PPT: Strategic Analysis: External Environment | Financial Management & Strategic Management for CA Intermediate PDF Download

 Page 2


Learning Outcomes
? After studying this topic you should be able to:
? Understand the role of external analysis in 
strategy formulation.
? Use a range of tools to analyse an 
organisation’s external environment.
? Explain the limitations of these analytical tools 
and the role of more subjective analytical 
approaches.
Page 3


Learning Outcomes
? After studying this topic you should be able to:
? Understand the role of external analysis in 
strategy formulation.
? Use a range of tools to analyse an 
organisation’s external environment.
? Explain the limitations of these analytical tools 
and the role of more subjective analytical 
approaches.
Link to overall strategic management
? “Strategic management includes understanding 
the strategic position of an organisation, strategic 
choices for the future and managing strategy in 
action (Johnson et al., 2008:12).”
? Strategic position identifies the impact of
? External environment
? Strategic capability
? Expectation and influence of stakeholders on 
strategy 
Page 4


Learning Outcomes
? After studying this topic you should be able to:
? Understand the role of external analysis in 
strategy formulation.
? Use a range of tools to analyse an 
organisation’s external environment.
? Explain the limitations of these analytical tools 
and the role of more subjective analytical 
approaches.
Link to overall strategic management
? “Strategic management includes understanding 
the strategic position of an organisation, strategic 
choices for the future and managing strategy in 
action (Johnson et al., 2008:12).”
? Strategic position identifies the impact of
? External environment
? Strategic capability
? Expectation and influence of stakeholders on 
strategy 
The Business Environment 
(Johnson et al. 2008: 54)
The 
Organisation
Page 5


Learning Outcomes
? After studying this topic you should be able to:
? Understand the role of external analysis in 
strategy formulation.
? Use a range of tools to analyse an 
organisation’s external environment.
? Explain the limitations of these analytical tools 
and the role of more subjective analytical 
approaches.
Link to overall strategic management
? “Strategic management includes understanding 
the strategic position of an organisation, strategic 
choices for the future and managing strategy in 
action (Johnson et al., 2008:12).”
? Strategic position identifies the impact of
? External environment
? Strategic capability
? Expectation and influence of stakeholders on 
strategy 
The Business Environment 
(Johnson et al. 2008: 54)
The 
Organisation
External analysis stages
? Macro-environment – these are broad trends shaping the 
national and international environment in terms of political, 
economic, social and technological trends (i.e. PESTEL factors, 
key drivers ).
? Micro-environment – this is the operating environment or 
industry sector in which the firm competes. It addresses a range of 
issues such as suppliers, customers, competitive intensity, threat 
of new entry and of substitute products arising (i.e. the ‘five-
forces’ analysis). 
? Competitor analysis – seeks to understand the rival offers from 
other firms seeking to serve the same customers and to out 
manoeuvre their managers with our innovation and competitive 
moves. 
? Market analysis seeks to evaluate the current needs of today’s 
customers and the emerging needs of tomorrow’s customers so 
new products can be anticipated. These will be different in 
different market segments. 
Analysing the external environment involves breaking a complex inter-
related reality into sets of issues to make the analysis manageable. The 
main sets of issues are usually: