GROUP ASSURANCE OF LEARNING 1
GroupAssurance of Learning
3-25: How doesthe external audit affect other components of thestrategic-management process?
An external auditenables an organization to learn of the opportunities and threatsthat could affect strategic decisions. The results of such ananalysis could impact areas such as resource allocation, mergers andacquisitions, market entry or exit, and new product development(David & David, 2016). A business could also acquire vitalinformation concerning social and cultural trends, regulatorychanges, demographic changes, economic conditions, and competitiveactivity.
The externalaudit affects product development by pinpointing competitive threatsand market opportunities. The information derived from the analysiscan be used to develop marketable goods (David & David, 2016).The external audit also shows the need to upgrade or improve existingproducts to ensure they meet the performance levels of competitors.
Furthermore, theexternal audit can affect the market by highlighting opportunitiesand threats. For example, changing economic conditions could reducethe demand in a particular sector (David & David, 2016).Modifications in the regulatory framework can also lead to an influxof new competitors into the market. Hence, the external audit resultscan help in the selection of the most profitable sectors. Besides,the recruitment and training strategy are affected such that the firmcan identify the need for adding new resources and skills (David &David, 2016). The external audit could indicate the need to consideran acquisition or merger if the opportunities cannot be exploitedwith available resources (David & David, 2016). Consequently, theorganization can make decisions regarding facets of the strategicmanagement process.
3-28: Let`s sayyour boss develops an EFE Matrix that includes 62 factors. How wouldyou suggest reducing the number of factors to 20?
I would allow agroup of knowledgeable and responsible persons in the organization toevaluate the relative significance of each factor. In this regard, Iwould assign a 1 to signify “not important,” 2 to show “somewhatimportant,” and 3 to show “very important.” Subsequently, Iwould add the ratings that each factor obtains. Next, I would rankthe factors in terms of decreasing values. Eventually, the 20 factorsthat have the highest ratings should be incorporated into the EFEMatrix.
David, F., & David, F. R. (2016). Strategic Management: ACompetitive Advantage Approach, Concepts and Cases. Boston,Mass.: Pearson-Prentice Hall.