If an organization does not react to the environmental changes through strategy, it cannot sustain in the market Environmental analysis helps to anticipate opportunities and to take optional responses to these opportunities.

It also helps to develop an early warning system to prevent threats or to develop strategies which can turn a threat into opportunity. Thus, the managers can concentrate on these few instead of having to deal with all the environmental influences.

Analysis of business environment is done with the objectives as…..

Firstly, the environmental analysis provides an understanding of current and potential changes that may take place in the environment. It renders the understanding of existing environment along with the long term future strategies too.

Then, it provides the inputs for strategic decision making. Simply collecting the data is not enough. Thus, it must be useful for the strategic decision making.

Third, environment analysis facilitates and fosters strategic thinking in organizations-typically a rich source of ideas and understanding of the context within which a firm operates. It challenges the current wisdom by bringing fresh viewpoints into the organization.