Internal and external evaluations are important if you want an overview of what is going on within and outside your business. This post will deal exclusively with external factors and the strategies marketeers use to judge; competition, future strategy development and the supply chain.
The external environment doesn’t tend to have an immediate effect on business though in the long term it may. Which is why it requires regular monitoring though it isn’t possible to control the external factors, if you are well researched in your markets you can reduce the high risk and have strategies in place for a multitude of situations.
What are some of the strategies Marketeers use?
PESTLE -stands for; Political, Economic, Socio- Cultural, Technological, Legal and Ecological environments. They are what they say on the tin!
With the PESTLE strategy you are analysing every eventuality that will or could affect your business or your supply chain in a global sense and what could help you in your business and developing strategy to fight it.
Political – an example would be government relations that can be source of ‘sustainable competitive advantage’ though this can be a double-edged sword as politics is often controversial even in the most stable countries.
Economic – economists often use ‘purchasing power parity exchange rate’ to compare the cost of common items which can help develop your own pricing strategy, the economy of every country is also crucial when considering business developments.
Socio – Cultural – issues within society are another factor to consider which could affect your business or branding, staying silent on important issues that may affect the majority of your consumer base is often a bad idea by showing that you are in touch with your consumers and issues in society you allow the chance to connect on a deeper level.
Technological – advancements in tech are changing the way businesses function, to keep on top with profit sometimes innovation is the right direction but keep in mind that not every ‘new tech’ is right for your business and the costs are often extortionate.
Legal – in any scenario it is crucial to keep up to date with new laws or legal issues that may arise affecting your business.
Ecological – 2020 is definitely the year to consider environmental issues plastics, water & waste are just some of the biggest issues. If you plan ahead and react to these issues head on, it’s likely your customers will reward you for it.
Competitive Analysis
Your competitors are the brands selling the same or similar product or service to you, this can include the breadth and scope of the market. This is always valuable to distinguish where your brand sits whether it is; market leader or niche, from here you can develop strategies to combat your closest competitor.
If you are still struggling identifying who your competitors are you can read an industry analysis which will identify the main brand leaders in your category and how strong the industry is as a whole.
Take inspiration from your competitors, DON’T COPY!
Analyse your Market Leader, there is probably a strong reason why they have the top spot, try to learn from them; What are they missing? What are they doing wrong? What are they doing well?
What about New Entrants? What are they doing differently?
There is a myriad of ways to generate new ideas or strategies within your own external analysis!
Have you done any External Analysis? What are some of your tips?
If you would like to see how to analyse your internal environment please leave a comment below!
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