What is an external environmental analysis?
2 These factors affect business, but are out of its control, for example, when the new political party accepts the Office and changes regulations, which requires the enterprise to invest in new equipment or modify its products. The external environment analysis includes a list of factors in the external environment of the company and their impact on business. It also discusses the opportunities that the company can monitor and threats that could negatively affect it. This type of analysis ends with a plan on how the business can take advantage of the opportunity and overcome or minimize its threats.
changes in an external environment are caused by factors outside the company control. For example, its customer base can change when they face the move of demography, trends and needs. Similarly, the competitive landscape can change its loyalty, output or development of new technologies. This may also affect the economic and political environment if there are changes in political parties where new regulations are added or in the case of economic instability. Not inLittle changes in the external environment of the company are threats - for example, a company that, for example, has invested in green technologies, could find itself a leader in the field for a shift in consumer demand.
External environmental analysis requires the company to examine and recognize factors that are beyond its control. The list should then be reviewed whether there are opportunities or threats. When an opportunity is found, the company should develop a strategy to use it. For example, if the economy moves from the recession, then it might want to increase production, so do not miss the sale. If any threats or potential threats are found, then the company should prepare plans to overcome or reduce the impact.
Regular implementation of external environmental analysis can help businesses to create or maintain a competitive advantage. It is easy to overlook the full outer simpleIt dilutes when it is focused on everyday operations, so opportunities can be lost or threats can turn into poor surprises. Depending on the industry, the annual analysis should be sufficient. However, if the industry is fast, sensitive to changing regulations or susceptible to changing competing landscape, either quarterly or half -year analysis should be monitored. Usually, external analysis of environmental analysis is performed as part of the strengths and weaknesses, opportunities and threats (SWOT), where the company looks at the internal and external environment in the same report.