C
hapter 4 asked you to assess the internal state of your business. In this chapter you
will look outwards to try to understand your external environment as well as possible.
The aim is twofold. First, when you come to develop your strategic plan you will need a
good grasp of what is going on in the big bad world. Second, and more immediate, you
want your business plan to include a short description about your existing market and
your competition. This will help you understand your competitive advantages.
For or against you?
The world seems to be packed with little spirits and gremlins that influence your business.
Most of these are forces over which you appear to have little (or limited) control. Some are
helpful. Many are waiting to catch you out. These include your competitors (actual and
potential), customers (actual and prospective), business partners and a whole range of
other influences.
It is important to understand the working of these external influences. You will find
that you can control some of them quite well. You have to learn to work with, and adapt
to, those you cannot control. Either way, you can use many of them to your advantage.
You have the greatest ability to influence those things closest to you, your micro envi-
ronment – your company itself, business partners (including suppliers and resellers),
competitors, and pressure groups such as labour or trade unions and the media. This con-
trasts with the world at large over which you have at best very minimal influence – your
macro environment.
FOR OR AGAINST YOU? 83
Suppliers:
raw materials,
components,
goods and
services
Prospective customers
r
Competitors
YOU ARE
HERE
Routes to
market:
distributors,
value added
esellers,
independent
service
vendors, etc.
Customers
Global, national, local economic and political influences ... labour unions ...
green lobby ... other pressure groups ... the media ...
Figure 5.1 Your world environment
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