Question

List the five environmental forces that have an impact on an organization as well as its suppliers and customers. provide examples of specific factors that might be examined as part of environmental scanning for each of the five forces.

Answer 1

Five environmental forces are as follows:

1. Political  forces

2. Economic forces

3. Social forces

4. Technological forces

5. Legal forces

Above five forces affect the organization, its customers as well as its suppliers in an economy. Regarding the political forces, the specific factors are political stability, political orientation towards the economy and political willingness to drive the economic growth. These factors strongly affect the different stakeholders in the economy, such as organization, suppliers and customers as their growth and buying tendencies depend upon the political orientation in the economy. If government focuses on promotion of private property rights, then organization grows as well. Regarding the economic forces, it is the economic policy, purchasing power of the customers and economic growth that work as specific factors affecting organization, customers and suppliers. A business friendly economic policy promotes organization and supplier infrastructure is also built. A higher purchasing power of consumers also attracts other firms to join and operate in the economy. Regarding social forces, the specific factors are social and cultural practices, dietary habits and social values that affect the organization and suppliers to adapt and increase the acceptability at the local level. Regarding the technological forces, the specific factors are technological development, innovation culture and state of technology in the economy. These factors cause the presence of technology in the country and affect all the stakeholders. The legal force has specific factors such as regulations, law & order and regulatory framework that controls the economy. A good regulatory system will help the economy to flourish without any economic scam or scandal. Besides, it will provide specific guidelines of operations for all the stakeholders.