The External Environment And Internal Environment

Table of Content

Presents, the economic landscape is complicated and mutable. As the development of globalisation, the international competition intensifies. The demands of consumers change invariably. The scientific discipline and engineering develop quickly. Furthermore, there are some unstable factors such as terrorist act and regional war which impacts on concern. Thus, companies are faced with great challenges in order to accomplish endurance and development. Therefore the statement that companies do non necessitate to take excessively much attempt to acquire success in usual economic times when economic systems are turning is non appropriate.

Although, in hard times, such as the current planetary economic downswing, some companies may be confronted with great crisis or even bankruptcy, some companies may acquire good chances and go really successful by taking advantage of the state of affairs. This paper foremost discusses the chances and menaces with which the companies are faced in usual times. Then, the paper analyzes the chances and menaces with which the companies are faced in hard times.

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The chances and menaces in usual times

In order to do right strategic preparation and strategic implement, the external environment and internal environment should be considered. The five forces theoretical account was put frontward by Michael Porter. The five forces theoretical account has a planetary and important consequence on the companies ‘ strategic preparation ( MBAlib, 2008 ) . The five force theoretical account is used to analyse the competitory schemes and can analyse the competitory environments efficaciously. The five forces are: risky of entry by possible rivals, industry competition, dickering power of purchasers, dickering power of providers and menaces of replacements ( Hill and Jones, 2009, pp53 ) .

The competition can non be merely regarded as competition among rivals. It is a system which involves five forces. In usual times, as the economic system grows, the competitory environment may go more complicated. The industry with considerable profitableness will convey approximately investing to this industry. When the economic system grows, the investing will increase. Then the risky of entry by possible rivals will increases. The new entrants will vie with the bing rivals for natural stuffs and market portions. This can do the profitableness of this industry autumn or even threats the endurance of some bing companies.

Thus the competition in this industry becomes fiercer. When the economic system grows, the scientific discipline and engineering develops fast. Thus the merchandises are updated or invented quickly. The menaces of replacements are terrible. Besides, the degree of ingestion of consumers is enhanced because of the growing of economic system. The consumers can afford to purchase more merchandises. However, as the rivals of the industry increases, the bargaining power of purchasers additions. Although there may be more providers, the demand for natural stuff besides increases. So, it is possible that the bargaining power of providers additions.

Even if in usual times when economic systems are turning, the competitory environments are still really terrible. Sony ‘s experience will turn out the fierceness of the rivals. In 1975, Sony seemed to hold an unbeatable prima topographic point due to their advanced Betamax merchandise, which is considered to be superior to their rivals ‘ VCR merchandise. Sony had a competitory advantage over their rivals. However, Sony was defeated. The two comparatively minor rivals of this industry, JVC and Matsushita, acquire allied. The Betamax portion of the planetary market was captured and destroyed by the confederation. At last, Sony had to halt the production of Betamax in the late eightiess ( Pech and Slade, 2005 ) . In usual times, companies take advantage of every chance to acquire developed. Companies even attack rivals in order to acquire success.

In the usual times, there are more chances for companies to develop. The general external environment is comparative easy for companies. The company may go insensitive to the alteration of the external environment or even self-satisfied about its present state of affairs. This mentality is one large menace for the strategic ends of the company ( Pech and Durden, 2004 ) . The complacence can do the directors of the company are unwilling to hear the unpleasant intelligence. The directors are isolated from nonsubjective information and do incorrect determination. The failure of Xerox has given a good lesson ( Pech and Durden, 2004 ) .

Besides, the complacence can do the company undervalue the enemy and overrate one ‘s ain capableness. A good illustration is the Vietnam War. The USA was trapped in the war for their undervaluing the capableness of Vietnam military personnels ( Pech and Durden, 2003 ) . Besides, the company may be unable to accommodate. The company is unwilling to be proactive. The invention is ignored. It prefers to be a follower instead than a leader. All of these may shorten an organisation ‘s life span ( Pech and Durden, 2004 ) .

The balanced scorecard is a tool for strategic implement. The balanced scorecard was proposed by Robert Kaplan in Harvard Business School and David Norton in Nolan Norton Institute in 1990. The balanced scorecard take shared vision and scheme of the organisation as nucleus ( MBAlib, 2008 ) . It adopts integrated and balanced doctrine to transform the shared vision and scheme of the organisation to concrete ends of low-level sections in fiscal, client, internal procedures and invention and larning positions ( Kaplan and Norton, 2004 ) .

The status of end implement in fiscal, client, internal procedures and invention and larning positions is measured. Then in term of the feedback, the schemes of the company are adjusted and the established vision and end are modified to do certain the schemes can be implemented successfully. The long-run endurance and development of the company can be realized. The company can acquire success.

In usual times, when economic systems are turning, the companies get more chances to acquire developed. However, that does non intend the company can acquire successes easy. Merely when the company gets more competitory advantages and derive above-average returns, it is successful. When economic systems are turning, the competition becomes severer. This state of affairs is like sailing against the current. The boat will either travel in front or maintain falling. Thus the company needs to save no attempt to endeavor for competitory advantages to acquire success, or the company would dawdle behind.

The chances and menaces in hard times

In hard times, some companies are faced with the autumn of profitableness or even bankruptcy. However, some companies may run into good chances and go really successful. In hard times, the risky of entry by possible rivals lessenings. In hard times, the economic depression causes the lessening of investing. There will be fewer entrants. Besides, the baleful external environment may convey about terrible challenges to this industry.

Some rivals may travel belly-up. Thus the competitions are comparatively alleviated. As the companies of this industry lessening, the bargaining power of purchasers is lowered. As investing lessenings, the updating velocity of replacements lowers. Therefore although the general external environment is hard, the industry environment is comparatively advantageous to some companies. The company can accomplish success by taking advantages of the state of affairs.

The outgrowth of the USA is a typical illustration. During the universe war one and the universe war two, the USA took advantages of the state of affairss to do weaponries trade. As many states were involved in the war, the competition in weaponries industry was non acute. Meanwhile, the weaponries industry has high entry barrier. Thus the bargaining power of the purchasers was weak. Meanwhile, as the provider of weaponries, the bargaining power of the USA is strong. Therefore, the USA obtained enormous net incomes from the weaponries industry in the hard times.

Presents, the chief hard times are caused by planetary fiscal crisis. As a affair of factors, if the word “ crisis ” is translated into Chinese, it maintains two Chinese characters. One character means menaces and another agency chances. Some companies may prehend the chances in the planetary fiscal crisis and go successful.

As the rivals of the industry may be belly-up, the industry psychiatrists. The market portion of some companies may be boosted. Besides, the fund ironss of many companies rupture and the assets of many companies depreciate. This provided good opportunities for some company to accomplish amalgamation and acquisition. To some companies, the fiscal crisis may hold good consequence on advancing their external competitory power.

As the information is unpredictable, the gait of alteration additions in concern. As the more companies are attacked by the turbulency of the external environments, the companies are more likely to alter. This is frequently a reactive nature. The planetary fiscal crisis can ease some companies to alter, modify their schemes and promote their internal environments. The planetary fiscal crisis causes the work force flow. Some companies attract more outstanding employees. Besides, some companies can acquire more support and aid from authorities.

Besides the influence of external environment, the internal environments of the company besides really of import. The planetary fiscal crisis can give rise to the outgrowth of new industry and new merchandises. If the transmutation of the industry is realized seasonably to follow new engineerings and new methods, the company can run into the demands of new industrial accommodation. Therefore, making demands and researching market is really of import. The company should set up an information system.

The company should scan the external environment, gather the pressing informations and obtain clear, prompt, indifferent and thorough information ( Pech and Durden, 2004 ) . Besides, the information should be analyzed quickly and widely and the directors and employees can happen the menaces and chances that it announces. Based on the information, the schemes of the company are formed or adjusted. Meanwhile, an intelligent response by employees is demanded ( Pech and Slade, 2004 ) .

In trouble times, some companies can take advantage of the state of affairs to be successful. The of import cause of their success is their ability to scan and process information to do rapid response. The company can analyse the information to see the menaces and chances. Therefore, they make appropriate schemes to prehend chances to acquire competitory advantages. Therefore, chances recognition plays an of import function in the success of the companies. Bill Day, the victor of the 2000 Ernst and Young Entrepreneur of the Year Award in New Zealand and the proprietor of Seaworks, set a good illustration to turn out the importance of chances acknowledgment ( Pech and Cameron, 2006 ) .

The planetary fiscal crisis gives rise to the demand for differential merchandises and service. In the planetary fiscal crisis, some companies can take advantage to ease the transmutation. The company should optimise the resources, promote capablenesss, acquire nucleus competence and develop distinction. Harmonizing to fiscal, client, internal procedures and invention and acquisition in the balanced scorecard, the company adjusts and modifies the schemes to acquire success.


In order to do successful scheme, both the external environment and the internal environment demand be considered. In usual times, the general environment is good for the development of companies. Although economic systems are turning, the competitions become ferocious. Meanwhile, the internal environments besides play a function on the success of the company. Therefore, in order to acquire success, good general environment is non plenty.

The company besides needs to save no attempt to acquire competitory advantages. In the hard clip, there are still chances. Although the general external environments are non good, some companies with outstanding information system can besides be sensitive to chances and acquire chances to acquire success. Besides, the external environments, the company can besides take advantage of this state of affairs to ease transmutation and advance the strength and nucleus competence of the company to acquire success.

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