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STR 581 WEEK 2 DQ 1

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STR 581 WEEK 2 DQ 1
Describe the external factors that influence a firm’s choice of direction and action. Which
categories of these interrelated factors do you think are most critical to an organization’s
success?
A firm’s external environment consists of three interrelated sets of
factors that play a principal role in determining the opportunities, threats, and constraints
that the firm faces. These factors can be subdivided into three interrelated categories such
as (1) The factors in remote environment, (2) factors in industrial environment, and (3)
factors in the operating environment. The remote environment comprises factors
originating beyond, and usually irrespective of, any single firm’s operating situation—
economic, social, political, technological, and ecological factors. Factors that more directly
influence a firm’s prospects originate in the environment of its industry, including entry
barriers, competitor rivalry, the availability of substitutes, and the bargaining power of
buyers and suppliers. The operating environment comprises factors that influence a firm’s
immediate competitive situation—competitive position, customer profiles, suppliers,
creditors, and the labor market. These three sets of factors provide many of the challenges
that a particular firm faces in its attempts to attract or acquire needed resources and to
profitably market its goods and services. I think the most critical factor is the remote
environment because it originates beyond, and usually irrespective of, any single firm’s
operating situation.

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