Impact of External and Internal Environment

Impact of External and Internal Environment

Introduction

Competition is exponentially expanding in the world. This does not confines to competition in the business only, but in all the various fields that exists be it of sports, professions, economy, administration etc. The desires and wants of human beings are not only unlimited but also ever-expanding. As the wants of humans grow, so does the volume, quantity and quality of businesses being conducted. All of this is being done with the aim to satisfy the human desires. It can be said that the human wants has a direct relationship with the growth of businesses. The more a person demands, the more a business needs to provide for them. The demands of consumers have reached such stupendous proportions, that now there is no space for those businesses that cannot provide and satisfy the specific demands on optimum level. Therefore, it is highly imperative for a business to compete effectively among the many competitors present. In order to achieve this end it is essential that the business accurately and meticulously assess and analyse the highly dynamic and volatile competitive environment. It then needs to formulate an effective strategy in place that positions the business in a favourable situation in comparison to its competitors. “Change is the only constant” is the famous saying of the Greek philosopher, Heractlius. This is essentially true, even after two thousand years of being since it was said. Hence, the business needs to adapt to the ever-changing environment that we live in. Businesses that are unable to adapt to the rapid changes, eventually finds itself struggling for survival, or so goes the saying: “What you can't comprehend, you can't survive.”

Discussion

Strategic Analysis is the process of conducting research on the business environment within which an organisation operates and on the organisation itself, in order to formulate strategy (BNET Dictionary). Definitions of strategic analysis vary, but there are certain features which are normally attached to it. These are:

Identifying and evaluating data that is pertinent to formulation of strategy.

The internal and external factors that is to be analysed, should be explicitly defined.

Various tools of analysis that can be employed for evaluation.

Prelude to strategy formulation is the correct analysis and assessment of competitive environment that affects an organisation. There are many external and internal factors that may pose challenges for the business. An effective strategy needs to be chalked out in order to confront these challenges successfully.

The business environment can include various external factors that can cause an impact upon a firm. These factors include political, economic, social, technological, legal and ecological. Political factors are beyond the control of an organisation, and in many cases is a volatile factor (CIMA, 2011). These factors include government legislations that may affect an organisation, law and order situations etc. Economic factors include the formulation of national fiscal and monetary policies, economic condition such as boom, growth or recession etc, the particular government's tendencies for example does it favours economic liberalisation or ...