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General Environment

Jo Amy Rollo, Allison Tanner
  • Author
    Jo Amy Rollo

    Jo Amy is a science teacher. She has a Masters degree in Environmental Science and two Bachelor of Science degrees- one in Biology and one in Environmental Science.

  • Instructor
    Allison Tanner

    Allison has a Masters of Arts in Political Science. She has worked in the customer service and food industry since 2013.

Learn about the general environment. Read the definition of general environment, learn how the general environment is analyzed, and see examples of it. Updated: 03/03/2022

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General Environment Definition

General environment refers to the factors affecting a company that is outside of a company's control. Elements in the broader society that influence a company and its business are what constitute a general environment. The general environment can influence a company's operation and performance because it can affect its ability to operate. It can potentially impact whether or not customers choose to buy products. This means that it is important for management to consider them as they plan and organize their business. The external business environment is made up of the general environment and the task environment. A company's task environment refers to the ability of the company to acquire necessary materials and deliver their outputs as exporting goods. What happens in the general environment usually significantly affects the task environment. If factors outside of the company's control, such as weather, get in the way of the company acquiring the materials they need and delivering their products, the general environment, and task environment are in conflict.

General Environment Examples

The general environment can affect the task environment positively and negatively.

  • Imagine a scenario in which a company sells VIP tickets to a baseball game. The tickets are very expensive and help the company make up much of its yearly profit. On the day of the baseball game, it rains the entire day. The weather, part of the general environment, is having a negative impact on the task environment. The game is canceled because of the weather conditions, and the company loses money.
  • The following year, the company plans for the baseball game again. Economic conditions in the area are better than the previous year, and the weather is nice, so they sell more VIP tickets than any other year. General environment factors, like the weather and economy, positively impacted the task environment.

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General Environment Analysis

Because the general environment influences the function of a company so much, it is important for business leaders to have an analyzing tool to determine the impacts. Analyzing the general environment can help the company make smart business decisions. The outside factors can be analyzed, and upcoming business can be anticipated. If company executives see that one of the factors is changing, they can invent solutions that will help their company stay ahead. For example, suppose technology is advancing, and people are no longer coming in the store to shop as much. In that case, a clothing company might develop an app and update its website to help consumers have easier shopping options. The PESTEL tool (which stands for political, economic, social, technological, environmental, and legal) is commonly used to help businesses organize the general environmental factors.

Political Factors

The political climate of an area can impact the businesses operating there. Things like tax percentages and foreign trade policies are important for companies to consider when making business decisions. For example, some countries have strict environmental laws that require companies to spend a lot of money to comply. Many businesses would likely move their operations to countries with fewer restrictions to make more profit.

Economic Factors

Economic factors include inflation rates, unemployment rates, interest rates, disposable income, and whether or not the economy is healthy or in downtime. For example, if the unemployment rate is high and the economy is falling, people will have less disposable income after paying their bills. This means that industries that sell products that are not necessities (toys, beauty, clothing, etc.) will likely suffer.

Social Factors

Social factors include things like culture, trends in the population, social activism, and demographics. These factors can determine the way a company chooses to market its products. For example, if popular culture is focusing on health and fitness, a company selling food and drinks will likely begin to have more health-conscious options available.

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Frequently Asked Questions

What are general environment factors?

General environment factors are factors beyond a company's control, like the weather or political climate, that still have an impact on the company. The analysis tool PESTEL helps companies to organize these factors as political, economic, social, technological, environmental, or legal.

What does general environment mean in business?

The general environment can be defined as a variety of external influences, such as the environment, technology, economic conditions, demographics, socio-cultural forces, and political factors. Businesses must consider the general environment as they make decisions because it can potentially have a great impact on their production and success.

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