External environmental analysis is an important part of the process of developing value-adding support strategies. External environmental analysis helps to identify opportunities and threats in the external environment which can be incorporated into strategy formulation. Strategy formulation addresses how best to take advantage of these opportunities and mitigate any potential risks from threats posed by the external environment.

The steps involved in external environmental analysis include identifying key stakeholders, predicting changes in the operating environment and evaluating the impact those changes may have on organizational operations. Identifying stakeholder needs and concerns provides insight into how a company’s strategy should align with those needs or address their concerns. Internal data points such as customer feedback, market research, surveys and competitor intelligence provide valuable information that can help shape strategic decisions. Predictions about what will happen or could happen in the future are also essential for understanding potential implications that could arise from certain actions or decisions made by a business entity. Lastly, assessing risk involves setting parameters around acceptable levels of risk taking while understanding that there is no guarantee results will turn out as planned; however it’s necessary to balance both long term objectives and short term goals when making decisions related to risk management within an organization.

Strategy formulation involves creating plans for reaching specific objectives set forth by top management or senior leadership within an organization. It requires decision makers to consider various factors such as competitive advantages, industry trends, resources available to them, technological advances etc., all while accounting for any potential pitfalls identified through external environmental analysis discussed earlier (Encyclopedia Britannica). A well thought out plan should clearly communicate what direction an organization wishes to go strategically so that employees understand their roles within this plan going forward; this may also involve changing processes or policies if need be in order for new strategies put into place become successful over time (Encyclopedia Britannica). Ultimately this step helps create ownership amongst different teams working together towards achieving common goals which ultimately help drive value back up through bottom line profits&profits growth over time!