External strategic business audits are essential for finding hidden opportunities and reducing the impact of future threats in a rapidly changing business environment. For example, when Palm Pilot did not correctly monitor the direction of the market, it nearly became obsolete in a matter of a few years due to smart phones. External strategic management audits provide management with both insight and preparation for the changing marketplace.
Research trends in the current environment. Gather information about economic, political, social, cultural, legal and technological shifts. In addition, determine changes in demographics and the aging population trends.
Evaluate direct and indirect competition. Collect competitive information on current and potential competitors, which includes strategies for increasing market share, distribution channels, marketing mediums and value chain structures. Also notice if competitors are at an advantage through handling of inventory, suppliers and distributors.
Survey the target market. The target market and its needs can shift quickly, so what was once true yesterday may no longer be true today. Survey the company’s current target market to find if there has been a shift in demographics, needs and demands.
Examine the external environment with current market. Compare the information collected when researching the external environment to the target market survey. Look for shifts in the external environment that will have an effect on the target market which could provide opportunities or be potential threats.
Analyze the competition with current market. List the names of all your competitors, as well as your company's name. Review the list of demands and needs in the market survey. Include next to each competitor which demands and needs are being fulfilled. Take note if there are particular needs and demands that are not being satisfied.
Redefine the target market. The target market study may reveal the target market is not composed of what your company initially expected. Define the current composition of the target market, then review trends to determine needs of the target market within the next five years.
Pursue opportunities. Review the notes created while analyzing the results. List all the opportunities then determine which are feasible for the company to pursue. Construct a plan with milestones and deadlines to reach the opportunities.
Plan for threats. Review the threats and determine if any are avoidable or can be minimized. Develop a detailed plan on what your company can do to best position itself to overcome the threats or reduce their impact. Set milestones and goals for dealing with each threat.
Monitor environmental and market trends. Develop a system to continuously monitor external forces and survey the target market so the company can move swiftly to any shifts or changes in the market.