Importance of Business Environment
Identification of SWOT, competition, dynamism, growth and development, image building, continuous learning, and coping with rapid changes is important in the business environment.
1 . Identification of SWOT
Scanning the business environment helps to identify the strengths, weaknesses, opportunities, and threats of the organization. It helps to make a business-friendly environment. SWOT analysis provides scenarios and trends of the changing environment. Adaptation to the environment ensures the growth and development of the business in a competitive environment. Organizations can be benefited from competitive advantages.
Competition is the activity of striving to win something by establishing superiority over others. It is common in business or industry. Thus, meeting competition is another benefit of environmental scanning. It helps the organizations to analyze the competitors’ strategies and formulates their own strategies accordingly. The organization should attract the weakest point of the competitors to capture the market share.
Dynamism is another benefit of environment scanning. It is complex and dynamic. It keeps on changing whether in terms of technological improvement or shifts in consumer preferences or entry of new competition in the market. Organizations should be able to take benefit of appropriate technology, globalization, development of communication, and transportation. Dynamism provides opportunities.
4. Growth and development
Business growth and development is the set of efforts for identifying, researching, analyzing, developing, and strategizing. ‘The interaction with the environment leads to opening up new frontiers of growth for the business organizations. It enables the business to identify the areas for growth and expansion of its activities. The growth and development of the business organization are not possible in the lack of environmental scanning.
5. Image building
Image building is another benefit of environmental scanning. It helps business organizations in improving their image by showing their sensitivity to the environment within which they are workings. Adaptation, dynamism, quality products or services, and cordial public relationships also help to build an organizational image.
6. Continuous learning
Environmental analysis encourages to managers make continuously learning and Update their knowledge, understanding, and skills to meet the predicted changes in the realm Of business. They will be able to face business challenges or threats and grabs golden opportunities. Continuous learning produces success in the organization.
7. Cope with rapid changes
The environment is complex and dynamic. Its rapid changes challenge all sizes and all types of organizations. In order to effectively cope with these environmental changes, managers must understand and examine the environment and develop suitable courses of action. But, environmental analysis suffers from certain limitations too such as: (i) environmental analysis does not predict the future, (ii) environmental analysis does not ensure organizational effectiveness; (iii) environmental analysis is not fully reliable, and (iv) environmental analysis lacks strategic approach.