Threaded Questions (Replies)

In the business world, external assessment is what is called the process of evaluating all of those factors that generate an impact directly or indirectly on the company, as stated by Fred & Forester (2017), “the purpose of an external audit is to develop a finite list of opportunities that could benefit a firm as well as threats that should be avoided” (p.61). 

The goal of the external assessment is to identify the potential opportunities and threats of the market or industry that affect the organization, so there is a follow-up strategy developed by the management of the company to embrace the opportunities and reduce the risk of the threats that are being found, “an external audit reveals key opportunities and threats confronting an organization, so managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats” (Fred & Forester, 2017, p.59). These external assessments focus their research or evaluation on five categories or factors known as the PESTLE analysis, those factors to evaluate are: Political, economic, social, technological, legal, and environmental, additionally, to complete the analysis it is imperative to have a thorough research of the competitors which could be achieved by applied the five forces model developed by Michael Porter, as stated by Fred & Forester (2017), “this competitive analysis is a widely used approach for developing strategies in many industries” (p.71).

On the other hand, the internal assessment is focused on evaluating the company from within to identify the strengths and weaknesses in their processes and operations, as stated by Fred & Forester (2017), “identifying and evaluating a firm’s strengths and weaknesses in the functional areas of business, including management, marketing, finance, accounting, operations, R&D, and MIS” (p.89). The idea then of evaluating the internal factors of the company is to exploit the strengths to attack or reduce the weaknesses that could have an impact on the achievement of objectives, additionally, identifying the strengths help the management to find ways to embrace the external factors (embrace opportunities and reduce the threats), according to Nasreen & Afzal, (2020), “both external and internal analysis serves a fundamental role in strategic planning that helps in scanning the institutional environment” (p.322). One of the methods developed to assess internally a company is the resource-based view theory which is intended to find how the company is internally and how that could be linked to the external factors to improve the processes and results, “resource-based view theory asserts that resources are actually what helps a firm exploit opportunities and neutralize threats” (Fred & Forester, 2017, p.93).

As a real-life example, Netflix external assessment could be summarized to three main factors that could generate opportunities and threats depending on their approach to them; first the changing trend of the entertainment consumers since now there are fewer tv usage times and longer smartphones used for diverse activities including entertainment; the social acceptation of productions is changing based on what is know socially accepted and enjoyed and whatnot, this also includes the social prohibitions in different cultures, specially mid-eastern cultures; and finally the economical capability of the consumers to spend on entertainment. Internally, Netflix has a strong economical muscle, diverse plans depending on the economical capability of the consumers, and now the independent production capability which releases them from depending on other studios or productions. Finally, for the weaknesses and threats of the company, the main factors that can be tied to Netflix in this points are the growing competition with platforms and video streamers in the market, or as the main threat is the constant leaks and piracy of the content to be broadcasted by free on the internet.

References:

Fred, R.D.,Forester R.D. (2017). Strategic Management: A Competitive Advantage Approach 16th edition. Pearson Education. 

Nasreen, K., & Afzal, M. T. (2020). Strengths, weaknesses, opportunities and threats in higher education: SWOT analysis of Allama Iqbal Open University Islamabad (Pakistan). Asian Association of Open Universities Journal, 15(3), 321-333. http://dx.doi.org/10.1108/AAOUJ-11-2019-0052

Post Two

External assessment is the management or the company’s evaluation of its external business environment to identify the opportunities or threats that would bring chances for the company to expand or potential business risks. It is very important for a business to understand its external operating environment, obtain knowledge about its competitors, suppliers, and customers, and be aware of various factors such as political factors, economic factors, social or cultural forces, legal impacts, technical developments or influences, and environmental considerations, that might impact the business decisions and develop strategies. There are a handful of models that a company can utilize to perform the external assessment of its business environment including Porter’s five forces, SWOT analysis, and PESTLE analysis.

Internal assessment is the company’s consideration of its internal success factors or its weaknesses that it needs to improve on. An internal assessment can help a company to access its resources, liabilities, business processes to identify competitive advantages or core competence in the long run. A company can use SWOT analysis to perform the internal assessment and evaluate the strengths and weaknesses it has. It can also use the profile matrix to understand the company’s advantages and disadvantages, or its position in the market compared to its competitors by evaluating itself using the profile matrix.

The external assessment focused more on the external environment of a company and how would the factors bring opportunities or threats to the company. The internal assessment focused more on the analysis of the business itself.

I would like to use Lululemon to illustrate its internal and external assessment. When analyzing its external environment and threats coming from outside, Lululemon may look into the economic downturn and uncertainty resulting from the COVID 19 outbreak, the decreased household income, and customer preference for working out and buying sports apparel. Besides, the competition in the sports apparel business is always strong – Lululemon has a handful of competitors including Nike, which has a lot of resources and a strong market presence. In the meantime, the trends of yoga and a healthy lifestyle would bring opportunities to the business. Analyzing it internal environment using SWOT analysis, Lululemon could easily identify that its strengths include high-quality products, good customer support, solid loyal customer base, and innovation. Some of the weaknesses may include the high price compared to similar products in the market and cost control.

Reference:

David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach, concepts and cases. Florence: Pearson–Prentice Hall.

Guidelines

1. Write two separate replies. Each post needs one reply and each reply needs at least 130 words. 

2. Each reply needs at least one reference, please cite in APA 7th Edition format.

3. Do not plagiarize, thank you!