 the External Analysis

Topics: Firm, Management, Corporation Pages: 2 (551 words) Published: April 10, 2013
* The External Analysis examines opportunities and threats that exist in the environment. It shows to management the opportunities to favorable conditions in the environment that could produce rewards for the organization if acted properly.

* An organization provides a means of using individual strengths within a group to achieve more than can be accomplished by the aggregate efforts of group members working individually. An organization relates to external analysis because it needs it in order to thrive and grow financially.

* The perspectives on organizational environment suggest that each company must create a positive environment to help employees and managers stay motivated, create a plan that will help in the long run to success, and the frequent use of external and internal analysis for constant development.

* Situation where the management of a firm has little information about its external environment that is in a state of instability and, therefore, largely unpredictably.

* Managers need to do more than just scan the environment because they need to acquire profound information on the events circulating in the company. They need to make deeper analysis in order for the company to grow and better itself, and that cannot be made by simply “scanning” the environment.

* Threat of new competition- Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will trend towards zero.

* Threat of substitute products or services
The existence of products outside of the area of the common product boundaries increases the propensity of customers to switch to alternatives. Note that this should not be confused with competitors' similar products but entirely different ones instead.

* Bargaining power of customers...
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