External environmental analysis – A case study of important factors and challenges

Abstract

In recent decades, markets have become complex, turbulent and more dynamic. This has led to more focus among companies to focus on the external environment. One activity that has become more important is analysing external environments as this can provide good strategic insight of external factors and how companies react in markets where organisations are active. The strategic importance of the purchasing function has increased over time in many organisations. There are many different aspects that needs to be considered when analysing external markets such as technological developments and how the competitiveness in a certain industry is shaped. This study has focused on analysing important factors and challenges when conducting external analysis by examining recent academic literature as well as conducting a case study at a manufacturing company that conduct external analysis on regular basis. Improvement suggestion for the case company’s existing external analysis framework has also been one of the focus for this study. The empirical data consists of both interviews and document collection at the case company. From this case study, it has been identified that important factors when conducting an external analysis are for instance a relevant scope the analysis and having clear internal requirements. Further, challenges when conducting an external analysis are the process of finding correct market information what analysis tools to use. It is also important to consider the risk perspective when analysing external markets. Lastly, from this case study, it has been found that having a clear structure when conducting an external analysis can be challenging, therefore, a more structured framework is provided compared to the existing analysis framework at the case company.