External environmental analysis: threats and opportunities in macro and micro environments

External Environmental Analysis

Overstock.com

This is an online business that offers direct retail sales as well as online auctions both at the international level and locally. It is an online market place where potential buyers can visit for designer brands and home goods at the best price bargains. It also offers a platform where sellers of items can get onto the market platform online and sell their items to other people within or outside the U.S.A.

Porter's Five Forces model and the overstock.com (Mind Tools Ltd., 2014)

Supplier power- this refers to the concentration of other businesses or suppliers that can provide the same service that overstock.com offers. This threat can be rated as high since there are several websites like amazon, ebay among several others that offer the same services.

Buyer power- this refers to the ease with which the buyers of the goods or services can drive down the prices hence undermining the competitive edge of the business. The buyers in this case are the people willing to have their products that are up for sale hosted in the overstock website and this threat is also considered high sinec due to the presence of other similar websites, once the product of the client does not move within a given number of days, they are tempted to try out the rival websites.

3. Competitive rivalry- this is a real threat within this industry since there are several competitors dealing in the same trade and overstock may have little competitive power in the contemporary business world as the suppliers and buyers can opt to go elsewhere in the event that they are not satisfied hence the threat here high.

4. Threat of substitution- this is the ability for the customers to find a different approach or way of doing exactly what you do. This threat is low to overstock.com since the online selling and buying at an international scale does not have an equivalent since it reaches the global market.

5. Threat of new entry- this refers to the ability of new players to get into the same market that one is dealing in. with the ever expanding online hosting and technological knowhow, this threat can be categorized as high since all it needs is for an IT expert individual to put up another website and a marketer to vigorously market it.

PEST analysis of overstock.com

PEST analysis looks at the Political, Economic, Social a well as the Technological aspects that help shape the overall marketplace within which several businesses operate (Strategic Management Insight, 2014).

Political- there are various government policies that organizations such as overstock.com have to comply with and adhere to the terms and change as well as trading policies. These are meant to control abuse of the internet as a resource and also to safeguard the interest of the consumers not to lose their fortunes to dubious websites. This is bound to affect overstock but it is a universally applied policy and terms hence inevitable.

Economic- this looks at the market situation both abroad and within the U.S.A. This is e aspect the overstock.com can easily transcend since the economic trends within the U.S.A. are on the upward trend, and the best of it all is that the website can be accessed internationally hence the benefit of tapping into various economic markets with tangible returns in terms of export.

Social- in as much as the social trends may differ over a large geographical area, the access to the internet is universal hence forming a global village where the overstock.com community can interact with potential buyers and sellers from all over the globe. Being that it is purely based online, it is easy to transcend the ethnic, religious and cultural boundaries and the access to information about products becomes much easier for the buyers, sellers and overstock.com