Strategic Management

THE EXTERNAL
ENVIRONMENT
Presented by
Fabyan Naufal Andanu — 042111233038
Nauraluna Nevetari S — 042111233265
 Table of
Contents
External Environmental
01 Analysis 03 Industry Analysis

02 Pestel Analysis 04 EFE Matrix

Page 02
External Environmental Analysis
a. Scanning

Scanning entails the study of all segments in the general environment. Although challenging,
scanning is critically important to the firms’ efforts to understand trends in the general
environment and to predict their implications.

b. Monitoring

When monitoring, analysts observe environmental changes to see if an important trend is

emerging from among those spotted through scanning.
External Environmental Analysis
c. Forecasting

When forecasting, analysts develop feasible projections of what might happen, and how
quickly, as a result of the events and trends detected through scanning and monitoring.

d. Assessing

When assessing, the objective is to determine the timing and significance of the effects of
environmental changes and trends that have been identified.
 PESTEL Analysis
Is one of the methods of external analysis of the company. Will involve Political,
Economic, Social, Technological, Legal and Environmental factors, it is divided into
5, namely:

Economic factors (Economic conditions of the company's environment)

Social, cultural, demographic and natural environmental factors (beliefs, values,
attitudes and lifestyles)
Technological factors (technological developments)
Political and legal factors (applicable policies and regulations)
Competitive Factors (conditions of the company's competitors)
Industry Analysis
The industry environment (measured primarily
in the form of its characteristics) has a more
direct effect on the competitive actions and
responses a firm takes to succeed. To study an
industry, the firm examines five forces that
affect the ability of all firms to operate
profitably within a given industry.
The External Factor Evaluation Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate Economic,
Social, Cultural, Demographic, Environmental, Political, Governmental, Legal, Technological,
and Competitive Information. The EFE Matrix can be developed in five steps:

a. Identification of key External Factors

there are 20 key external factors identified during the external audit process. These factors
should include economic, social, cultural, demographic, environmental, political, governmental,
legal, technological and competitive aspects.
b. Determine the Weight
Assign a weight to each factor identified, with a range from 0.0 (not important) to 1.0 (very
important). These weights reflect the relative significance of each factor in determining a
company's success in the industry it operates in.
The External Factor Evaluation Matrix
c. Assess the company's response
Rate the effectiveness of the company's current strategy in responding to each key external
factor.
d. Calculate a weighted score
Multiply the weight assigned to each factor (Step 2) by the rating assigned to the company's
response to that factor (Step 3) to calculate a weighted score for each factor.
e. Determine the total weighted score
Add up all the weighted scores calculated in Step 4 to determine the total weighted score for
the organization.

The EFE Matrix is a valuable tool for strategic planning and decision making, as it helps
organizations prioritize and address the external factors that have the most significant impact on
their success.