Assignment 3
Name; Mukhtar Abdullahi Ahmed.
Student id; FA20-MSMG-0030.
Subject: Strategic management
Teacher: Asif Qureshi
SUBMITED DATE: 20-02-2021
Chapter 3
The External Assessment
Summary
The External Assessment, or External Environmental Scan, is an inventory of the political,
economic, social, and technological forces that influence the mission and goals of an
organization, and how it functions. ... The result of an external assessment reveals the
opportunities and threats that confront the organization
External Assessment
“It is not the strongest of the species that survive, nor the most intelligent, but the one most
responsive to change.” – Charles Darwin
“Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you
off the map.”
External Strategic Management Audit
-Environmental Scanning
– Industry Analysis.
External Strategic Management Audit
Identify & evaluate factors beyond the control of a single firm
Increased foreign competition
Population shifts
Aging society
Fear of traveling
Stock market volatility.
Purpose of an External Audit
Develop a finite list of
opportunities that could benefit a firm
threats that should be avoided
External Audit
Gather competitive intelligence
Assimilate information
Evaluate
Resulting in a list of the most important key external factors
Social, Cultural, Demographic, and Natural Environmental Forces
Major Impact –
• Products
• Services
• Markets
• Customers
US Facts
Aging population
Less White
Widening gap between rich & poor
2025 = 18.5% population > 65 years
2075 = no ethnic or racial majority
Facts
World population 7 billion
World population = 8 billion by 2028
World population = 9 billion by 2054
U.S. population > 310 million
Trends
More American households with people living alone
Aging Americans – affects all organizations
Competitive Forces
Identify Rival Firms’
• Strengths
• Weaknesses
• Capabilities
• Opportunities
• Threats
• Objectives
• Strategies
Competitive Forces
Competition in virtually all industries can be described as intense
Key Questions Concerning Competitors.
Their strengths
Their weaknesses
Their objectives and strategies
Their responses to external variables
Their vulnerability to our alternative strategies
Our vulnerability to strategic counterattack
Our product/service positioning
Entry and exit of firms in the industry
Key factors for our current position in industry
Sales/profit ranking of competitors over time
Nature of supplier and distributor relationships
The threat of substitute products/services
characteristics of most competitive firms
Market share matters
Understanding what business you are in
Broke or not, fix it
Innovate or evaporate
Acquisition is essential to growth
People make a difference
No substitute for quality
Competitive Intelligence.
A systematic and ethical process for gathering and analyzing information about the
competition’s activities and general business trends to further a business’s own goals
Sources of Competitive Intelligence.
Internet
Employees
Managers
Suppliers
Distributors
Customers
Creditors
Consultants
Trade journals
Want ads
Newspaper articles
Government filings
Competitors
Objectives of Competitive Intelligence
Provide a general understanding of industry and competitors
Identify areas where competitors are vulnerable and assess impact of actions on
competitors
Identify potential moves that a competitor might make
Market Commonality
The number and significance of markets that a firm competes in with rivals
Resource Similarity
Extent to which the type and amount of a firm’s internal resources are comparable to a rival
The Five-Forces Model.
Rivalry among competing firms
Most powerful of the five forces
Focus on competitive advantage of strategies over other firms
Potential Entry of New Competitors
Barriers to entry are important
Quality, pricing, and marketing can overcome barriers
Potential development of substitute products
Pressure increases when:
Prices of substitutes decrease
Consumers’ switching costs decrease
Sources of External Information: Published Sources
Periodicals
Journals
Reports
Government documents
Abstracts
Books
Directories
Newspapers
Manuals
