Business Environment Contains Those Factors 'surrounding the Organization

Business Environment:

Business environment contains those factors 'surrounding the organization'.

Managers are not prepared to act wisely in steering a company in a different direction or altering its strategy until they have a deep understanding of the pertinent factors surrounding the organization's situation.

To be viable the organization must achieve an appropriate fit with its environment. This includes:

 Results that meet the expectations of its owners

 Products and services that meets its customers' expectations at least as well as rivals

 Ability to remain within the legal and ethical codes of the societies it works in

 Attractive as a place to work for its staff

 Satisfying the needs of other powerful or influential stakeholders

Environment Analysis:

Environmental analysis is the study of the organizational environment to pinpoint environmental factors that can significantly influence organizational operations.

Insightful diagnosis of a company's external and internal environment is pre-requisite for managers to succeed in crafting a strategy that is an excellent fit with the company's situation.

External Environment Analysis:

External environment factors are factors external to the business that influence its operation and actions.

Components of External Environment:

* General or Macro environment

* Industry Environment

Environmental Scanning:

Environmental scanning is a process of gathering, analyzing, and dispensing information for strategic purposes. The environmental scanning process entails obtaining both factual and subjective information on the business environments in which a company is operating or considering entering.

Scanning activities involve monitoring and evaluating information from external environment and disseminating it to key people within the organization.

Expert holding line and staff positions in the organization or outside consultants may be employed to prepare reports analyzing and interpreting the impact a special development has on the industry and the firm.

Gathering and Disseminating Environmental Information:

An effective system:

 Gathers environmental information

 Validates the information

 Disseminate the information

Sources of Environmental Information:

Internal Sources:

* Employees: Some will be following developments affecting the firm or their field or work or have past experience or networks of contracts that can provide insights.

* Internal Record System: This will reveal comments of sales teams at meetings, revenue and cost trends at different locations, customer requests or complaints etc.

* Formal Information Sources: Many firms may employ information