The Role of External Environment and General Environment of the Firm

In this video, I discuss the role of the external environment in a firm's life. Specifically, I discuss the general environment of the firm. Below is the general outline of the concept discussed in the video.
Given that the external environment will continue to change-and that change may be unpredictable in terms of timing and strength-a firm’s management is challenged to be aware of, understand the implications of, and identify patterns represented in these changes by taking actions to improve the firm’s competitive position, to improve operational efficiency, and to be effective global competitors.
External environmental factors-like war and political unrest, variations in the strength of national economies, and new technologies-affect firm growth and profitability in the United States and beyond.
Environmental conditions in the current global economy differ from those previously faced by firms:
• Technological advances require more timely and effective competitive actions and responses.
• Rapid sociological changes abroad affect labor practices and product demand of diverse consumers.
• Governmental policies and laws affect where and how firms may choose to compete.
• Changes to nations’ financial regulatory systems have increased the complexity of organizations’ financial transactions.
Understanding the external environment helps build the firm’s base of knowledge and information that can be used to (1) help build new capabilities and core competencies, (2) buffer the firm from negative environmental impacts, and (3) pursue opportunities to better serve stakeholders’ needs.