External Environment Analysis

• Most firms face external environments that are turbulent, complex, and global —conditions that make interpreting those environments difficult.
• To cope with often ambiguous and incomplete environmental data and to increase understanding of the general environment, firms complete an external environmental analysis.
• External environmental analysis has four parts: SMFA

  scanning

  monitoring

  forecasting

  assessing
• Identifying opportunities and threats is an important objective of studying the general environment.
• is a condition in the general environment that, if exploited effectively, helps a company reach strategic competitiveness


  opportunity
• In terms of possible opportunities, a combination of cultural, political, and economic factors is resulting in rapid retail growth in parts of Africa, Asia, and Latin America.
• the world's largest retailer

  walmart
• Walmart is expanding its number of retail units in Chile (404 units), India (20 units), and South Africa (360 units).
• Carrefour exited India after four years and in the same year (2014) that Tesco opened stores in India.
• While Metro closed its operations in Egypt, it has stores in China, Russia, Japan, Vietnam, and India in addition to many eastern European countries.
• is a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness

  threat
• Nokia Corp filed a patent infringement case against the HTC Corp but the dispute ended when they agreed to sign a collaboration agreement.
• Firms use multiple sources like printed materials (such as trade publications, newspapers, business publications, and the results of academic research and public polls), trade shows, and suppliers, customers, and employees of public-sector organizations, and internet sources -to analyze the general environment through scanning, monitoring, forecasting, and assessing.