Chap 3 Fred R David
THE EXTERNAL ASSESSMENT - Summary |
The External Assessment or External Audit is a very essential part of the Strategic Management Process. Due to the turbulent situation around the globe, it is very much necessary for organizations to conduct an effective and efficient External Audit. The purpose of external audit is to develop a list of possible opportunities and threats that an organization can face in its outer/external environment. Identifying and evaluating external opportunities and threats enables organizations to develop a clear mission, to design strategies to achieve long term objectives, and to develop policies to achieve annual objectives.
The process of performing an external audit should include as many managers and employees as possible. This creates understanding and commitment from organizational members.
There are a few external forces that an organization should take into account while making strategies. These forces can be divided into five categories: * Economic Forces:
Economic factors have a direct impact on the potential attractiveness of various strategies. For example, as interest rates rise, funds needed for capital expansion becomes costly or unavailable. In such cases, the organization’s strategies should be amended in such a way to get hold of any such Economic change that can overall affect the working of an organization. Some other key economic factors are Inflation rates, GDP trend, Stock market trends, Currency valuation, Monetary policies, Fiscal policies, Tax rates, Government Budget Deficits, and Price fluctuations etc.
State Corruption can also lead to economic downfall and can act as a potential threat to organizations. For instance, in Russia, political bureaucracy demoralizes economic progress and entrepreneurship. Russian businesspersons who do not favour local government are targeted with extensive taxes, tariffs, fines, and intrusive inspections. So far, Russia is not considered the suitable place for business
The External Assessment or External Audit is a very essential part of the Strategic Management Process. Due to the turbulent situation around the globe, it is very much necessary for organizations to conduct an effective and efficient External Audit. The purpose of external audit is to develop a list of possible opportunities and threats that an organization can face in its outer/external environment. Identifying and evaluating external opportunities and threats enables organizations to develop a clear mission, to design strategies to achieve long term objectives, and to develop policies to achieve annual objectives.
The process of performing an external audit should include as many managers and employees as possible. This creates understanding and commitment from organizational members.
There are a few external forces that an organization should take into account while making strategies. These forces can be divided into five categories: * Economic Forces:
Economic factors have a direct impact on the potential attractiveness of various strategies. For example, as interest rates rise, funds needed for capital expansion becomes costly or unavailable. In such cases, the organization’s strategies should be amended in such a way to get hold of any such Economic change that can overall affect the working of an organization. Some other key economic factors are Inflation rates, GDP trend, Stock market trends, Currency valuation, Monetary policies, Fiscal policies, Tax rates, Government Budget Deficits, and Price fluctuations etc.
State Corruption can also lead to economic downfall and can act as a potential threat to organizations. For instance, in Russia, political bureaucracy demoralizes economic progress and entrepreneurship. Russian businesspersons who do not favour local government are targeted with extensive taxes, tariffs, fines, and intrusive inspections. So far, Russia is not considered the suitable place for business