In a business arena, managers that are unable to assess the environment they are up against, will most likely have a hard time navigating a course that will help them achieve their goals. Highly successful company leaders on the other hand, are able to see trends, anticipate how industry changes will affect them, and act quickly to adapt to them by devising strategies that will maintain their competitive edge. Business strategist expert, Michael Porter (2011) suggests that strategies should also include the identification of what actions not to take as much as deciding which actions to move forward on, especially because of the limited supply of resources that are available (Porter, 2011). For example, many companies implement strategies to keep costs down and may contemplate outsourcing certain tasks. Without conducting an external analysis to assess all the components and consequences involved in making this change, they risk not being fully prepared to weather any obstacles that may occur from this decision.
The positive implications of this strategy, for example, will no doubt reduce the company’s resources in employment costs. The downside of this strategy, however, is that the company is looking to reduce the local work force. This will leave many well qualified individuals out of a job and seeking employment elsewhere. In other words, the outsourcing strategy implemented by the organization, will create a situation that helps contribute to the economic downturn of that community where the business operates. The organization, therefore, must also include in their external analyses strategies, how this change will affect the community and in turn effect their industry.
By including an external analyses in the developmental stages, leaders are in a better position to support more efficient methods and adjust to industry changes without creating a new set of challenges. In short, by laying-off local employees, the organization must address how this strategy will affect the consumers who because of their unemployment status, are no longer in a strong financial position to feel confident purchasing more goods and services. The implications, therefore, of downsizing and outsourcing, can be severe if the corporation does not also include in their analyses, how the changes may affect the economy of the populace that supports their business.
In the ebook, The Strategy Behind an External Analysis (soon to be released on audio book) my research work revealed that the brightest leaders developed the best strategic plans because they included external analyses to help them in the decision making process (Berry, 2014). To help them get a better idea of the significant threats and opportunities the firm may face, they ask some of the following questions:
· What events are happening in the world arena?
· What does this mean?
· What changes need to occur for positive results?
· What is the next step?
In conclusion, by addressing these and other important components about the external environment an organization is up against, leaders are in a better position to assess their weaknesses and strengths which in turn, can help them plot out the best navigational course for achieving their goals.
Well, that wraps up today’s post! Thanks again for stopping by! We will conclude the discussion on the importance of external analyses on Friday. Until then … stay organized my friends!
However beautiful the strategy, you should occasionally look at the results. – Winston Churchill
If you are interested in more tips and information on effective strategic planning or want to find out how to purchase any of our accelerated learning Business Life titles, please visit our website at:
Berry, M. A. (2014). Organizational management: The strategy behind an external analysis. Las Vegas: Kindle Direct Publishing.
Porter, M. (2011). HBR’s 10 must reads on strategy. Boston, MA: Harvard Business Review Press.