the pros and cons of the PESTEL will stretch to whole of the industry. Their are several restrictions led on the oil companies due to the Harman they cause to environment, they are also expected by the government to invest so in the physical well being of it\'s surroundings, that involves a lot of investment in analysis and implemention, which is not the case in Printing industry or education industry.

This is how elements of general environment affects businesses all together.