The external analysis examines opportunities and threats that exist in the business environment; both of these exist independently of the company. Opportunities are favorable conditions in the environment that could produce rewards for the organization if acted upon correctly. That is, opportunities are situations that exist but must be acted on if the company is to benefit from them. Threats are conditions or barriers that may prevent the company from achieving its objectives; for example, a major unfavourable situation in a company’s environment.
The basic objective of this section is to structure the data that has been collected, reorganizing it schematically to increase its informative potential. The output will be a critical comparison that relates results obtained in previous phases to the specific objectives identified in the process of planning.
The way to differentiate a strength or weakness from an opportunity or a threat is to ask: ‘Would this issue exist if the company did not exist?’ If the answer is yes, it should be considered external to the company.
The following is provided by way of example, to guide the preparation of a list of opportunities and threats, and is certainly not exhaustive, given the infinite number of possibilities and variables, depending on the sector and company in question,.