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Strategic Management 6 External Analysis
6 External Analysis
6.1 Introduction – Definition: External Analysis
There are two parts or levels - Environmental analysis of the ‘far’ or ;macro’ environment affecting all firms, and the
industry analysis of the ‘near’ or ‘micros’ environment which is much more specific.
• Benefits of external analysis include
• Increasing managerial awareness of environmental changes.
• Increasing understanding of the context in which industries and markets function.
• Increasing understanding of multinational settings.
• Improving resource allocation decisions.
• Facilitating risk management.
• Focusing attention on the primary influences on strategic change.
• Acting as an early warning system
6.2 Explanation
6.2.1 The far or macro environment
The macro-environment represents forces that affect all firms across all industries.
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