Strategic Business Planning: Analysis of the external environment
External business environment analysis is a crucial part of a strategic business planning process. It identifies opportunities and threats presented by the factors outside of the company’s control, and provides insights into how the company can take advantage of this knowledge given its capabilities and aspirations. This analysis includes the following major components:
Macro environmental analysis
Macro environmental external factors affect the society as a whole and have a great impact on growth of any industry. PESTEL (political, economic, social, technological, environmental and legal factors) analysis is often used as a framework for macro environmental scanning.
Micro environmental analysis
Micro environmental external factors are factors within the industry; they affect the industry's profitability. Porter’s Five Forces model is the major strategic tool for a micro-environmental industry analysis. It considers five components - the threat of new entrants, the power of suppliers, the power of buyers, the power of product substitutes and the intensity of industry rivalry - to evaluate the industry's profitability.
Another factor to consider in a micro environmental analysis in the industry's life cycle. Operating in a startup, growing, mature, shakeout or declining industry present different challenges and opportunities for businesses.
Market analysis
It is important for businesses to understand the markets (groups of customers with similar needs) they target. What are the major characteristics of the markets? How big are the targeted markets are now and into the future?
Customer analysis
Businesses exist to satisfy customers. Understanding the targeted customers helps to provide maximum value to them. Customer analysis involves posing questions such as: What do my customers want? What can they afford? How would they behave?
Competitor analysis
To compete successfully, businesses need to understand what their competitors do to survive and prosper. What are the competitors’ strengths and weakness? What are the key factors which make businesses in the industry to succeed?
Julia Podgorbunskaya, CPA, Head Planner at Professional Business Plans
last updated in September 2025
(61) 02 8072 8929
[email protected]
www.ProfessionalBusinessPlans.com.au
Macro environmental analysis
Macro environmental external factors affect the society as a whole and have a great impact on growth of any industry. PESTEL (political, economic, social, technological, environmental and legal factors) analysis is often used as a framework for macro environmental scanning.
Micro environmental analysis
Micro environmental external factors are factors within the industry; they affect the industry's profitability. Porter’s Five Forces model is the major strategic tool for a micro-environmental industry analysis. It considers five components - the threat of new entrants, the power of suppliers, the power of buyers, the power of product substitutes and the intensity of industry rivalry - to evaluate the industry's profitability.
Another factor to consider in a micro environmental analysis in the industry's life cycle. Operating in a startup, growing, mature, shakeout or declining industry present different challenges and opportunities for businesses.
Market analysis
It is important for businesses to understand the markets (groups of customers with similar needs) they target. What are the major characteristics of the markets? How big are the targeted markets are now and into the future?
Customer analysis
Businesses exist to satisfy customers. Understanding the targeted customers helps to provide maximum value to them. Customer analysis involves posing questions such as: What do my customers want? What can they afford? How would they behave?
Competitor analysis
To compete successfully, businesses need to understand what their competitors do to survive and prosper. What are the competitors’ strengths and weakness? What are the key factors which make businesses in the industry to succeed?
Julia Podgorbunskaya, CPA, Head Planner at Professional Business Plans
last updated in September 2025
(61) 02 8072 8929
[email protected]
www.ProfessionalBusinessPlans.com.au