Fahey & Narayanan - Macroenvironmental Analysis

The Structure of Concern Project compares many theoretical models from many disciplines to the Adizes PAEI model, arguing that they must all be reflecting the same underlying phenomenon. One concern structure model is described below.

In their textbook on Macroenvironmental Analysis for Strategic Management (Fahey & Narayanan, 1986[1]), Fahey and Narayanan describe dimensions of the business environment that are relevant for the construction of business strategy. These dimensions are also relevant to the structure of concern. Fahey and Narayanan indicate that managers need to undertake analyses of the environment of their organizations in order to understand current and potential business changes. They can also use these analyses to generate important intelligence for strategic decision makers. Fahey and Narayanan review several business environment models, and draw a distinction between models of the general environment and those of the business-relevant environment. They divide the business-relevant environment into four segments, along the lines of the structure of concern:

P – Economic: Gross measures of productive activity at local, regional and national levels, and relationships to demand.
A – Political: The regulatory environment, but control over regulatory bodies is contested, so PI-type political processes and developments are highly relevant.
E – Technological: Progress, advancements, innovations and discoveries are the key concerns in the technological sector.
I – Social: Demographics, lifestyles and cultural values all matter in this sector, and can be related to demand, productivity and political processes.

Their model of macroenvironmental analysis highlights the linkages within and between these segments. Environmental turbulence is analyzed as changes in interconnectedness within and among segments.

1. Fahey, L., & Narayanan, V. K. (1986). Macroenvironmental Analysis for Strategic Management (The West Series in Strategic Management). St. Paul, Minnesota: West Publishing Company.
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