Saturday, 14 December 2019

Unit 4: External Assessment


 Unit 4: External Assessment   

External assessment is a step where a firm identifies opportunities that could benefit it and threats that it should avoid.

It involves monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation.

The nature and degree of competition in an industry hinge on five forces, viz. the threat of new entrants, the bargaining power of customers, the bargaining power of suppliers, the threat of substitute products or services and the jockeying among current contestants.

To establish a strategic agenda for dealing with these contending currents and to grow despite them, a company must understand how they work in its industry and how they affect the company in its particular situation.

The process of conducting external environment assessment starts with collating information and intelligence on factors affecting the external environment.

Industry analysis is a tool that facilitates a company's understanding of its position relative to other companies that produce similar products or services.

Environmental analysis or scanning is the process of monitoring the events and evaluating trends in the external environment, to identify both present and future opportunities and threats that may influence the firm's ability to reach its goals.

Competition: Rivalry between two or more parties to achieve a similar goal.

Environment: The totality of surrounding conditions.

Environmental Scanning: Process of gathering, analyzing, and dispensing information for tactical or strategic purposes.

Fragmented Industries: Consists of a large number of small or medium-sized companies, none of which is in a position to determine industry price.

Porters Five Forces: Named after Michael E.

Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths.

Switching Costs: One-time costs that a customer has to bear to switch from one product to another.

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