External threats are environmental conditions that could weaken the organisation's competitiveness. For example, the September 11 terrorist attacks had a devastating effect on the travel industry, which in turn was responsible for the cancellation of a significant number of international conferences and events in Sydney. This was a threat that affected the industry as a whole. To respond to this threat on behalf of its members in the events and conference industries, The Sydney Convention and Visitors Bureau implemented a campaign to promote Sydney as a safe destination and thus encourage international delegates to hold their conferences in Sydney. Conversely, environmental opportunities are ways for an organisation to gain strength. However, one organisations threat can be another organisation's opportunity. To continue the aforementioned example, the security industry experienced a significant boom due to the demand for more security in an atmosphere of potential threats of terrorism. Both threats and opportunities may include "technological, economic, legal-political, socio-cultural and international influences", which can also be effectively explained by using "Porter's five competitive forces model to analyse the nature and intensity of competition" (Bartol et al, pg 208). The five major forces include: rivalry, bargaining power of customers and suppliers, threat of new entrants, and threat of substitute products and services.
If one of the fundamental objectives of an organisation is to deliver sustained, superior performance, then it must do so by outperforming its competitors. In order to achieve this an organisation must effectively differentiate itself from its competitors. This would suggest that the aim of any strategy is to gain the competitive edge over the organisation's rivals. Competitive advantage is therefore central to strategic management, in that, it produces sustained superior performance.
