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1. Opportunity and Threat of External
Environment

2. OPPORTUNITIES & THREATS
 Opportunity a condition in the general environment
that, if exploits, helps a company achieve strategic
competitiveness
 Threat a condition in the general environment that may
hinder a company’s efforts to achieve strategic
competitiveness

3. AIM & OBJECTIVE
 Discuss the organization as an open system and assess
the impact of a number of environmental forces to
understand the opportunity-driven strategy depends
upon an ability to manage and to manage in the business
environment
 To examine the threat of the business and implement
process to the strategic plan of the organization.

4. EXTERNAL ENVIRONMENT
 The external environment comprises of all the entities
that exist outside its boundary, but have significant
influence on its growth and survival.
 An organization has little or no control over its
environment but needs to constantly monitor and adapt
to these external changes, a pro active or reactive
response leads to significantly different outcome

5. TYPES OFEXTERNAL ENVIRONMENT
 Direct interactive
this environment has an immediate and firsthand
impact upon the organization.
 Indirect interactive
this environment has a secondary and more distant
effect upon the organization

6. EXTERNAL ENVIRONMENT ANALYSIS
 Scanning, Identifying early signals of environmental
changes and trends.
 Monitoring Detecting meaning through ongoing
observations of environmental changes and trends
 Forecasting Developing projections of anticipated
outcomes based on monitored changes and trends.
 Assessing Determining the timing and importance of
environmental changes and trends for firms strategies
and their management.

7. ANALYSIS OF THE EXTERNAL ENVIRONMENT
 General Environment focused on the future
 Industry Environment focused on factors and conditions
influencing a firm’s profitability within an industry
 Competitor Environment focused on predicting the
dynamics of competitors’ actions, responses and
intentions

8. General Environment Dimension
 Demographic Segment
 Economic Segment
 Political/Legal Segment
 Sociocultural Segment
 Technological Segment
 Global Segment

9. THREAT OF NEW ENTRANTS barriers
 To entry Economies of scale
 High differentiate products or well-known brand
names
 Capital requirements
 High consumer switching costs
 Assess the distribution channels
 Cost advantages independent of scale
 Government policy Expected retaliation

10. THREAT OF NEW ENTRANTS
BARGAINING POWER OF THE SUPPLIER
BARGAINING POWER OF BUYERS/CUSTOMERS
THREAT OF PRODUCT SUBSTITUTES
INTENSITY OF RIVALRYAMONG COMPETITORS

11. COMPETITOR ENVIRONMENT
 Competitor intelligence
 The ethical gathering of needed information and data
that provides insight into
 A competitor’s direction (future objective)
 A competitor’s capabilities and intentions (current
strategy)
 A competitor’s beliefs about the industry (its
assumption)
 A competitor’s capabilities

12. COMPETITIVE ANALYSIS
 Who are your competitors?
 Do you know about your close competitors’ strengths
and weaknesses?
 How detail should we analyze the competition?
 Use a systematic approach
 Analysis competition at various levels

13. EXAMPLE OF THREAT AND OPPORTUNITIES
 The strength of economy effects
 The level of demand includes shareholders, and capital
markets
 Their satisfaction with company success
 Changes in structure
 Labour market
 Availability of skills Influence of trade unions

14. EXAMPLE OF THREAT AND OPPORTUNITIES
 Robotics in manufacturing
 Technology Computers
 Information technology
 Changing population - by ageSociocultural
environment
 Changing tastes and values
 Regional movements

15. EXAMPLE OF THREAT AND OPPORTUNITIES
 Suppliers Availability and cost of suppliers
 Changes in preferences and
 Customers purchasing power
 Changes in competitive strategies
 Competitors Innovation Effects of good and bad publicity,
 The media drawing attention to companies, products and
services

16. WHY IS IT IMPORTANT TO KNOW THE COMPANY
OPPORTUNITIES AND THREATS?
 By examining opportunities, you can discover untapped
markets, and new products or technologies, or identify
potential avenues for diversification
 By examining threats, you can identify unfavorable
market shifts or changes in technology, and create a
defensive posture aimed at preserving your competitive
position

17.  CONCLUSION
It is important for company to pay attention to
external environment
The research in external environment is essential for
the business
The company that adapt its strategy to the changes of
external environment is likely to be more
competitive in the business