General Environment Analysis

The general environment is composed of dimensions in the broader society that influence an industry and the firms within it.7 We group these dimensions into seven environmental segments:demographic, economic, political/legal, sociocultural, technological, global, and physical. Examples of elements analyzed in each of these segments are shown in Table 2.1. The general environment is composed of dimensions in the broader society that influence an industry and the firms within it.

Table 2.1: The General Environment: Segments and Elements

Demographic segment

• Population size • Age structure • Geographic distribution

• Ethnic mix • Income distribution

Economic segment

• Inflation rates • Interest rates • Trade deficits or surpluses • Budget deficits or surpluses

• Personal savings rate • Business savings rates • Gross domestic product

Political/Legal segment

• Antitrust laws • Taxation laws • Deregulation philosophies

• Labor training laws • Educational philosophies and policies

Sociocultural segment

• Women in the workforce • Workforce diversity • Attitudes about the quality of work life

• Shifts in work and career preferences • Shifts in preferences regarding product and service characteristics

Technological segment

• Product innovations • Applications of knowledge

• Focus of private and government- supported R&D expenditures • New communication technologies

Global segment • Important political events • Critical global markets

• Newly industrialized countries • Different cultural and institutional attributes

Physical environment segment

• Energy consumption • Practices used to develop energy sources • Renewable energy efforts • Minimizing a firm’s environmental footprint

• Availability of water as a resource • Producing environmentally friendly products • Reacting to natural or man-made disasters

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