Environment Analysis Meaning in Business

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Environment Analysis Meaning in Business

Environment refers to the forces that impact the organization’s performance. Such forces provide strengths weaknesses, opportunities, and threats to the organization. It influences corporate planning and policy decisions. Thus, regular environmental analysis is conduct to know its impacts in the future.

Environmental analysis is a strategic tool. It can be defined as a process to identify all the external and internal elements, which can affect the organization’s performance. Goals, policies, and strategies, organizational culture, organizational resources, and organizational structure are internal components and task environment (such as competitors, customers, suppliers, regulators, and strategic allies) and general environment (such as political-legal, economic, socio-cultural, and technological- PEST) are external components.

Environmental analysis is essential to grab the opportunities in the competitive market. STOT analysis, PEST analysis, scenario planning, Porter’s five forces model, etc. are major techniques of environment analysis. An organization performs an environmental analysis to identify the potential influence of particular aspects of the environments on business and decisions.

Environmental Analysis a process for identifying all external and internal elements that can affect the performance of the organization and evaluating the level of threat or
opportunity they present. —investorwords.com

Environmental Analysis is defined as the process by which strategists monitor the economic, government/legal, market/competitive, supplier/technological, geographic, and social settings to determine opportunities and threats to their firms. —Silverliningoncloud

In conclusion, environmental analysis is the analysis of strengths, weaknesses, opportunities, and threats of an organization. It impacts performance and productivity of the organization. An organization performs an environmental analysis to identify the potential influence of particular aspects of the environments on business operations and decisions. An organization can use different tools and techniques to analyze the environment. It helps you understand what is happening both inside and outside your organization and to increase the probability.

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