The External Environment and Internal Resources

# The External Environment Many consultants and other advisers are pushing small companies to give more emphasis to their external environment. In a study of 100 companies, the Futures Group of Glastonbury, Connecticut (www.tfg.com), found that "managers who spend more time evaluating external fact...

# The External Environment Many consultants and other advisers are pushing small companies to give more emphasis to their external environment. In a study of 100 companies, the Futures Group of Glastonbury, Connecticut (www.tfg.com), found that "managers who spend more time evaluating external factors such as their competitors, the U.S. market climate, and emerging technology can better manage and forecast business than those who focus on internal factors." This practice was found to improve their strategic plans. Some other external environmental factors to consider include clients, the economy, legal and political factors, changing demographics, foreign competition, and many other influences. This examination is part of a SWOT analysis. Changes caused by the introduction of videotapes, computer hardware and software, lasers, and population aging, for example, have been a blessing to some companies and a death warrant to others. For example, the population of the baby boomer generation is almost twice that of the next generation - Generation X. As boomers begin to retire, there will be fewer workers to replace them. Because of this shortage, more firms will ask retirees to remain. The expanding communication and transportation systems require that even the smallest companies keep abreast of a constantly widening range of events. # Internal Resources and Competitive Edge The internal resources found in small businesses include those listed below and also examines strengths and weaknesses of a SWOT analysis. Also, to be competitive, the resources must include the characteristics listed: 1. **Human resources** include both management and nonmanagement people and include key operating employees such as production supervisors, sales personnel, financial analysts, and engineers. To keep the company competitive, these people must be motivated, imaginative, qualified, and dedicated. 2. **Physical resources** include buildings, tools and equipment, and service and distribution facilities. For the company to be competitive, these resources must be strategically located, be productive, be low in operating costs, be effective distributors, and make the proper product.