The two terms are utilized by economists to provide a detailed explanation of conditions that

characterize a specific financial sector or the wider external factors the influences the
operation of an organization. Example of these conditions includes taxation and the
purchasing power of the consumer. The distinction of general and industry environment lies
in the universality and scale of a company operation (Vossos, 2015). The general environment
represents those elements in the broader society that can influence all industries and the firms
that compete in those industries; it represents elements or segments that firms cannot directly
control. The general environment is composed of the following segments: demographic,
economic, political/legal, sociocultural, technological, and global segments. The industry
environment is the constellation of factors that directly influences a firm and its competitive
actions and responses. Firms are influenced by these factors and should attempt to establish a
position in the industry that enables the firm to favourably influence the factors or to
successfully defend against the factors influence. These factors are: threat of new entrants,
bargaining power of suppliers, bargaining power of buyers, threat from substitute products,
and intensity of rivalry among competitors. It is a kind of external environment. It is closer to
the organization and includes the sectors that conduct day-to-day transactions with the
organization and directly influence its basic organization and performance. Therefore, the
purpose of the assignment is to differentiate between general and industry environment.
Similarities between general and industry environment
Businesses in both the two environments are affected by external forces. The similarities of
the general and industry environments is that they are a potential source for opportunities in
the firm which when harnessed properly might foster the development of the firms. Also both
environments influence the strategic decisions and actions the organization will take.
Differences between general and industry environment
Industry environment, in comparison to the general environment, has more direct effect of
firms strategic competitiveness and above-average returns. The five forces model of
competition includes the threat of entry, the power of suppliers, the power of buyers, product
substitutes and the intensity of rivalry amongst the competitors. The firm finds a position in
the industry where it can influence the forces in its favour to achieve strategic
competitiveness and earn above-average returns.
Another difference between the general and external environment is that the general
environment is larger than the industry environment. In addition, the general environment is
beyond the control of the firms while the industry environment is within the control of the
firm. The general environment is uncertain compared to the industry environment, which is
more predictable and certain. The industry environment is affected by the porters
competitive forces whereas General environment entails the impact of government
regulations on a business.
Moreover, the general environment may refer to external conditions that may affect an
organization and go beyond the boundaries of a single industry. It particularly describes how
society can affect a business or industry in general. These may include government

regulations on trade practices, employment and taxation or even the economic climate:
whether consumers have the purchasing power and willingness to buy products and services.
Take an example of Gas providers who literally don't have to care about the bargaining power
of customers for example, as without an alternative, people must buy gasoline for their
transportation and gas heat, no matter what the cost. But in the case of food producers, they
must provide competitive prices, as with an abundance of substitutes, consumers can go for
other products when, for example, the price of tomatoes rises dramatically.
To add on, the general environment can affect anyone in an industry, whereas the Industry
environment also includes sectors that the organization interacts directly to make a direct
impact on the organization's capability to reach its goals through its operations and
performance. This Industry environment normally includes the industry, competitors and the
customers, while it sometimes includes techniques of production, suppliers, raw materials and
market sectors. Some organizations will also have human resources and the international
sector as part of this environment.
Furthermore, it is where a company operates within the second sub environment that actually
lies outside of the business. It is affected by the variables in the market environment and these
affect the business, making it important for the management to react on opportunities and
pressure in the market environment; whereas the general environment is the layer of the
external environment that will only affect the organization indirectly. It is the one that is
furthest away from the widely dispersed organization and is defined as the outer layer. The
organization is indirectly affected by the general environment and parts of it include
demographic, economic, political/legal, sociocultural, technological, and global segments.
Therefore an industry's environment is seen to describe all those conditions that can affect a
business within the strict boundaries of a financial sector. It literally encompasses "Porter's
Five Forces," such as rivalry between the industry's firms, the threat of new entrants, and the
threat of substitute products, the bargaining power of customers and the bargaining power of
suppliers.
Conclusion
In all, the general and the industry environments have an impact to the success of the
organization and the factors of this environment should be considered critically in order to
make informed decisions, policies and strategic plans to foster the survival, growth,
performance and the competitive edge of the organization. Both industry and general
environment affects the operation of a business. Industry environment is greatly concerned
with porters five forces whereas general environment address government regulations. There
is a mutual relationship between a firm and its environments. Both parties can gain from
opportunities and both can suffer detrimental outcomes (from threats). A firm that is active
and manages sustainable positive results is likely to be the one that studies and regularly
monitors changes to its environments. A firm with a competitive advantage is one that is able
to develop and practice successful strategies that enable it to gain from the opportunities
available to it and protects itself from the threats.

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http://www.ehow.com/info_8705940_difference-between-industry-generalenvironments.html