The external environment relates to an organization’s macro / external factors that impact on a businesses indirectly. Management has no or little control over these factors. These macro / external factors reside outside the business, which can lead to opportunities or threats.
Management must continually scan, assess and analyse the macro / external environment and identify those factors that could have an impact on the company. Example of these factors that could have a positive or negative impact on the business are:
The objective of scanning the environment is to identify potential threats and opportunities as they emerge, and to gauge their impact on the industry and on the company itself.
Forecasting is about predicting future events and estimating what the impact on the business will be. One looks at historical data and trends in the data (i.e. statistical or other) and then apply these trends to predict possible outcomes in the near future.
Situations where Forecasts are typically used by business are:
Sources used in Forecasts but not limited to:
The general rule is forecasts attempt to be unbiased and are: