CHAPTER4
External appraisal
DEMOGRAPHY
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ECONOMIC FEATURES
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SOCIO -PSYCHOLOGICAL &
CULTURAL FORCES
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NEW STRATEGIC POSTURE
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C. Bowman et al., Strategic Management
© Cliff Bowman and David Asch 1987
External appraisal 59
4.1 Introduction
Both this chapter and Chapter 5, Internal Appraisal, are concerned
specifically with the objective conditions faced by the organisation.
Analysis of the situation confronting the firm is often very complex,
hence we will consider external or environmental influences in this
chapter, followed by a review of the firm's resources in Chapter 5. It
should be realised that such a neat divide is often not the case in practice
as not only will environmental forces help to shape strategic decisions
but also such decisions may impact on parts of the external environ-
ment. Readers should also remember that our strategic analysis is
interdependent and that what is required is an understanding of the
complex issues involved - their links and relative importance - plus an
acknowledgement that these will change over time and show substantial
differences from one firm to another.
There is one further point to make which relates to the scope of
external appraisal. While we recognise the importance of an organis-
ation's economic environment it is important to realise that external
appraisal for strategic decisions is more than just an assessment of the
firm's immediate sector of the economy. The behaviour of the economy
as a whole, together with the effect of social, technological and political
factors, is an important input to our analysis of the external influences
affecting the future development of the organisation. Figure 4.1 ident-
ifies the main external environmental influences indicating the scope of
the problem faced by an organisation in appraising it's environment.
Technology
Economic and
demographic - - . - t ~--- Socio-psychological and
features cultural forces
Legal and governmental
influences
FIGURE 4.1 Environmental influences affecting organisations
