Conduct an external environment analysis for a company of your choice Essay

Conduct an external environment analysis for a company of your choice assessing the impact of the external environment on Human - Essay Example The main objective of external analysis is to identify the opportunities and threats in the environment. Identifying and exploiting the opportunities and minimizing the threats, which are hindering performance can help the organization achieve its strategic competitiveness (Hitt, et al, 2009). This external environment has its impact on business strategy and hence on the human resource strategy as well. This paper aims at conducting the external environment analysis of Toyota and studies its impact on the human resource policies and practices of the organization. This paper will make use of different matrices, methods and tools to conduct the industry analysis. Automobile manufacturing is a very significant industry which contributes to 10% of the world GDP. Globalization has resulted in increased pressure on the firms to achieve global competitive advantage. Automotive industry has recently witnessed large scale consolidation of organization resulting in mergers and acquisitions to capitalize the strengths of each market and organization. Most of the organizations in the automobile industry are doing business offshore. The automobile industry global competition is characterized by big three American and Japanese giants with the shift moving towards Japanese automakers which includes Toyota. Toyota is increasing its market share and becoming more dominant and less threatened by its competitors. An external audit of Toyota will reveal its opportunities and threats and its impact on the business and HR strategy. External Environment Analysis The external environment or the macro environment has a strong impact on the all activities and strategies of the organization. These factors include political, social, economic, legal, technological and eco-environmental factors. Two models are used to analyze the force and impact of these factors. These two models are called â€Å"PESTEL Analysis† and â€Å"Porters five forces†. An industry’s attractive ness is evaluated through Porter’s five forces model. According to the model the forces that affect an industry are the threat of entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and the level of rivalry among the existing competitors (Porter, 2008). The evaluation determines the attractiveness or unattractiveness of the industry and also helps in formulating strategies for obtaining competitive advantage. The attractiveness of an industry in turn determines the overall profitability of the industry measured through overall return on investment. It requires utilizing the existing industry environment to gain competitive advantage. Out of the five forces the strongest competitive force indicates the profitability of the industry and forms the most crucial part of strategy formulation. If the affect of forces is intense then the industry is said to be unattractive that is companies in the industry will not earn attractive return on thei r investments while if the forces are not intense then the industry is attractive and the companies in the