EXTERNAL ASSESSMENT
Focuses on identifying and evaluating trends and events beyond the control of a
single firm.
EXTERNAL FACTORS
Political Factors
Political factors result from the processes and actions of government bodies that can
influence the decisions and behavior of firms.
Economic Factors
Economic factors in a firm’s external environment are largely macroeconomic,
affecting economy-wide phenomena.
Socio-Cultural Factors
Sociocultural factors capture a society’s cultures, norms, and values.
Technological Factors
Technological factors capture the application of knowledge to create new processes
and products.
Ecological Factors
Ecological factors involve broad environmental issues such as the natural
environment, global warming, and sustainable economic growth.
Legal Factors
Legal factors include the official outcomes of political processes as manifested in
laws, mandates, regulations, and court decisions—all of which can have a direct
bearing on a firm’s profit potential.
PORTER`S FIVE FORCES
A tool for examining the industry-level competitive environment, especially the
ability of firms in that industry to set prices and minimize costs.
COMPETITIVE RIVALRY
● Threat of New Entrant
The possibility that the profits of established firms in the industry may be
eroded by new competitors.
● Bargaining Power of Buyer
The threat that buyers may force down prices, bargain for higher quality or
more services, and play competitors against each other.
Focuses on identifying and evaluating trends and events beyond the control of a
single firm.
EXTERNAL FACTORS
Political Factors
Political factors result from the processes and actions of government bodies that can
influence the decisions and behavior of firms.
Economic Factors
Economic factors in a firm’s external environment are largely macroeconomic,
affecting economy-wide phenomena.
Socio-Cultural Factors
Sociocultural factors capture a society’s cultures, norms, and values.
Technological Factors
Technological factors capture the application of knowledge to create new processes
and products.
Ecological Factors
Ecological factors involve broad environmental issues such as the natural
environment, global warming, and sustainable economic growth.
Legal Factors
Legal factors include the official outcomes of political processes as manifested in
laws, mandates, regulations, and court decisions—all of which can have a direct
bearing on a firm’s profit potential.
PORTER`S FIVE FORCES
A tool for examining the industry-level competitive environment, especially the
ability of firms in that industry to set prices and minimize costs.
COMPETITIVE RIVALRY
● Threat of New Entrant
The possibility that the profits of established firms in the industry may be
eroded by new competitors.
● Bargaining Power of Buyer
The threat that buyers may force down prices, bargain for higher quality or
more services, and play competitors against each other.
