ABSTRACT
The macro environment What are the most important environmental factors to take into account? Classical strategic analysis (Parthasarthy, 2006) posits that political, economic, social, technology-related, environmental and legal forces need to be assessed. Such assessments, however, need to be made in light of what exactly does affect a firm’s “center of gravity.” In highly regulated industries or government-driven sectors, political and legal forces will have a crucial influence. In the retail sector, for durables and non-durables, economic and social issues are likely to be the most important, as the business outlook and consumer tastes have a huge bearing on which products and services are absorbed by the market. In manufacturing and operationallyminded sectors, technology-related factors will have a huge influence on the advantages the firm may expect to derive from such changes. Environmental factors are increasingly important for all industries. Logistical services providers and extractive industries are especially sensitive to such forces because of a concern for CO2 emissions and pollutants that result from their activities. It is also possible that all forces combine to various degrees in order to alter a sectors’ dynamics. Take the trend toward green information technology: on the political and legal fronts, many jurisdictions are actively discussing and passing legislation that is bound to impact the levels of CO2 emissions allowed for industry. Furthermore, information technology is not only a power hog, but it also requires many potentially harmful substances for manufacturing hardware. This is rendered more complicated by the difficulty to find safe disposal measures at the end of the hardware’s lifecycle. Economic forces at play like forecasts for business spending and cyclicality in information technology investments have an influence. Social issues, like a growing fondness for corporate social responsibility in the general population and data consumption habits have, in turn, an effect on how IT infrastructures are set up. Technological factors will also be important determinants in terms of architecture, processing power, software and hardware design. Environmental issues also matter as different types of systems will have different ecological footprints. This short example emphasizes the need for corporations to consider these forces from an integrated perspective because of their complex interaction.
