What tools are used to analyse the external business environment?

The tools used to analyse the external business environment include PESTLE analysis, SWOT analysis, and Porter's Five Forces.

PESTLE analysis is a framework used to understand the macro-environmental factors that affect an organisation. It stands for Political, Economic, Sociocultural, Technological, Legal, and Environmental factors. Political factors include government policies, regulations, and political stability. Economic factors include economic growth, inflation rates, and unemployment rates. Sociocultural factors include demographics, consumer attitudes, and cultural trends. Technological factors include technological advancements, automation, and innovation. Legal factors include laws and regulations that affect the business. Environmental factors include ecological and environmental aspects such as climate change and sustainability.

SWOT analysis is another tool used to analyse both the internal and external environment of a business. It stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are internal factors, while opportunities and threats are external factors. Opportunities could include a new market, a new target audience, or a new technology. Threats could include competition, changing customer preferences, or economic downturns.

Porter's Five Forces is a tool used to analyse the competitive environment of a business. The five forces are the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products or services, and the intensity of competitive rivalry. The threat of new entrants refers to the ease with which new competitors can enter the market. The bargaining power of buyers refers to the ability of customers to influence prices. The bargaining power of suppliers refers to the ability of suppliers to influence the terms and conditions of supply. The threat of substitute products or services refers to the likelihood that customers will switch to a different product or service. The intensity of competitive rivalry refers to the degree of competition within the industry.

These tools provide a comprehensive analysis of the external business environment, helping businesses to understand the opportunities and threats they face, and to make strategic decisions accordingly.