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  • Writer's pictureNicky Finlay

What models can I use to conduct a good external analysis of my business environment?

Our previous Blog highlighted the importance of not only looking at your internal data when business planning, but also understanding the external environment that the business operates in. 

While internal analysis provides insights into a company's strengths and weaknesses, external analysis models help guide businesses through the intricate aspects of the broader business environment. 

In this blog, we look at some of the powerful business models designed to support a business to understand the complexities of its external environment.

Here are some commonly used business models for external analysis in a business context:

PESTLE Analysis:

  • Purpose: To analyze the macro-environmental factors affecting a business.

  • Components: Political, Economic, Social, Technological, Legal, and Environmental factors.

  • Application: Helps businesses identify and assess external factors that may impact their operations. SWOT Analysis:

  • Purpose: To identify internal strengths and weaknesses and external opportunities and threats.

  • Components: Strengths, Weaknesses, Opportunities, and Threats.

  • Application: Provides a comprehensive overview of the internal and external factors influencing business strategy. Porter's Five Forces:

  • Purpose: To analyze the competitive forces within an industry.

  • Components: Threat of new entrants, Bargaining power of buyers, Bargaining power of suppliers, Threat of substitute products or services, and Intensity of competitive rivalry.

  • Application: Assists in assessing the competitive environment and formulating strategies for market positioning. Competitor Analysis/Benchmarking Frameworks:

  • Purpose: To understand and evaluate the strategies and performance of competitors.

  • Components: Market share, Pricing strategies, Product/service offerings, Distribution channels, and Marketing and advertising.

  • Application: Helps businesses benchmark against competitors and identify areas for differentiation. Market Segmentation Analysis:

  • Purpose: To categorise the target market into segments based on shared characteristics.

  • Components: Demographic, Geographic, Psychographic, and Behavioral factors.

  • Application: Enables businesses to tailor products, services, and marketing strategies to specific customer segments. Scenario Planning:

  • Purpose: To anticipate and prepare for various future scenarios.

  • Components: Identifying key uncertainties and creating multiple plausible scenarios.

  • Application: Helps businesses develop flexible strategies that can adapt to different potential futures. Industry Life Cycle Model:

  • Purpose: To assess the stage of development of an industry.

  • Components: Introduction, Growth, Maturity, and Decline.

  • Application: Aids in understanding industry dynamics and adapting strategies accordingly. Five C's Model:

  • Purpose: To analyze the external environment from a marketing perspective.

  • Components: Company, Customers, Collaborators, Competitors, and Climate.

  • Application: Helps in understanding the broader marketing context and identifying strategic opportunities and challenges.

These models can be used individually or in combination, depending on the specific needs and goals of the business. They provide frameworks for comprehensive external analysis, supporting informed decision-making and strategic planning.

If you need any help in developing your external analysis or understanding the research and data required, please contact us at


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