Components of External Environment

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What are the two most relevant externalities from Exhibit 2.6 for a firm with which you are familiar? Have these externalities made the industry in which the firm operates more, or less, attractive to you as consumer? I am familiar with the retail industry which operates within most relevant externalities or the sphere of influence outside the company that shapes how companies do business. Unlike the micro environment of a retail store, companies in the retail industry usually cannot influence or change the macro environment and must adapt to changes as they arise. The macro environment includes economic, technological, societal and governmental influences. A retailer must understand the role of each to compete within the retail industry (Marcus 2011). I feel that macro environment is a useful tool to understand the big picture of the environment in which the firm is operating Technology not only creates new products for retail companies to sell, but also plays a major role in changing the way retail companies do business. Technological advancements such as the Internet offer retail customers additional shopping options. Technology also opens new retail markets, such as the Home Shopping Network and web-based retailers such as (Marcus 2011) which I use in buying books. Barcoding and computerized billing systems have improved the retail industry by allowing retailers to develop new processes that increase efficiency. Point-of-sale systems increase sales by allowing retailers to process cash, check, and credit- and debit-card payments. Secondly, most government policies can have a number of positive or negative effects on the retail industry. When it comes to Government assistance, such as government-backed loans and subsidies, can help fledgling retailers grow or allow an established company to keep costs low for consumers. However, government policies

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