Internal and External Business Environments Research Paper

Internal and External Business Environments - Research Paper Example Answer of Question 1 The main five segments of the of the general business environment that tend to have significant effect on an industry and all the companies belonging to an industry (irrespective of the size and revenue) happens to be macro environmental forces in the form of political, economic, social, technological, legal and environmental or better known as PESTLE. Although it is needless to say that all the factors are of great significance but as per the requirement of the study economic and social factors have been chosen as the two most significant forces to reckon with. The main reason for such choice is the fact that these two factors only affects the businesses & the industry but also have a close interrelation with the other forces and corresponding affect on the businesses and the industry (Porter, 1980). Economic factors The retail industry in U.S. happens to be second largest industry in the country. The industry is responsible for 12% of the overall employment of the country. Majority of the retail industry is dominated by the organized retail chains. The country has the presence of some f the major global retailers in the form of Wal-Mart (the largest in the world) followed by Kroger, Target, Best Buy, the Home Depot, etc. However, like many other industries the retail industry is also looking to combat the wrath of the 2008 economic downturns. The economic downturn coupled the high level of competition has meant that the growth rate of the industry is going to be slow as the economy is still going through a stage of downturn. The economic downturn has also increased the unemployment rate and reduced the disposable income which most certainly will continue be a reason for the slow growth rate. It is needless to say that Wal-Mart has been affected by the economic conditions just like any other retailers. However, there have been certain opportunities that have been available to the industry such as the free trade zone. Also in the year 2009, the retailer awarded benefits worth $2 billion that included bonuses, contributions, profit sharing and attractive merchandise discounts. Here it is to be noted that this was a move that was respected by the employees and the government also most of the retailers were looking to cut down on costs and employee benefits during that period of time. But from the perspective of growth it is to be said that the company needs to focus a lot more on the operations in the emerging economies. Simply because, the economy of Germany, UK, USA is matured in nature and provide very little opportunity for growth; On the contrary the emerging economies like India and china have a relatively un-taped market and hence would provide would provide a lot more opportunity for growth than some of the matured economies. Social Factors Off late the retail industry in the country has witnessed a paradigm of shift in the domain of consumer behavior. This actually has been an affect multiple factors. Due to th e environmental concern regarding global warming the customers have become a lot more environmental conscious and like to consume green products. Consumers have also become a lot of health conscious too. Also, as mentioned above the due to the economic downturn there has been a rise in the unemployment rate and dip in the disposable income of the people. Unlike earlier due the hectic and complex schedules and high fuel costs the people prefer to