The success of a business is dependent on the ability to gain andgrow its market share. refers to the conditionsand strategies that place a business at a superior position ingaining market share with respect to its competitors (Daidj, N.2015). Competitive strategy of an organization increases its abilityto meet long-term and short-term goals efficiently. Successfuloperation in a competitive environment is dependent on theorganization’s ability to create competitive advantage. This paperdescribes how internal and external environment of an organizationinfluences competitive advantage.

The external environment is divided into meta-environment andmacro-environment. The meta-environment consists of competitors,suppliers, customers, industry entrants and substitute products andservices. Technology, political and social factors forms themacro-environment. Conaway, R. N., &amp Laasch, O. (2014) arguesthat an organization does not have control on most of these factors.The external environment can create threats or opportunities for anorganization. Threats are the environmental conditions that reduce afirm’s productivity and market share. Organizations can utilize theopportunities in the environment to increase their market share andrevenue, and achieve long-term and short-term goals.

The ability of afirm to identify and utilize the opportunities in the externalenvironment is dependent on its internal environment, value chain(Semmelrock-Picej &amp Novak 2013). The internal environmentconsists of the organization’s strengths and weaknesses. is derived from the optimal use of a firm’svalue chain strengths in utilization of the opportunities. Thesuccess of the value chain of a firm depends on the management of itsresources such as technology, innovations, human resources,processes, organization structure and culture. Effective linkagebetween the value chain strengths and opportunities in the externalenvironment result in competitive advantage. The competitiveadvantage of an organization is stronger when it has minimalweaknesses and threats (Daidj, N. 2015).


Conaway, R. N., &amp Laasch, O. (2014).&nbspPrinciples ofresponsible management: Global sustainability, responsibility, andethics.

Daidj, N. (2015).&nbspDeveloping strategic business models andcompetitive advantage in the digital sector.

Semmelrock-Picej, M. T., &amp Novak, A. (2013).&nbspTheproceedings of the 9th European conference on management leadershipand governance: Klagenfurt, Austria, 14-15 November 2013.Reading: Academic Conferences and Publishing International.