Which of the following is conducted to assess the external environment in which a business operates?

The correct answer is the external audit, which is specifically designed to evaluate the external environment in which a business operates. An external audit focuses on external factors such as market trends, industry conditions, economic factors, and competitor behavior. By examining these elements, a business can gain insights into opportunities and threats that arise from the external landscape.

This assessment helps companies make informed strategic decisions. It enables them to adapt to changes in the environment, understand potential risks, and identify areas for growth or improvement. An external audit is essential for comprehensive strategic planning, allowing businesses to align their strategies with external realities.

While market analysis is focused on understanding the dynamics of a specific market, and an internal audit evaluates the organization's internal processes and controls, neither of these directly assess the broader external environment. SWOT analysis also reviews internal strengths and weaknesses alongside external opportunities and threats; however, it is more about synthesizing overall findings rather than being solely focused on assessing the external factors themselves.