Analysis of the external environment of business organisations
One of the concepts that is difficult to apply is how to master the analysis of the external environment. This concept is quite simple on paper, but it is hard to apply in real-life settings. For example, the concept of industry analysis was formulated to identify businesses that had an unfair advantage. In the modern times, most companies have learnt smart ways of hiding their unfair competitive advantages. A good example of this problem is the fact that Amazon, one of the biggest companies in the world rarely announces any significant profits in its financial reports even though it is a monopoly. A company looking to enter this industry might be misguided by Amazon’s misrepresented profitability. The best way to solve this external analysis issue is to rely on data from divergent sources rather than partisan companies.
Another difficult theory is the resource-based view (RBV), which is often used to determine why some companies end up being more successful than others. The Course materials explain RBV quite simply, and this raises the questions why all companies are not able to use this theory to their advantage. However, upon further investigations it becomes clear that most companies find it difficult to manipulate all their four types of resources at once including, financial, physical, human, and organizational. Most companies tend to concentrate on just one of their resources without taking into account all the others. For example, some companies retain bad organizational structures as long as they do not have financial problems. Most of these companies will only restructure after they begin making losses. The best way to overcome the challenge of RBV is for companies to seek the help of professionals who can offer thorough analyses of all types of resources.