Good strategic management is heavily dependent upon a thorough knowledge of the environments faced by an organization. Environmental components are pervasive in that they influence au other steps of the strategic management process. The resulting strategies must be designed in light of expected environmental conditions(see Perspective 2.1). This chapter presents a discussion of the major environmental consid- erations. Chapter 3 focuses on approaches and techniques for environmental analysis. The total environment faced by an organization can be divided into three levels: the macroenvironment, the task environment, and the internal situation. The macroenvironment influences all businesses, but not necessarily in the same way. The task environment is defined for specific industry, a with all firms in an industry influenced by its task environment. The mac roenvironment and task environment are sometimes combined and called the external or uncontrollable environment. The internal situation is composed of factors inside a specifc frm, in effect, a firm is the sum of its internal situation factors. The internal situation is sometimes referred to as the internal or controllable environment. These three environmental levels defined and their interrelationships illustrated are graphically in Figure 2.1 organizations must be cognizant of two other factors when analyzing environmental influences. First, environmental complexity is characterized