The broad environment identifies general trends that may create future opportunities or threats for the company. These trends could be from any of the five basic environments (political/legal, economic, socio/cultural, technological, and environmental) but can basically be analyzed around two general concepts:
- Will these factors influence demand?
- Will these factors influence cost structures?
Some basic questions that you should consider include:
- Economic trends (e.g. availability of credit, income level growth, etc.) that impact the ability of the industry to operate or expand.
- Demographic trends.
- Are their any current social issues impacting the industry? Are these fads or lasting issues?
- What are the political trends impacting the industry?
- Is changing technology going to enhance or diminish the industry?
- Do strong brands or company image drive the industry?
When you make your broad analysis you should also consider whether these general trends have a more immediate impact (e.g. legislature that will go into effect sometime in the near future) or an impact sometime in the future (e.g. the introduction of new technology that would make production more efficient).