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Environmental Analysis: Definition: Environmental Analysis Is Described As The Process Which Examines All The

Environmental Analysis is the process of examining internal and external factors that influence an organization's performance, helping to identify strengths, weaknesses, opportunities, and threats. It involves steps such as identifying, scanning, analyzing, and forecasting to inform strategic planning and goal setting. The analysis aids in detecting threats early, aligning strategies with organizational objectives, and identifying market opportunities.

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55 views2 pages

Environmental Analysis: Definition: Environmental Analysis Is Described As The Process Which Examines All The

Environmental Analysis is the process of examining internal and external factors that influence an organization's performance, helping to identify strengths, weaknesses, opportunities, and threats. It involves steps such as identifying, scanning, analyzing, and forecasting to inform strategic planning and goal setting. The analysis aids in detecting threats early, aligning strategies with organizational objectives, and identifying market opportunities.

Uploaded by

Francis Andres Gumawa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Environmental Analysis

Definition: Environmental Analysis is described as the process which examines all the


components, internal or external, that has an influence on the performance of the organization.
The internal components indicate the strengths and weakness of the business entity whereas the
external components represent the opportunities and threats outside the organization.

To perform environmental analysis, a constant stream of relevant information is required to find


out the best course of action. Strategic Planners use the information gathered from the
environmental analysis for forecasting trends for future in advance. The information can also be
used to assess operating environment and set up organizational goals.

It ascertains whether the goals defined by the organization are achievable or not, with the present
strategies. If is not possible to reach those goals with the existing strategies, then new strategies
are devised or old ones are modified accordingly.

Advantages of Environmental Analysis

The internal insights provided by the environmental analysis are used to assess employee’s
performance, customer satisfaction, maintenance cost, etc. to take corrective action wherever
required. Further, the external metrics help in responding to the environment in a positive
manner and also aligning the strategies according to the objectives of the organization.

Environmental analysis helps in the detection of threats at an early stage, that assist the
organization in developing strategies for its survival. Add to that, it identifies opportunities, such
as prospective customers, new product, segment and technology, to occupy a maximum share of
the market than its competitors.

Steps Involved in Environmental Analysis

1. Identifying: First of all, the factors which influence the business entity are to be identified, to
improve its position in the market. The identification is performed at various levels, i.e. company
level, market level, national level and global level.
2. Scanning: Scanning implies the process of critically examining the factors that highly influence
the business, as all the factors identified in the previous step effects the entity with the same
intensity. Once the important factors are identified, strategies can be made for its improvement.
3. Analysing: In this step, a careful analysis of all the environmental factors is made to determine
their effect on different business levels and on the business as a whole. Different tools available
for the analysis include benchmarking, Delphi technique and scenario building.
4. Forecasting: After identification, examination and analysis, lastly the impact of the variables is to
be forecasted.

Environmental analysis is an ongoing process and follows a holistic approach, that continuously


scans the forces effecting the business environment and covers 360 degrees of the horizon, rather
than a specific segment.

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