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Importance Of External Environment Essay

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Section 1: Importance of external factors affecting an organisation

1.0: It is crucial for managers to understand this aspect that no business is insulated from the outside environment. Businesses exist and are surrounded by certain environment and factors from their environment have an effect on their organisation. The environmental domain for example has few key factors which can affect the organization like competition within related industries or in global context also. Customer preferences can change; even demographical changes can have huge impact on a business. Resources like skilled workers, availability of raw materials, availability of capital and technology are some other key external factors which can change and if the managers are not aware of these factors in their external environment, they may well be caught unaware and unready for changes that affect their organisation. …show more content…

This is fundamental because if their competitors are gaining market share it can be at their expense. Any competitor in the same sector gaining more market share means that someone is losing their share. Likewise, its important for managers to look for ways to increase their respective businesses ' market share. Knowledge of what the competition is doing in terms of sales promotions, product mix, general pricing, customer service initiatives, and more, will help a business ensure that they have programs and policies in place to compete with their competition. Consequently, they are protecting their market share as best they can and even working to increase their market share by trying to stay one step ahead of their

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