BSBA HRDM 3-1N
Chapter 3: EXTERNAL ASSESSMENT
An External Audit focuses on identifying and evaluating trends and events beyond the control of a single firm, such as increased foreign competition, population shifts, an aging society, information technology, and the computer revolution. An external audit reveals key opportunities and threats confronting an organization so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats.
The Nature of an External Audit
The purpose of an external audit is to develop a finite list of opportunities that could benefit a firm and threats that should be avoided. As the term finite suggests, the external audit is not aimed at developing an exhaustive list of every possible factor that could influence the business; rather, it is aimed at identifying key variables that offer actionable responses. Firms should be able to respond either offensively or defensively to the factors by formulating strategies that take advantage of external opportunities or that minimize the impact of potential threats. In the illustration of the Strategic Management Model, it shows how the external audit fits into the Strategic Management Process.
Key External Forces
External forces can be divided into five broad categories:
* Economic forces;
* Social, cultural, demographic, and environmental forces;
* Political, governmental, and legal forces;
* Technological forces; and
* Competitive forces.
Relationships among these forces and an organization are depicted in illustration below. External trends and events significantly affect all products, services, markets, and organizations in the world.
Special interest groups
AN ORGANIZATIONS... [continues]
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