ABSTRACT
We can also define an organization's environment as the external surroundings in which the organization operates, and this can include its competitors (and non-competitors), suppliers, buyers and governments. Organizations act to both shape their environment and to respond to events that occur in it. In light of this, and since multi-divisional organizations operate in a number of industries and countries, we suggest that each business unit is investigated using the following procedure:
Define the industry or industries in which the organization operates. This should include an estimate of industry size by some measure of turnover, the identification of industry segments and the geographic extent of the industry. Identify the organization's or unit's competitors. Conduct an analysis of the industry or industries using Porter's Five Forces Model (Porter, 1980, 1985). Identify the forces in the wider macroeconomic environment that are impacting on the unit and its competitors. Assess the significance of these forces and the potential for change that they could induce. Discuss the opportunities and threats to the organization that the environmental analysis raises.
