External Environment, Power / Weakness, and Decision Models
Discussion must be in current APA format and must include a reference list. Reference sample make sure to include DOI-Drollinger, T., Comer, L. B., & Warrington, P. T. (2006). Development and validation of the active empathetic listening scale. Psychology & Marketing, 23(2), 161-180. https://doi.org/10.1002/mar.20105
There needs to be 2 scholarly references, 1 required from list below, and 1 biblical references from the King James bible in the paper
Must use one of these in references:
1. Gamble, J., Peteraf, M., & Thompson, A. (2021), Essentials of strategic management, McGraw-Hill Course Content Delivery (7th ed.), New York, NY. ISBN: 9781260785791.
2. Keller, T. (2014), Every good endeavor: Connecting your work to God’s work, Riverhead Books, New York, NY. ISBN: 9781594632822.
3. Krogerus, M., & Tschäppeler, R. (2017), The decision book: 50 models for strategic thinking., W.W. Norton & Co. (Revised ed.), New York, NY. ISBN: 9780393652376.
4. Rumelt, R. (2011), Good strategy/bad strategy: The difference and why it matters., Crown Business, New York, NY. ISBN: 9780307886231.
Discussion Thread:
External Environment, Power / Weakness, and Decision Models
Evaluating the external environment that the company does business in is critical to the process of developing a company’s strategy. When evaluating the external environment, it is important to understand key sources of power or weakness that exist. Decision models continue to impact strategy development and should continuously be evaluated, and others considered.
Minimum of 500 words in the body
Minimum of 2 sources from the literature in addition to course texts
Current APA format must be used.
Use the following outline:
• Introduction
• Process: Evaluating the External Environment – What is the process in no less than 200 words
• Strategic Thinking: Discussion of a Key source of Power / Weakness ‐ What is it and why is it important in no less than 200 words
• Decision Model: no less than 100 words
• How do my decision models aid / hinder this process and why
• What other decision models are being considered and why
• Conclusion
• Support your factual assertions with citations.
Include an Annotated Bibliography, in current APA format, of the 2 additional Sources:
Minimum of 200 words in each annotation
Summary of Key Points
Evaluation of the Quality of the Publication Evaluation of the Quality of the Author(s) Where this fits into the discussion
ANSWER
Evaluating the External Environment
The external environment of a business plays an essential role in the success of the business. It is as important as the internal environment. The difference between the external and the internal environment is that the business has little control over the external environment. The external environment is characterized by different degrees of complexity (Gamble et al., 2021). Thus, a business must evaluate its external environment and understand the steps to take to ensure that the business does not fail. The business does not control the external environment, and thus, the only step that it can take is adapting to the environment and ensuring that the vision and mission align with the external factors to ensure that it succeeds. A successful evaluation of the external environment gives a business the opportunity to exploit the potential market and prepare for unanticipated scenarios.
Process: Evaluating the External Environment
Understanding the external environment of an organization is an essential part of having a successful business. This means that if the managers understand the external environment, they can exploit the opportunities. Changes in the external environment cause uncertainty for businesses. For example, there have been external environmental uncertainties such as the COVID-19 pandemic, the Russia-Ukraine war, and the hike in gas prices (Edmondson, 2018). All these are external environmental factors the business does not have control over. However, evaluating the external environment can help the business make decisions that will help it during hard times. One method of evaluating the external environment is the PESTEL analysis. This type of analysis is used to analyze the general environment, but it could be helpful in analyzing the external environment of an organization.
The external environment has threats and opportunities. It is thus important for the business to understand the opportunities and the threats before making any decisions. PESTEL stands for P for the political segment, E for the economic, S for the social, T for the technological, E for the Environmental, and L for the legal. These factors are out of control for the business, and thus this is a good way of evaluating the environment. According to the PESTEL analysis, the environmental factors involve factors such as natural disasters and weather patterns. It is important for the business to evaluate the treats such as pollution and look at the opportunities the external environment offers.
Strategic Thinking
The external environment affects businesses. Businesses do not have a direct impact or control over the external environment. However, strategic thinking can help the organization in ensuring that it seizes the opportunities. For example, the pandemic was an external factor that led to the failure of businesses. Most businesses that had never evaluated their external environment and possible threats that come from the environment did not have a strategic model that could help them during the pandemic (Wheelen et al., 2017). Those who had already thought of the threats from the external environment had already prepared for such eventualities. This meant that businesses such as hotels turned to online selling. They would sell their products online and deliver them online. This became their point of strength. They also offered comfort food during the hard times, and this helped their businesses (Gamble et al., 2021). Strategic thinking helped these businesses keep their businesses running even when most were closing. According to proverbs, strategic thinking and planning are important factors in any business. According to proverbs 16:1, “Commit to the Lord whatever you do, and your plans will succeed.” This means that planning and strategic thinking are God’s plans, and they are a phenomenon that businesses should embrace.
Decision Model
The five forces analysis is an excellent tool for evaluating the external environment. Evaluating the external environment can be aided by many models, such as the PESTEL analysis and the five force model. The five force model contains buyers, the threat of new entrants, suppliers, buyers, Rivalry, and substitute products. All of these highlight the problems caused by the external environment (Edmondson, 2018). They guide the business in making the best decisions for the business. They also ensure that the decisions being made are for the best outcome for the business. For example, the threat of new entrants can be approached by increasing the quality of services provided and lowering the prices. This will ensure the customers remain loyal to the business.
Conclusion
Evaluating the external environment is important for any business. It is important as it aids in making the decisions that best impact the business. For example, by evaluating the external environment, the company can assess the risk and create a risk prevention program and risk preparedness. This helps the business in case of factors such as economic recessions.
Annotated Bibliography
Edmondson, V. C. (2018). Evaluating a Company’s External Environment: The Firm Industry–Society Relationship. In The Thinking Strategist: Unleashing the Power of Strategic Management to Identify, Explore and Solve Problems (pp. 79-91). Emerald Publishing Limited. https://doi.org/10.1108/978-1-78756-157-120181008
According to Edmondson (2018), evaluating the external environment is as important as evaluating the internal environment of a business. However, identifying the threats and opportunities in business can be quite challenging as some experts cannot offer the definition of threats and opportunities. People view opportunities and targets differently. Some companies might view threats as an opportunity. Thus, there are no concrete definitions of opportunities and threats. Edmondson (2018) states that opportunities and threats are not tied to a single firm. They are found industrywide. For example, the threats and opportunities in the auto industry do not only face one auto company, they face the auto industry at large. Each of the segments highlighted in the PESTEL analysis should be analyzed to ensure the business is prepared for all the external forces that might affect the environment. According to Edmondson, trends in each segment have negative and positive implications for the industry and the company. There is a possibility of contradictions between trends, advantages can be exploited in future strategies.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy (Vol. 55). Boston: Pearson.
According to Wheelen et al. (2017), strategic decisions are different from any other decisions. Strategic decisions are consequential, and thus, they are important in the organization. Strategic thinking involves thinking about the outcome of the organization’s decisions. According to Wheelen et al. (2017), planning is an important part of any organization. Evaluating the external environment enables the business to plan and make decisions that benefit the organization. For example, after doing an external evaluation and identifying the threats and opportunities, strategic thinking and decision-making will enable the leaders in the organization to make the best decision for the business. For example, if there are threats such as natural disasters in the business environment, the business can decide to move to a new area or prepare for the threat. The business can also use the opportunities in the environment while planning for the risks.
References
Edmondson, V. C. (2018). Evaluating a Company’s External Environment: The Firm Industry–Society Relationship. In The Thinking Strategist: Unleashing the Power of Strategic Management to Identify, Explore and Solve Problems (pp. 79-91). Emerald Publishing Limited. https://doi.org/10.1108/978-1-78756-157-120181008
Gamble, J., Peteraf, M., & Thompson, A. (2021), Essentials of strategic management, McGraw-Hill Course Content Delivery (7th ed.), New York, NY. ISBN: 9781260785791.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy (Vol. 55). Boston: Pearson.
King James Bible.
