Question

External and Internal Analysis of a business definition:

The internal analysis tries to identify the current strategy and the position of the company against the competition. The resources and abilities of the company must be evaluated, with special attention to the detection and elimination of weak points and enhancement of strong points, as well as the capacity of resistance of the company itself, that is, its strength in the event that the strategic formulation fails.

The external analysis determines the strategic factors of the environment, in order to detect possible difficulties and opportunities for the company. This will be the specific factors of the study of current competitors, their market share, possible future competitors, technological development, information and communication systems, substitute products, etc.

Please describe the tools within both the External and Internal Analysis of a business.

PESTLE Analysis

SWOT Analysis

Please describe the purpose of each

PESTLE Analysis helps the businesses to study the external prospects and threats in the market of study. Those can be the political changes, economic, legal, technological, environmental, and social factors.

SWOT Analysis: with the SWOT analysis companies can undertand their Strenghts, Weakness, Opportunities, and Threats.

The Five Forces: Focus in 5 forces that can affect the business as: competition - potential entrants, existing competitors, buyers, suppliers and alternative products/services.

• 1. How do the set of external analysis tools interconnect with the set of internal analysis tools? Please be specific.
• 2. Which comes first: external or internal analysis? Why is this important?

please answer the questions 1 and 2

thanks

Answer 1

The set of external analysis tool interconnects with internal analysis tool in the sense that the organization strategy is based on both these analyses and how the strengths and weakness of the company will factor in the external analysis. For example. A company's weaknesses are its processes which might not be compliant with the legal requirements of a company. Therefore, it is a strategic call of the company's management either to improve the processes to meet the legal requirements or to manage the policy requirements. The company's strengths must also be in synergy with the social and cultural requirements of the company. For eg: Kellogs failed in India because Indians are used to eating hot breakfast rather than cold breakfast. This synergy and knowledge of social factors have to complement each other.

First come internal analysis since the company must know its strengths and weaknesses and its organization's structure, culture, processes etc. This enables a company to formulate a strategy which must be in synergy with the external analysis. The company can change its processes based on the requirements of each market.If a company doesn't know itself, it cannot formulate a strategy to enter new markets.