Strategy Formulation: Analyzing the External Environment

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Introduction

Crafting a winning business strategy is a lot like preparing for a wilderness expedition: you wouldn’t just start off unprepared and hope for the best. Instead, you’d study the weather, know the terrain, and perhaps avoid trails marked “Danger: Bears.” In the corporate wilderness, analyzing the external environment serves the same purpose.

You need to understand industry dynamics, competitor moves, and broader trends to have a full grasp of the landscape to spot opportunities, threats, and any market ambushes lurking around the corner. This is done by a thorough external environment analysis, which in essence is to obtain competitive intelligence (CI) through environmental scanning and monitoring.

Environmental Scanning & Monitoring

Imagine environmental scanning as the corporate equivalent of checking the news, the weather app, and your horoscope all at once. Companies keep an eye on economic trends, technological changes, and social shifts to spot early signals of change. Monitoring these signals over time helps spot patterns.

Competitive Intelligence (CI)

Competitive Intelligence is simply collecting and interpreting market data to make informed decisions…