Environmental analysis will help the firm to understand what is happening both inside and outside the organization and to increase the probability that the organisational strategies developed will appropriately reflect the organizational environment. Show
Environmental scanning is necessary because there are rapid changes taking place in the environment that has a great impact on the working of the business firm. Analysis of business environment helps to identify strength weakness, opportunities and threats. SWOT analysis is necessary for the survival and growth of every business enterprise. The following is the need and importance of environmental scanning: 1. Identification of strength:Strength of the business firm means capacity of the firm to gain advantage over its competitors. Analysis of internal business environment helps to identify strength of the firm. After identifying the strength, the firm must try to consolidate or maximise its strength by further improvement in its existing plans, policies and resources. 2. Identification of weakness:Weakness of the firm means limitations of the firm. Monitoring internal environment helps to identify not only the strength but also the weakness of the firm. A firm may be strong in certain areas but may be weak in some other areas. For further growth and expansion, the weakness should be identified so as to correct them as soon as possible. 3. Identification of opportunities:Environmental analyses helps to identify the opportunities in the market. The firm should make every possible effort to grab the opportunities as and when they come. 4. Identification of threat:Business is subject to threat from competitors and various factors. Environmental analyses help them to identify threat from the external environment. Early identification of threat is always beneficial as it helps to diffuse off some threat. 5. Optimum use of resources:Proper environmental assessment helps to make optimum utilisation of scare human, natural and capital resources. Systematic analyses of business environment helps the firm to reduce wastage and make optimum use of available resources, without understanding the internal and external environment resources cannot be used in an effective manner. 6. Survival and growth:Systematic analyses of business environment help the firm to maximise their strength, minimise the weakness, grab the opportunities and diffuse threats. This enables the firm to survive and grow in the competitive business world. 7. To plan long-term business strategy:A business organisation has short term and long-term objectives. Proper analyses of environmental factors help the business firm to frame plans and policies that could help in easy accomplishment of those organisational objectives. Without undertaking environmental scanning, the firm cannot develop a strategy for business success. 8. Environmental scanning aids decision-making:Decision-making is a process of selecting the best alternative from among various available alternatives. An environmental analysis is an extremely important tool in understanding and decision making in all situation of the business. Success of the firm depends upon the precise decision making ability. Study of environmental analyses enables the firm to select the best option for the success and growth of the firm. _____________________________________________________________________ www.tolexmart.com #tolexmart #cable_terminal_ends #cableterminal #startup #startupindia #upbasedstartup The internal environment and external environment are foundational concepts for understanding strategy. At first, the distinctions between these environments seem trivial - one is about factors outside the firm, the other about the factors within. Yet many of the most influential tools in business strategy are rooted in this distinction. A clear understanding of and distinction between the internal and external environment will guide strategic actions because the organization can focus on what it can control, instead of becoming frustrated with external factors. Throughout this book, many of the tools and ideas will build upon this foundation. Strategic fit is one such idea. It would be difficult to understand strategic fit without an understanding of the internal and external environments. Strategic fit is the degree to which an organization can match its internal resources and capabilities with opportunities in the external environment. The External EnvironmentThere are, obviously, many events and circumstances outside of a given organization. The external environment focuses on a subset of these events and circumstances - the factors that will impact the organization. Some difficulty arises in considering a broad enough range of factors that impact the organization without considering unnecessary factors. Some strategic tools, such as the STEEPLE Analysis, help broaden the manager's perspective on what impacts the firm. Other tools, such as the Weighted Comparative Strengths assessment, narrow the manager's view to focus on certain important factors. Organizations cannot directly change the external environment. However, they can respond to changes in the external environment. An incorrect response could spell disaster for the company, while a spectacularly good response could create a temporary comparative advantage. Factors in the External Environment
Tools to Analyze the External Environment
The Internal EnvironmentThe internal environment refers to the conditions, events, entities, and factors that occur within (or internal to) the organization. As companies define their internal environment, they can align their resources to compete most effectively. An effective internal environment can provide a firm with the competitive advantage it needs to succeed in its industry. Factors in the Internal Environment
Tools to Analyze the Internal Environment
Want to try our built-in assessments?Use the Request Full Access button to gain access to this assessment. Why is it important to understand internal and external environment?A clear understanding of and distinction between the internal and external environment will guide strategic actions because the organization can focus on what it can control, instead of becoming frustrated with external factors.
Why is it important to study both the internal and external environment of a business?Once they know about both positive and negative effects within and outside the company, they can produce suitable strategies to handle any predicted situation. Therefore, examining internal and external factors is considered the most important task for an enterprise before launch any strategic marketing plan.
Why is it important to understand the internal environment?Evaluating the internal environment, company's assets, and capabilities highlights organizational weaknesses and strengths. Combining both findings gives you a broader perspective and a holistic picture of your organization's situation.
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Why is it important to understand the internal and external environment of a business?
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