External Environment

Strategic choices are a function of conditions of internal and external factors and the possibility of influencing them. The external environment, or external factors, can affect the organization's choices as well as its performance so it is fundamental to consider them within the strategic management process even though it will be impossible to affect them. This chapter addresses the factors residing in the general or remote environment. The external factors are usually grouped during the strategic management process using a framework called Political, Economic, Social, Technological and Environmental (PESTE). The chapter explores management science tool: analytic hierarchy process and artificial intelligence, to facilitate the evaluation of the diverse factors identified in a PESTE analysis. When using management science tools to make sense of exogenous factors, managers need to be aware of more than one technique available to make an informed judgment on whether to apply a particular technique.