What is Environmental Analysis in terms of business ? What is its purpose ?
Environmental analysis means checking out the environment in which your business works to look for opportunities and threats.
It includes monitoring the trends, observing the pattern of changes, keeping track of changes and forecasting future.
Since business environment is dynamic, it keeps changing continuously. It therefore, is imperative for businesses to know about the current changes and potential changes so that they may be used to maximum advantage.
The following are the purposes of environmental analysis -
1) Input on the information on change : Analysis provides input on the information on current change as well as potential change. It gives understanding of environment as well as long term perspective about future.
2) Strategical Decision Making : Analysis provides information like customer demand, demand preferences, customer profile, consumer behavior, market trends, govt policies etc. based on which strategic decisions are taken.
3) Strategical Thinking : Analysis facilitates strategical thinking which gives fresh viewpoints and results into creation of new ideas and concepts.