Question

list and explain the internal and external factors that an organization need to access for formation of successful stratergies

Answer 1

There can be many different factors that may influence the strategies and their planning in a business organization. The prominent ones include the internal factors, the external factors, as well as the leadership. Some of these factors may be more static when compared to others and a strategy may lie on a continuum that lies between the emergent and the planned or deliberate strategies. Methods used for strategic planning, including the SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis take an overview of the internal factors (the strengths and weaknesses) as well as the external factors (including opportunities and threats) in a given market to make a successful strategy. A study of the internal and external factors help firms contemplate and choose the best strategies that can help it attain the objectives and goals it desires.

Internal Factors To Be Assessed For Formulating Successful Strategies

The study of the internal factors helps a firm know its weaknesses and strengths better. Firms can know more about their cost and expenditures and put value to expenses (including fixed costs, operational costs, research expenses, and training expenses) all vis. a. vis. the competitors to judge how much resources can be acquired to gain market leadership and what kind of optimizations and cost cuttings are required.

Employees, entrepreneurs, and leaders- A company should assess its human resources and manpower to judge its skills, knowledge base, and competency and know whether it is ahead of the competition in these spheres or not. The approach of the managers, owners, and entrepreneurs towards strategic planning and functioning may also cause an impact on the success of the strategic maneuvers. The rash and risky entrepreneurial approach may not always be successful while the traditional strategic planning moves may not produce the desired result in the highly competitive and technologically influenced the conditions of these times. Assessment of these resources and personnel and a study of the attitudes involved can help a firm create a fine balance. Further, the competency of the management and its experience may also lay an impact on the success of a strategy.

Image and reputation- the existing image and reputation of the company in a market may also have a critical impact on any of its new moves and strategies.

Financial strength- the strength of the finances available to the company may have a definitive impact on the success of a strategy. Firms can make even greater investments when they are sound financially and can gain a competitive edge by investing heavily in research and development activities and other key areas as well. However, they need to have more cost-cautious strategies when they are short of finances

The life-cycle stage of the organization and its history: the more complex and large organizations give more importance to strategic planning and have a formal, cooperative, and analytical strategy implementation structure in place already. The strategic plan will possess a greater probability of success when it takes into account the existing life-cycle stage of the company and includes provisions for improving its feasibility towards adoption and implementation.

Cultural values- apart from quantitative results, strategies may also incorporate efforts towards improving the cultural values to ensure that the organization turns to be more sustainable. For instance, integration of corporate values and a code of ethics with the strategies can provide for a better reputation as well as a highly motivated workforce. Strategic plans may also aim to disperse the lessons learned earlier by the organization through its relationship with bankers, suppliers, customers, and regulatory authorities and other stakeholders. Hence cultural values should be accessed, evaluated, and should be tuned towards success, sustainability, and growth, and accessing the cultural elements prevailing in an organization helps in devising culturally feasible strategies that provide for convenient adoption and faster implementation.

External Factors To Be Accessed For Formulating Successful Strategies

A study of the current and future opportunities and threats help the firm position itself well enough and plan the strategies that can improve its sustainability and competitiveness.

General environment- the different variables and elements of the external environment in which a firm operates includes certain economic, political, social, legal, technological, environmental elements, which lay an impact on business activities, which among other things, are also required for the implementation of strategies. A dedicated tool by the name of PESTLE (political, economic, socio-cultural, technological, legal, and environmental) framework can be used to study the different components and variables of the external environment and to tune the strategies in accordance with them.

For instance, bureaucratic setups in licensing and in other spheres may delay business processes. Hence a firm can allocate dedicated time to them or choose alternative measures beforehand when it assesses and studies the legal and regulatory framework of the market and region where it operates.

Another example here can be the assessment of social factors. A firm should not only make products that are needed by the customers of a market but these offerings should also be socially accepted. Even the best of products and services may be rejected by customers in a given society and region when they go against the social norms.

A study of economic factors may help a firm adopt the best strategies for market entry or diversification, among other uses. Hence all of these external factors that form a part of the PESTLE analysis framework should be studied carefully to choose the best strategies and course of action.

External stakeholders- the satisfaction of the external stakeholders of the firm and the underlying relationships should be assessed and studied. Successful implementation of a strategy may depend to a great extent on the collaboration of these important stakeholders including customers, suppliers, government agencies, and unions, and the extent to which the stakeholder find the strategy favorable. The firms can study these elements of the external environment to ensure that a new strategy is successful.