07-01-2014, 03:47 PM
Business Environments: External and Internal
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Environments Change
Likewise, changes within the internal environment of a firm may force a company to change its tactics and strategies.
For example, new personnel with unique knowledge and skills may join the company OR valuable employees with unique knowledge and skills may leave the firm.
Changes in the external environment (general & competitive) may require a company to adjust its strategic plans. These new conditions may present new opportunity or threats thereby necessitating revision of offensive or defensive strategies.
Scenario Models
Scenario Models are tools that can aid in the rapid adaptation to environmental changes.
Scenario Models help TMTs prepare for a wide range of possible future conditions from the highly likely to the highly unlikely.
Scenario Models facilitate the preparation of contingency strategies.
Political/Legal Factors
Political/Legal Factors center on the political stability of a country, its legal system, and its general attitude toward business.
Antitrust laws are examined and current philosophies of regulation and deregulation are assessed.
The extent and nature of "Protective Laws" are studied to determine potential problems or conflicts as a business implements its strategy.
Laws regarding required education and/or certification for various jobs are assessed.
Lack of understanding or respect for a particular nation's political predisposition and legal system can be disastrous for a firm's performance and may result in expensive litigation and loss of good reputation.
Rivalry of Competing Firms
Rivalry of Competing Firms increases in intensity when the size of markets shrinks or ceases to grow.
It also increases when there are numerous competitors or equally balanced competitors seeking the same set of customers.
The results of intensified competition can be felt throughout an entire industry.
Prices may fall, more favorable shipping terms may be offered to customers, or selling firms may offer more relaxed payment terms.
Ancillary services to customers may be enhanced and a variety of supplemental purchase incentives may be offered.
The consequence of increased rivalry for most firms is lower net revenues from reduces prices and increased expenses associated with the additional services and incentives offered.