MGT Notes

Reference: Strategic Management (5e) – Frank T. Rothaermel (Pg 74)

The following series of posts will focus on the Analysis portion of the Analyze-Formulate-Implement framework of Strategic Planning.

Analysis of the external environment is important to leverage opportunities and mitigate threats. The external environment can be of two forms based on the source or proximity of factors:

1. General Environment: Here, an entity has little to no control or influence over the environment. ex. Macroeconomic Factors

2. Task Environment: Here the entity has some influence over the environment. ex. Structure of the industry.

The PESTEL framework (PESTEL stands for Political, Economic, Socio-cultural, Technological, Ecological and Legal) allows us to systematically evaluate the external environment for effective strategic planning. In the upcoming posts, we will take a closer look at how to scan, monitor and evaluate these external factors.