What Is External Business Analysis?

An external business analysis is a type of business evaluation process that focuses primarily on events and circumstances that occur outside the control of a company. Typically, the analysis will attempt to identify situations that could either be advantageous to the business if manipulated properly, or that could cause the company a great deal of distress if not addressed in a way that minimizes the impact. One of the key benefits of an external business analysis is that the findings can be matched with the results of an internal analysis and allow the business to develop new strategies to meet the anticipated events and manage them in the most effective manner.

While some forms of business analysis are aimed at identifying weaknesses or threats to the company operation, an external business analysis seeks to identify positive and negative factors present in the marketplace and the general economy what are likely to exert some sort of impact on the business. As it relates to the identification of positive factors, the analysis can often provide owners and managers with information that can be used to position the company so that emerging opportunities can be exploited. By identifying these factors ahead of time, the chances of not only maintaining but also increasing revenue are greatly enhanced.

An external business analysis will also seek to identify events that could cause some difficulties for the company. Any negative factors that are uncovered as part of the analysis are addressed, usually from the perspective of finding ways to minimize the influence of those factors on the company’s sales and reputation in the business community. Here, the goal is to be able to determine how to make changes and ride out any downturns in the marketplace with as little damage to the company as possible.

The results of an external business analysis can often trigger close scrutiny to current business solutions used in the operation of the company, even to the point of bringing about some degree of organizational change in how facilities are organized, and how the company is presented to the buying public. In this sense, effective external business analysis can lead to policy development over time that helps the company to operate in just about any type of market, identifying and taking advantage of opportunities when and as they arise. The complexity and scope of this type of business strategic planning will vary, based on the size and type of company involved, and the market in which that company functions.