External Analysis - Essay Example

The external analysis is used to define the threats and opportunities in the environment. It is the external factors of the SWOT analysis which is used to lead to the analysis of the company’s core competencies and the identification of the opportunities and threats that the firm may need to take into consideration. These external facts, both opportunities and threats are independent from the organization as they are outside the control of the company. The opportunities refer to the favorable factors in the external environment that can be advantageous to the firm, while the threats are unfavorable conditions of the environment that may cause harm to the company if not avoided.

The external analysis allows the company to keep up to date with the changes in the industry. It helps the organization in keeping track of the stakeholders in the market including the customers and competitors. The outcome of the external analysis comes through the development and implementation of strategies. There are factors that affect the way that organizations perform these factors can be internal environmental factors and external environmental factors. The internal environment encompasses the strengths and weaknesses of the company and covers the internal factors that can be the resources including profitability, sales, or can be capabilities. Factors such as the corporate culture and employees also constitute to the internal environment. On the contrary, external factors are outside of the company. Advancements in technology and changes in government regulations and social policies can be characterized as opportunities or threats for the company. The opportunities for the firm include changes in the trends, changes in the competition, analysis of new markets as well as segments, advancements in information technology, and alterations in government regulations. 

The only thing in common am the ong the opportunities and the threats is the fact that they both take into consideration the external environment of the business as opposed to the internal environment. Threats in the external environment are the factors that affect the organization in some way or the other and are to be overcome. Some of the threats could be the low barriers to entry and hence, emergence of competitors, low growth of the market, unfavorable changes in the regulation, and advancements in technology that are difficult to keep up with.

StilSim: Threats and the Opportunities:

An external analysis of Stilsim would give a detailed view of the opportunities and threats that the company deals with.

Opportunities:

The analysis revealed that among the opportunities are the prospects of expansion and the advancements in technology.

One of the vital aspects of an organization is its prospects for expansion. An attractive opportunity for Stilsim is the choice of spreading to other areas and expanding operations beyond the current region of work. Despite the condition of the markets, businesses of employment firms and recruitment agencies are always in demand. This opportunity for Stilsim can enable it to capitalize on its experience and contacts in the industry and expand its operations to various cities. another opportunity that was recognized as technological opportunities. With the passage of time and the advancements in information technology, there has been an evolution in the way businesses conduct themselves. Technologies that were once seen as far-sighted notions are now household commodities. This advancement in technology has provided more opportunities for businesses. Stilsim can reach its potential customers through its web presence. It could mold its website according to the needs of the customer and current trends. The internet could be exploited to communicate the core values of the business and use it for E-marketing.

Threats:

The threats in the external environment include the company's incompetence regarding technology and the use of state-of-the-art systems. Stilsim is still dependent upon the use of manual systems for its operation and is not agile towards novel internet marketing techniques. As the business idea spreads around, there are more and more competitors entering the market. Stilsim has a threat of competitors that could learn from the previous businesses and perform better. The change in the demographics and geographical distribution of the population has made it difficult for Stilsim to retain its customer base. Furthermore, there is a deteriorating situation within the firm as the employees of Stilsim are dissatisfied and do not feel a sense of belonging to the company. Sue Maxine and other employees in similar situations are a source of threat to the company.

Porter’s Five-Force Model:

It is imperative for an organization to keep track of the competition and be agile to the changing needs of the market and consumers. Porter's Five forces model helps in identifying the forces of the environment. Among the factors that have effects on Stilsim are the following:

Bargaining power of buyers:

With the increase in competition, buyers will have more choice. As there is an increase in choice for the buyers they could demand lower prices and more services or they could switch to other service providers.

Threats of new entrants:

As new entrants come into the market, Stilsim will lose some share of the market. With the new competition in the market such as Don Wilson and monster.com, profit margins could decrease leading to negative implications for the organizational culture.

The threat of substitute products or services:

Again, with the increase in competition in the market, there is pressure on Stilsim to keep up with the competition and retain its customer base by providing better services and keeping costs down.