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Objectives of Environmental Analysis
1. The should provide an understanding of current and potential changes taking place in an environment. One must be aware of the existing environment, but one must also have a long term perspective.
2. The study of environment should provide inputs for strategic decision making.
3. The environment analysis should provide a rich source of ideas and understanding of the context within which a firm operates. It bring fresh viewpoints into the organisation.
The benefits of environmental study may be specified as follows:
1. This study helps the firm in the development of broad strategies and long term policies of the firm.
2. The study of business comment should help in developing action plans to deal with technological advancements.
3. I should help the management in foreseeing the impact of socio-economic changes at the national and regional level on the firm’s stability.
4. The walk should be the management in analyzing the competence’s strategies and Simulation of effective countermeasures
5. To keep we-self dynamic and innovative
The Relationship between Business and its Environment
Business is the product of the economic, political-government, socio-cultural, natural demographic, technological and international environmental forces and it functions amidst these forces. The features which are common to the relationship between business and its environment at in billows:
Business and its Environment
1. There is a correlation between business and its environment and among the environmental factors. In other words, business is influenced by the environment and in turn, it influences the external forces of environment, similar is the relationship between the external factors.
eg. political-legal environment influences economic environment and in turn, economic environment influences the political legal environment.
2. The second feature is that the Business Environment is dynamic. Many elements in the environment undergo changes. They keep on changing as years roll by, so does business. All this indicates that the business policy should be dynamic enough to be successfully adaptable to the changing environment.
3. The third feature is that a particular business firm, by itself, may not be in a position to change its environment. But along with other firms, business will be in a position to change the environment in its favor to a considerable extent.
Techniques for Environmental Analysis
Techniques for environmental analysis refer to the methods of gathering the relevant information for appraising the environment. William F. Glueck mentions the following techniques:
(1) Verbal and Written information
(ii) Search and Scanning
(iv) Forecasting and formal studies.