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Understanding the external environment

Analysing the operational environment

At its simplest level, any organisation is fulfilling a need that exists to bridge a gap between an originating supplier and an ultimate customer.

All organisations have a common business model.

Even in small businesses this chain can become quite complex

from a strategic thinking perspective, it is important to determine

the structure of the supply-chain within which an organisation functions and

where the organisation is positioned within that chain

Risks and Uncertainties that we are faced with on a daily basis:

1. Environmental influences - e.g. company's approach to CSR. There is a prevailing view that an organisation needs to consider its use of resources and how it will, at least, replace such usage for future generations

2. Technological influences - As part of any strategic planning process we need to allow for the uncertainties of technological advance. At the forefront of our mind should be the increasing use of, and potential for, artificial intelligence (AI).

3. Human influences - an individual focus on a particular task or direction can in itself be skewed by a wide range of external influences. Any strategic development needs to consider and allow for the vagaries of human behaviour.

Recognising the boundaries

We need to be able to clearly identify the boundaries within which we operate

1. At the centre of this structure is the organisation - before considering the organisation itself in detail, it is important for us to recognise the differing influences of the boundaries which surround it.

2. competitors and markets, and the industry or sector - could be considered as part of the micro or near environment. Directors and managers will have some level of ability to influence these layers and the impact that they have upon an organisation

3. By the time we reach macro environment, control and influence have been replaced by the need to respond.

- boundaries can be fluid across a passage of time.

- an organisation has the ability to influence and change the positioning of the boundaries that exist within the first three circles

- It is only the macro environment where an organisation has very limited, if any, powers of influence