LESSON 3 Flashcards
The first layer of the environment is the physical or natural environment.
It is composed of the natural elements that are inherent in the earth. It is divided into climate, physical resources and wildlife.
physical environment
The climatic conditions in a particular region in the Philippines where the business will be established must be evaluated.
climate
The availability of raw materials is another major factor that can influence the success or failure of the business venture.
Physical Resources
The wild plants and animals in the Philippines forests are continually abused.
In view of this, the entrepreneur must ensure that his/her business contributes to the preservation and not the destruction of the ecological system of the local community and our country in general.
wildlife
Changes in the physical environment have a direct impact on the societal environment and the effect can be felt later in the industry environment.
THE SOCIETAL ENVIRONMENT
is generally composed of social, political, cultural, economic, legal and technological forces
The societal environment
The critical evaluation and thorough study of the environment where the business operates is technically called.
environmental scanning
There societal environment is composed of different forces, namely:
- Political
- Economic
- Social
- Technological
- Legal
are elements in society resulting from human interactions that can influence the thoughts, behavior, attitude, actions and even beliefs and customs of the people.
Social Forces
are the various elements usually comprising of the political parties, political systems, and other related political groups that substantially influence the political stability of a country.
Political Forces
basically refers to the integrated characteristics of a group of people or ethnic group in a particular society.
include the following:
1. Religion
2. Language
3. Beliefs
4. Customs
5. Education
culture
are factors which are primarily caused by changes or movements in the Philippine economy that have direct or indirect effects on the entrepreneurial venture.
Economic forces
is the amount of interest that the lender (e.g., banks, financial institutions, and financial intermediaries) charges to the borrower for certain amount within a specified period of time.
Interest rate
are the elements and bodies that are directly involved in the legislation and interpretation of laws and ordinance directly affecting the business.
Legal forces
basically refer to the trends and developments in computer and information technology that have impact in business.
Technological forces
refers to the gathering, critical evaluation and utilization of information on events and activities and their relationships with the physical, societal and industry environment.
Environmental scanning
is a tabular framework of the trends and developments in the different forces in the external environment.
PESTLE Analysis
PESTLE stands for
Political, Economic, Sociocultural, Technological, Legal and Ecological Forces.
This is the environment where business conducts its various entrepreneurial activities.
is the internal environment layer where the trends and changes are easily and immediately felt by the business.
industry environment
refers to the system or institution that handles the affairs of a particular country.
Government
refer to individual person or companies that provide required materials, parts, or services to the business.
Suppliers
are the buyers of goods or services produced or rendered by the business.
customers
are the forces existing in the industry environment that produce, sell, or render products or services which are similar to those of business.
competitors
produce and sell similar products or services
Direct competitors
produce and sell substitute products.
indirect competitors
are the workers of the business who are highly responsible for the production of goods or delivery of services to the consumers.
employees
refer to banks, financial institutions and financial intermediaries engaged in the lending of money to the borrower usually for a fee or charge in the form of interest.
creditors
s is used to identify a business’, strengths, weaknesses, opportunities, and threats.
SWOT analysis
include internal capabilities, resources, and all positive situational factors that may help the company serve its customers and achieve its objectives.
Strengths
include internal limitations and negative situational factors that may interfere with the company’s performance.
Weaknesses
are favorable factors or trends in the external environment that the company may be able to exploit to its advantage,
Opportunities
are unfavorable external factors or trends that may present challenges to performance.
threats
The first of the five forces refers to the number of competitors and their ability to undercut a company.
Competition in the Industry
A company’s power is also affected by the force of new entrants into its market.
Potential of New Entrants into an Industry
The next factor in the five forces model addresses how easily suppliers can drive up the cost of inputs.
Power of Suppliers
The ability that customers have to drive prices lower or their level of power is one of the five forces.
Power of Customers
The last of the five forces focuses on substitutes. Substitute goods or services that can be used in place of a company’s products or services pose a threat.
Threat of Substitutes
physical environment is divided into three elements
climate, physical resources, and wildlife
