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An extensive external environmental scan for my business unit would include an analysis of five forces to find relevant trends and potential threats. It would include assessing competition, threats of substitutes and the bargaining power customers have with suppliers. Also, it could identify new potential entrants to the market. Understanding the industry’s competition could help us to distinguish ourselves and stay ahead.
Analyzing the possibility of substitutes may help you identify other solutions better suited for customer needs. This is particularly important when trying to maintain a strong market position in such crowded markets. Analyzing both supplier and customer bargaining power can help us understand where to pay more attention, as well as what leverage we have in negotiations.
Finally, looking at the likelihood of new entrants into our sector allows us to gauge how safe our position is; if barriers to entry are low then there’s always a risk that someone else may try and enter our space which could disrupt current operations or even lead to direct competition.