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External Environment Analysis - PESTEL

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Running head: EXTERNAL ENVIRONMENT ANALYSIS 1
External Environment Analysis
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EXTERNAL ENVIRONMENT ANALYSIS 2
The External Environment
Any business is largely influenced by the environment it operates in i.e. internal or
external environments. While businesses have complete control over its internal environment
(skills and competencies), it has no direct influence over its external environment. The external
environment can be divided into the Broad and Task environments. Despite a company’s
inability to fully control both external environments, it has the ability to protect itself against
threats and take advantage of any opportunity that presents itself. Aldai Inc. is therefore placed in
a prime position to analyze its environment and come up with a strategic plan that maximizes its
unique skills and competencies thus taking advantage of opportunities and limiting threats.
The analysis of the external environment is essential as it not only helps with improving
the business strategy but it also helps fight competition. This analysis helps an organization
identify how to gain competitive advantage over its competition.
A. The Broad Environment
The broad environment is a part of the external environment that Aldali Inc. has no
influence over despite its significant influence on the company. The Broad environment can be
summarized by the PESTEL analogy i.e. Political, Economic, Social, Technological,
Environmental, and Legal factors. As a herbal cosmetics producer, Aldali Inc. has a chance to
analyze how each of these factors influence its production, service, distribution, marketing and
pricing. The PESTEL analysis should only focus on the areas that are within the sphere of
interest of Aldali Inc. for instance, the company is currently operating in the US thus its legal
parameters are only controlled by regulators such as the US FDA. It has no operations within the
financial markets thus making this economic factor irrelevant to its strategy.

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EXTERNAL ENVIRONMENT ANALYSIS 3
i. Political Forces
The political factors, local and international, have an influence on how a company works.
However, in the context in which Aldali Inc. presently exists and operates, the political forces
abroad are immaterial. Political factors refer to political ideologies, stability, government support
and goodwill, and fiscal policies. These factors are important to any business as they set the stage
from which the market system is formed, prices move, and new business are established.
The US, where Aldali Inc. is set up, is a country whose ideologies are centered on wealth
maximization i.e. a capitalist economy. This implies that it embraces a free market system. In this
system, Aldali Inc. has the chance to move its factors of production to anywhere it deems fit and
appropriate for wealth maximization. The free market also implies that the government has no
hand in the pricing strategy of Aldali Inc. Instead, it is the forces of demand and supply that
influences the pricing strategy of the company.
ii. Economic Forces
These are the factors that affect the economic growth, interest rates, and the availability
of credit, inflation rates, foreign exchange rates, and foreign trade balances. The company has
managed to stay sustainable through exploiting some of the economic forces that have been
relevant to it. The fact that it operates within West Central Florida implies that is not faced with
the same economic factors that those companies operating on a national or international scope
are faced with. This is why the company needs to reorganize if it is to make it in the national
level.

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External Environment AnalysisName:Institution:The External Environment Any business is largely influenced by the environment it operates in i.e. internal or external environments. While businesses have complete control over its internal environment (skills and competencies), it has no direct influence over its external environment. The external environment can be divided into the Broad and Task environments. Despite a company's inability to fully control both external environments, it has the ability to protect itself against threats and take advantage of any opportunity that presents itself. Aldai Inc. is therefore placed in a prime position to analyze its environment and come up with a strategic plan that maximizes its unique skills and competencies thus taking advantage of opportunities and limiting threats. The analysis of the external environment is essential as it not only helps with improving the business strategy but it also helps fight competition. This analysis helps an organization identify how to gain competitive advantage over its competition. A. The Broad EnvironmentThe broad environment is a part of the external environment that Aldali Inc. has no influence over despite its significant influence on the company. The Broad environment can be summarized by the PESTEL analogy i.e. Political, Economic, Social, Technological, Environmental, and Legal factors. As a herbal cosmetics producer, Aldali Inc. has a chance to analyze how each of ...
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