Chapter 3-External Assessment
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Define external audit, and its purpose
- EXTERNAL AUDIT- focuses on identifying and evaluating trends and events BEYOND THE CONTROL OF A SINGLE FIRM. Reveals key opportunities & threats confronting an organization.
- aka- environmental scanning or industry analysis
- PURPOSE- reveals key opportunities & threats confronting an organization so that managers can formulate strategies to take advantage of opportunities and avoid/reduce the impacts of threats. DEVELOP A FINITE LIST OF OPPORTUNITIES THAT COULD BENEFIT A FIRM & THREATS THAT SHOULD BE AVOIDED. RECOGNIZE MARKET TRENDS
What does identifying and evaluating external opportunities and threats enable for a business?
It enables organizations to develop a clear mission, to design strategies to achieve long-term objectives, and to develop policies to achieve annual objectives.
List the five broad categories of KEY EXTERNAL FORCES
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