The external environment of an organization includes the factors which are not under the control of the management. These factors include politics, economy, society and technology. There are various challenges which an organization faces from its external environment. The major challenge is the continuous change in the external environment and an organization has to adjust its internal environment according to this change. Secondly, legislation and rules implemented by the state also create challenges. Thirdly, skills shortages and rise of the service sector is another major challenge for the organizations. Moreover, globalization and technology can also pose challenges for the companies. Threats faced by the organization from its external environment include declining product demand, strict legislation, unstable politics and poor economic indicators. Opportunities on the other hand include diversification, subsidies, liberal laws, cheap technology because of developed infrastructure and good indicators enhances the situation of the companies.