Why do organisations examine the external environment and what models do the use?

Answer 1

If there is anything that is stead fast and unchanging, it is change itself. Change is inevitable, and those organizations who do not keep up with change will become unstable, with long-term survivability in question.

There are things, events, or situations that occur that affect the way a business operates, either in a positive or negative way. These things, situations, or events that occur that affect a business in either a positive or negative way are called "driving forces or environmental factors."

There are two kinds of driving forces; Internal driving forces, and external driving forces. Internal driving forces are those kinds of things, situations, or events that occur inside the business, and are generally under the control of the company. Examples might be as follows

· organization of machinery and equipment,

· technological capacity,

· organizational culture,

· management systems,

· financial management

· employee morale.

External driving forces are those kinds of things, situation, or events that occur outside of the company and are by and large beyond the control of the company. Examples of external driving forces might be, the industry itself, the economy, Demographics, competition, political interference, etc.

Whether they are internal or external driving forces, one thing is certain for both. Change will occur! A company must be cognizant of these changes, flexible, and willing to respond to them in an appropriate way.

External driving forces can bury a business if not appropriately dealt with. The question is, how does a business know what changes are occurring so that they can deal with them in a positive way. OK, that's the next issue.

In order for a business to succeed and gain the competitive edge, the business must know what changes are indeed occurring, and what changes might be coming up in the future. I guess you might call this forecasting. Thus, critical to the business is what we call "informational resources." It is the collection and analyzation of data. Some examples of critical information might include the following:

• Competition (what are they doing?)
• Customer behavior (needs, wants, and desires)
• Industry out look (local, national, global)
• Demographics (the change populations, there density, etc.)
• Economy (are we peaking, or moving negatively)
• Political movements and/or interference
• Social environment
• Technological changes
• General environmental changes

The above are just some issues organizations must be on top of. Well it's never easy, but businesses that are successful include all of the above (and more), to develop the appropriate tactics, strategies, and best practices, to ensure successful out comes.

Answer 2

Analyzing both internal and external environmental factors is critical for the very survival of any organization. It is a collection of data through the use of all informational resources to determine the state of the organization, and for use in strategic planning. Many organizations use a SWOT analysis which identifies the strengths, weakness, opportunities, and threats facing the organization. The strengths and weakness typically refers to the internal environmental factors, while the opportunities and threats refer to the external factors some of which include, demographics, competition, government laws and regulations, economy, etc. In addition, many organizations attach a PEST analysis to the external environmental factors which takes in the political, economic, social, and technological environment the organization operates within.