External Analysis

An opportunity is the chance to introduce a new product or service that can generate superior returns. Opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product

specifications or the development of new products in order for the firm to remain competitive. Changes in the external environment may be related to:

  • Customers

  • Competitors

  • Market trends

  • Suppliers

  • Partners

  • Social changes

  • New technology

  • Economic environment

  • Political and regulatory environment

The last four items in the above list are macro-environmental variables, and are addressed in a PEST analysis. The SWOT analysis summarizes the external environmental factors as a list of

opportunities and threats.

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