ABSTRACT
The rapidly changing external environment faced by firms has placed heightened demands on strategic managers. Not only must they identify the changes, but they also have to develop a strategic management response – how the firm’s strategy and architecture will be altered to adapt to and exploit these changes. At the same time, the value of any strategy and thus the firm’s performance is also affected by these changes. Some of the changes make traditional business models obsolete – witness the growth of downloading of music and entertainment. Others change the rules for existing competitors, and challenge the assumptions of others, both new and old. Environmental analysis is therefore not a passive exercise, but rather an active and essential input to strategy development, helping the firm and its business units identify attractive opportunities and make decisions on where, and how, to compete.
