Student response – External Context of Strategy, management homework help

INSTRUCTIONS: Please RESPOND to this answer from the Point of view as a student. Use credible sources and respond as if you are a manager of a marketing agency. Tell this student what your marketing agency would think of each of these answers from a Management perspective:

MT1 – Some aspects of the External Context of Strategy to be considered are: What are some of the fundamental characteristics of the External Context and the key questions to be asked when analyzing the firm’s external context. How to use PESTEL analysis to identify the macro characteristics of the external context. What are some of the determinants and consequences of globalization?

External Context of strategy is very important in companies. The macro environment plays an important role when managers are planning and strategizing. According to Carpenter and Sanders (2008) “Managers perform stakeholder analysis to gain a better understanding of the range and variety of groups and individuals who not only have a vested interest in the formulation and implementation of a firm’s strategy but who also have some influence on the firm’s performance”. Today companies are in a global arena, the companies must take into consideration what other countries are doing to stay competitive in the marketplace. For example, Apple has made use of the low labor cost in China. Apple’s Iphones are manufactured in China, this enables the company to make better profit.

According to Wagner (n.d) “An external analysis helps you stay on top of trends and events in your industry that may affect your company, but are out of your control. Some people conduct one as part of a full SWOT analysis that also looks at a company’s internal strengths and weaknesses. Armed with an external analysis, your company can make and implement decisions that help your company move forward and become more competitive.


The market section of your analysis reviews the opportunities and threats of the industry in which you compete. Look at the overall size of the industry to get a feel for how many companies offer similar products and services, then research the projected industry growth.

Economic Trends

Economic trends can affect your business for better or worse, so staying on top of anything that could affect your profitability is key to conducting an ongoing external analysis. For instance, look at economic indicators, such as recession levels or interest rates that affect buying power.


Keeping an eye on your competitors is a necessity if you want to gain more market share, or even to stay competitive. Evaluate the performance of your competition by reviewing the services and products they offer and their pricing structure.


A careful review of the demographics of your target market is a valuable component of an external analysis since it helps you figure out if you’re on track with your marketing messages. Review the characteristics your market shares, such as age, interests, dislikes, location, income level and needs than the messages you create to attract senior citizens who want their hair set and dried every week”.

The key questions to be asked when doing external analysis is how the competitors are performing, what are the market conditions and the market forecast. According to Carpenter and Sanders (2008) “What macro environmental conditions will have an effect on our ability to implement our strategy successfully? What is the firm’s industry? What are the characteristics of the industry? How stable are the characteristics?”

PESTEL Analysis is a efficient tool to analyze the political, economic, sociocultural, technological, environmental and legal aspects of a company. Pestel analysis explains the external influences that can impact a company. According to Carpenter and Sanders (2008) “It helps managers gain a better understanding of the opportunities and threats they face and consequently aids them in building a better vision of the future business landscape and how the firm might compete profitably.”

Globalization has helped some companies and hurt others, for example, the companies that cut costs use a globalized strategy to do so. The multinational companies use cheap labor, cheap raw materials to increase their profit. The companies have outsourced and offshored processes and functions. Globalization has also helped with more intellectual capabilities and the ability to get to market quickly. I believe globalization was bound to happen due to the internet and its capability to join the entire world through a screen.

In my company, external factors play a major role because we import speakers from China, the Chinese economy is closely watched by our owner. For example, during the Chinese economic crisis when the Yuan lost its value. The owners asked the suppliers if they could reduce the raw material cost, but the businesses there were just waiting and watching for the next economic move to make any changes. I also suggested the owner to hedge the currency.


Wagner, N (n.d), An external analysis of the company, Retrieved from

Carpenter, M. A., & Sanders, W. G. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, NJ, USA: Pearson Education, Inc.

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