Question

The global recession forced thousands of firms into bankruptcy. Does this fact alone confirm that external factors are more important than internal factors in strategic planning? Discuss.

Your response should be at least 200 words in length.

Answer 1

There are various factors that are contributing in the successful running of a business. It has always been suggested that both internal and external factors should be considered before making any strategy because these variable can have deep impact on Business. Analysis of Internal factor can be controlled to certain limit but external factor cannot be controlled thus proper risk evaluation and respective mitigation planning has always been recommended. We have seen a situation where global recession forced thousands of firms into bankruptcy which make us to believe external factor is the main factor that decides the fate of business but it is not true completely. Most of the company that went into bankruptcy have a common assumption which got failed in actual sense these company couldn’t able to account the change in variable and thus suffer heavy losses when that variable changes. Strategy planning is a process where there is a thorough analysis of each and every factor that may impact company and how company will deal with those factors so as to make the maximum profit. Proper analysis of data and building strong internal process are some of the ways of minimizing the impact of external factor on our strategic planning. The company if working on certain revenue model or following any specific financial model need to review it after an interval of fixed time so as to analyze the change in external factor and its impact on current business. Thus a good strategic planning include contingency plan for any change in external factor.