ABSTRACT
This chapter assesses why an environmental analysis is important before strategy decision. It explains market entry and market exit barriers. The chapter describes the elements of macro analysis and their impact on the strategy-finding process. It also explains the major factors of the firm's industry environment. The chapter also determines how the micro analysis and strengths–weaknesses–opportunities–threats (SWOT) are linked in terms of strategy finding. The process of the environmental analysis reassembles a funnel where rather general country market data. The environmental analysis provides informational evidence for the management's international target market selection. Aspects of the institutional environment have a direct impact on a firm's market entry strategy in a foreign target market. The economic analysis targets financial indicators of the foreign target market. Stable environments in terms of legal and political systems of the target country are of vital importance for sustainable business success in the target market.
