An organization simply cannot survive without the support of its environment. An organizations environment provides opportunities and threats, and it influences the various strategic decisions that executives must make. The general environment and the industry environment are two components of the an organizations environment. The general environment is the overall trends and events in society and the industry environment consists of an organizations competitors.
Walmart's PESTEL analysis:
Political - Policies on economy, trading agreements NAFTA
Economic - Unemployment rate, slightly increase in comsumption
Social - Faster pace of living, efficiency is key
Technological - Online shopping, phone apps, job application online, website
Environment - recycling bags
Legal - Patents
Evaluating the industry environment gives an organization a helpful insight as to what their competitors are doing. Being aware of your competitors strategies can help the executives decide what they need to do next to stay ahead of competitors.
Organizations also needs an analysis for profit potential, this is where the Five Forces Analysis created by Professor Micheal Porter comes in to play. The purpose of the five forces analysis is to identify how much profit potential exists in the industry. For this to work, the five forces analysis must consider the interactions among competitors in the industry, potential new entrants to the industry, substitutes for the industry's offerings, suppliers to the industry, and the industry's buyers. Walmart has many competitors, some being potential new entrants like Target or K-Mart. The power of substitutes for Walmart is high because of competitors selling similar products and could be selling them cheaper.
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