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Five Types Of External Forces

1264 Words6 Pages

Name : Mohamed Tarek Mohamed

ID : 2131181

Assingment :- Strategic Mangement

What are the five major types of external forces that should be examined as part of an external audit? Give an example of each type of force

(1 ) economic forces

(2 ) social, cultural, demographic and natural environment forces

(3 ) political, governmental and legal forces

(4 ) technological forces

(5) competitive forces.
(1) ECONOMIC FORCES :-

Economic factors have a direct impact on the potential attractiveness of all strategies. The auditor may wish to look into the balance sheet and financial supporting documents to see if the company report has taken this external factor into account. Both inflation and interest rates and a given country's …show more content…

Is important to know about political regulations in our country, if we want to promoting products or services in other countries.
A. Political, Governmental, and Legal Factors Represent Key Forces state, local, and foreign governments are major regulators, deregulators, subsidizers, employers, and customers of organizations.
B. Political, governmental, and legal factors therefore can represent opportunities or threats for both small and big organizations.

c. For industries and firms that depend with difficulty on government contracts or subsidies, political forecasts can be the most important part of an external audit.

d. Changes in patent laws, antitrust legislation, tax rates, and lobbying activities can affect firms …show more content…

Mobile payments are slowly being introduced, which might make a morning cup of coffee more attractive to many customers (and in doing so increase their potential market).

(5 ) COMPETITIVE FORCES :-

competitive forces include the threat of substitute products, the power of customers, the power of suppliers
And Collecting and evaluating information on competitors are essential for successful strategy formulation
Factors that influence the competitive position of a company in an market. Competitive forces include (1) bargaining power of the buyers and suppliers, (2) threat of new entrants, and (3) rivalry among existing companies.

1.The threat of entry: competitors can enter from any industry, channel, function, form or marketing activity. How best can the company take care of the threat of new entrants?

2.Supplier power: what is the power of suppliers in this industry? How will their actions affect costs, supplies and developments? If there are a few suppliers, power is in their favour and cost of switching may be prohibitive; vice versa for a situation with lots of suppliers. There may be too many buyers from too few

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