Importance of External Environmental Analysis in Strategic Management
Micro and Macro factors in the BusinessMicro factors look at the specificity and macro factors look at the overall economy/business. Micro factors can be influenced because it is an assessment of the specific firm, and Macro factors are less influenced because it is external factors that are difficult to predict and understand. Therefore, micro factors are the factors of the specific firm such as the functional department, policies, procedures, laws, and others which can be influenced and changed when necessary. But, macro factors are external factors/segments such as demographics, political, legal, socio-cultural, technology, environment, legal issues that can be difficult to predict and influence.
External Environmental AnalysisScanning- It's very important as it helps to analyze the trends and patterns across the various industrial activities. It looks at the ability of industry and demand to be fulfilled ability, competence, and capability of a firm.
Monitoring- It is examining the activities happening during the scanning of an environment. It looks at whether an organization can achieve the goals, and look at the flow of activities/analysis.
Forecasting- It is the projection of future trends and activities. It is not a prediction and is projected by analyzing current trends and forecast future trends and activities.
Assessing- It is time management to identify the above all EEA processes such as scanning, monitoring, and forecasting. A good product by itself is not sufficient, so it requires proper assessment to gain a competitive advantage over competitors.