Organisations in all sectors are susceptible to broader economic forces, The state of the economy affects organisations in a number of ways, including:
Environmental issues have a growing impact on what customers want and how organisations behave. You may need to consider a number of factors:
Government policy and spending decisions have a major impact on most organisations in the public and private sectors. Some organisations have performance targets and measurements imposed directly on them by central or local government.
Governments regulate what consumers of many products and services can buy, and where, how and for how much (because of indirect taxes), all of which affect customers' perceptions of value. The laws and regulatory frameworks which result from political processes have a huge impact on most organisations.
In wider terms, the rise and fall of democracies or dictatorships and government policy in countries and regions across the world affect consumers: how many of them there are, what they want and are able to buy and what can be sold to or in other countries.
Such political change also affects relationships with public and non-profit service organisations in other countries.
The STEEP framework provides a useful structure for the discussion of the external environment. As you may well have noted, however, the distinction between the factors is rather artificial. Many political decisions have an economic impact, and almost all economic factors have a political dimension. Social behaviour is influenced by new technology, and in turn influences political decisions.
Environmental issues have strong social, political and economic elements, and the implementation of environmentally acceptable solutions often depends on the adoption of new technology.
It is important not to worry too much about how to classify external factors, but to be aware of how they may affect your organisation, your role and what customers value.
Most organisations attempt to keep abreast of and sometimes to forecast changes in their external environment, and we consider this next.
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