Developing Strategy through External Analysis

Read this section to learn the difference between internal and external forces and how they affect organizations. Attempt the exercises at the end of the section.

Developing Strategy Through External Analysis

LEARNING OBJECTIVES

  1. Understand the basics of general environment analysis.
  2. See the components of microenvironment analysis that support industry analysis.
  3. Learn the features of Porter's Five Forces industry analysis.

In this section, you will learn about some of the basic external inputs for strategy formulation – the determinants of a firm's opportunities and threats. We will focus on three aspects of external analysis here, though you recognize that these should be complemented by internal analysis as well. For the external environment, it is best to start with the general environment, and then work your way into the focal industry or industry segment.

Creative Commons License This text was adapted by Saylor Academy under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without attribution as requested by the work's original creator or licensor.