Analysing The External Environment

There are external factors beyond every organization’s control to which they must respond. The first stage to determining how to respond to these is to understand what these forces are and how significant they are to your organization. Learning Outcomes

In this unit you will

Appreciate the difference between the macro and micro environment

Evaluate the techniques available to allow the objective assessment of the external environment including frameworks such as PEST and Porter’s Five Forces

Understand the tools used to evaluate an organization’s competitive position

Study the means of analysing potential and current customer bases to gain understanding.

Having completed this unit you will be able to

Define the organization’s intelligence/research/resource needs to support a rigorous environmental audit

Undertake customer and competitor analyses at the micro level

69Assess the political, economic and social and technological trends at the macro level

Assess the organization’s competitive position in relation to them

Draw together the results of the internal and external analyses to give a summary of the organization’s competitive position.

Key Definitions

Marketing environment is the set of uncontrollable external forces to which a company must adapt.

The Macro environment consists of macro factors and their trends such as politics, economics, societal and technological.

The Micro environment consists of trends at the industry level such as suppliers, competitors and customers.

Environmental scanning is the process of monitoring the environment, and gathering relevant market intelligence to ensure that the organization remains up to date with trends

The marketing environment constitutes the arena in which organizations go about their business