Analysing the external environment Essay Example | Topics and Well Written Essays - 2500 words

Analysing the external environment - Essay Example The external environment is able to determine a business’s success or failure; that is why it is extremely important for businesses to carefully analyse it. The function of monitoring external environments serves to track any type of progress in commercial trends of known import. A number of external elements can be affected by company advertising, while others call for the business to implement changes (Daft, 2010:111). It is vital to monitor the fundamental components of a businesss external environment. Tactical business planning is essential in discovering new opportunities, as well as in reducing the potential impact of potential threats. In the past, companies that have neglected to keep an eye on the market have suffered heavy setbacks. A good example is Eastman Kodak which nearly became obsolete because it was unable to foresee the popularity of digital cameras (Harris, 2003:106). External tactical management assessments supply the management with premeditated plans that seek for opportunities and reduce the effects of threats. An external strategic proposal should include the following points: 1. Study external forces: It is important for a business to collect information concerning the political, economic, cultural, social, technological, and legal factors of its community. It should also take into account any changes in consumer demographics and seek to make sure that it gets its information from trustworthy sources. Companies should mainly use primary data, with other sources of secondary information being made use of sparingly. 2. Assess the competition: A company should gather competitive intelligence on its business rivals. The statistics gathered should include the distribution channels, plans for gaining more customers, and their value chain arrangement (Dibben, Wood and Roper, 2004:92). In this, a company will be able to determine how its competitors benefit from advantages that it might