When a situation analysis reveals that a competitor's market share has steadily increased over the past year, what has the business identified?

When a situation analysis indicates that a competitor's market share has steadily increased over the past year, this identifies an external threat to the business. An external threat arises from factors outside of the organization that could potentially harm its market position or profitability. In this context, the growing market share of the competitor means that they are gaining a larger share of customers, which could divert sales away from the business being analyzed.

Recognizing this threat is crucial for strategic planning, as it signals the need for the business to evaluate its own competitive strategies and perhaps innovate or enhance its marketing efforts to retain or grow its customer base. The situation demands that the business take proactive measures to counteract the competitor's advances in the market.

In contrast, internal changes or weaknesses would pertain to problems or modifications within the organization itself, while external strength doesn't directly pertain to the competitive threat faced by the business; instead, it's more about the overall market landscape.