political structure will differ from a unitary political system. In the UK
there is a parliament for Scotland and an assembly for Wales. There are
however be a number of decision areas that are still be the responsibility of
the Westminster parliament. At the same time there is also an increasing
range of decisions taking place both politically and legally within the
framework of the European Union. Political pressure groups such as
Greenpeace can also affect the political agenda. Therefore when consider-
ing this area of the environment a much wider view has to be taken than
just the domestic national government or the legal process.
Economic factors
Similarly, economic factors have to be viewed from a wider perspective
than the organisation’s domestic economy. In the global economy, domes-
tic economic conditions are heavily influenced by events in other areas of
the world. Economics is concerned with the allocation of resources.
Therefore issues such as conservation of natural resources, costs of pollu-
tion, energy consumption and the whole area of the management of nat-
ural resources should be considered under this heading.
Social/cultural issues
Demographic changes are important and can be used as lead indicators in
certain areas, such as health care and education. However other critical
areas such as social/cultural values and beliefs that are central to changes
in consumer behaviour are harder to predict and can be subject to more
dramatic shifts.
Technological developments
There is a great danger in using a particular technology to define an
industry. In a situation where technological developments are fast moving
it is critical to understand the fundamental consumer needs which the
organisation’s technology are currently serving. Identifying new technol-
ogy’s that can service that consumer’s needs more completely or econom-
ically is the critical part of this area of the analysis.
External analysis 25Illustrative Example 2.1
On-line clothing sales
The on-line sales of clothing and shoes in the UK rose by 44 per cent in 2007 to reach £1.4 bil-
lion. This represents a five-fold increase in on-line sales since 2001. Next Directory is the biggest
single operator in this sector of the clothing market. Research has shown that the biggest rea-
son for purchasing on-line was to avoid having to search for the right size on the clothes rack
(Continued)