Review Question # 3
A decision maker can identify strategic factors in the corporation’s external environment by monitoring, and evaluating information. According to our textbook, an organization must scan the external environment to identify possible opportunities and threats before beginning strategy formulation. “Environmental scanning is the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation. It is a tool that a corporation uses to avoid strategic surprize and ensure long- term health”(Hunger31). Some external environmental factors important to the success of the organization are the economic, political, technological factors. In order to create their strategic action plan, the company must also have a clear understanding of its competitive forces included in the industry environmental factors. The factors the company must look at are the entry barriers including capital requirements and policies regarding distribution channels. We must understand that external environmental factors are created without the actions of the company. These factors may present the organization with opportunities, threats, and constraints. According to NetMBA business knowledge center web site, “Once the firm has specified its objectives, it begins with its current situation to devise a strategic plan to reach those objectives. Changes in the external environment often present new opportunities and new ways to reach the objectives. An environmental scan is performed to identify the available opportunities. The firm also must know its own capabilities and limitations in order to select the opportunities that it can pursue with a higher probability of success. The external environment has two aspects: the macro-environment that affects all firms and a micro-environment that affects only the firms in a particular industry. The macro-environmental...