What Is an External Environmental Analysis?

A competitive strategy must come from a deep understanding of the rules of competition that determine the attractiveness of the industry. Michael Porter's strategy is an organic combination of what a company can do (ie, the strengths and weaknesses of an organization) and "what it can do" (ie, opportunities and threats to the environment). The focus of external environmental analysis is to identify and evaluate external development trends and events that exceed the company's control. Successful strategies must use major resources to take advantage of the most decisive opportunities. Through the analysis of external environment, companies can clearly identify the opportunities and threats they face, and then decide what they can choose to do. Making correct predictions about future changes in the external environment is a prerequisite for the success of the strategy.

External environmental analysis

The long-term development plan of the company does not have a clear development strategy and competition strategy; strategic decisions are more arbitrary and lack a scientific decision-making mechanism; the formulation of corporate strategies lacks a scientific basis; the judgment of the company's external environment depends solely on the leaders and managers Intuition and experience;

Make a comprehensive and objective investigation and data analysis of the market and development trends; scan all industries of the company, focusing on industry trends, products, customers and existing competitors;

Help companies recognize their market position

Help customers actively shape their future and grasp the development direction;

Define what the business can do;

Let customers systematically and objectively understand the environment in which an enterprise is located;

Let customers understand the opportunities and challenges brought about by changes in the external environment;

Fully understand the foundation of establishing corporate goals and strategies;

Devote major resources to taking advantage of the most decisive opportunities;

Make full use of opportunities to achieve business goals.