Organization exist or dissapear according to the resources available in the environment; like in nature, they are subject to selection and if they do not compete and adapt successfuly they can die.
There are six issues to consider when analyzing the broad environment (PESTEL):
- Political (rules, taxes, etc)
- Economic (GDP, inflation, etc)
- Social (demographics, trends, etc)
- Technological (know-how, required equipment, etc)
- Ecological (sustainable development, energy sources, etc)
- Legal (patents, copyrights, etc)
To the broad environment, the organization needs to adapt. To its industry environment, the organization needs to shape (industry attractiveness accounts for 20% of company’s profitability) and finally, the organization needs to deal with its internal environment (its resources and capabilities) which account for an 80% of the company’s profitability.
A good excersice is to locate each of the PESTEL dimensions into a matrix showing: simple vs comples / stable vs dynamic.
