1.0 Introduction

The external environmental analysis is a primary study and analysis of macro environmental forces, industry analysis and competitive analysis in purview of an organization's growth (Diasz, 2017). Macro environmental forces are dimensions in the wider society that affect the companies in it. It focuses on the future probability of events. Industry environment includes set of contingencies which have a direct influence on the firm’s action and response (Johnson and Scholes, 2008). It focuses on the factors that affect the profitability of a company in an industry, while the analysis of competitors aims to anticipate / anticipate the dynamics of the competitors in terms of actions, reactions, etc (Thomson, 2008).
Purpose of this study is to analysis the external environment of Hatton National Bank. Currently, banking sector has changed significantly due to technological changes. Therefore, this report is comprehensively analyzed changes of the banking sector and how they impact to the HNB. Hatton National Bank (HNB) one of leading commercial bank in Sri Lanka which was operate since 1888. HNB is listed entity in Colombo Stock Exchange. Currently HNB has more than 250 branches all over the Sri Lanka. According Fitch rating, HNB has been rated as AA- (lka). Currently HNB is involved in retail banking, corporate banking, international banking, treasury and project financing. HNB’s strategy is driven through people, technology and processes for transforming the bank to become to become a Game Changer in the industry. Bank try to achieve customer service excellence by enhancing customer convenience, adding value to product offering and improving speed of service delivery. The micro environment consist with PESTEL factors. Therefore, PESTEL analysis has been conducted to analyze the external environment of the HNB. Further, the profit potential of an industry will be determined by the balance of supply and demand for the product in the short run, and industry structure in the long run. Porter (2008) explains that by understanding how the five competitive forces influence profitability in the industry, a company can develop a strategy for enhancing the company’s long term profit. Therefore, Porter’s five forces has been analyzed in this report to understand the competitiveness of the industry.
This report is based on secondary data. Mainly, annual reports of HNB has been provided good insight about the external environment of HNB. Further, industry related books and articles have been used to conduct this study.