Importance of environmental analysis
No single organization can exist in a vacuum. For a successful business operation, an organisation needs to interact with various other actors and players around it. These may range from political institutions to other business and financial institutions. These institutions are called environment of an organisation. In this assignment, we would try to illustrate the importance of environmental analysis for a business organisation.
The conceptualisation of environment holds the central position in this discussion. Thompson uses the term ‘operating or task environment, or inner layer’ for immediate or internal environment (Thompson, 1997). ...view middle of the document...
Kotler argues the case of successful company is one which constantly taking ‘an outside-inside view of their business’ (Phillip Kotler, 2003). It is the existence of perceived strategic uncertainty and perceived strategic importance which compel strategic decision makers to scan events in selected sectors of environment. ( Deft, et la, 1988 )
The goals of environmental analysis depend upon the purpose an organisation has in its mind for it. It also depends upon the nature of an organisation and how it is going to use it in a broader decision making process. (Douglas Brownlie) Brownlie also assigns environmental analysis the responsibility of monitoring, forecasting and interpreting issues, trends and events in the task environment. In addition it is expected to provide a broad but penetrative view of remote environment. Thus arming strategic decision makers with ‘intelligence’ so that organisation can respond successfully to environmental changes (Douglas Brownlie). Thus the environmental analysis ‘is the key link in a chain of perceptions and actions that permits the organisation to adapt to changes in its environment’ (Daft et la, 1988).
Among other things Jain discusses six objectives for environmental analysis. That includes helping an organisation to capitalise on early opportunities. It also provides early signs of impending dangers. It sensitizes organisation to changing environment. It can help an organisation in improving its image. Provides a strategic tool of ‘intelligence’ for strategic decision making and last but not least it provides a continuous and broad informational and educational resources for company’s executives (Jain, 1984).
The Microenvironment consists of the forces close to the company that affect its ability to serve its customers-the company ,suppliers ,marketing channel firms, customer markets ,competitors and publics (Kotler et al,2002,p118). Gilbert Harrell in his own view emphasizes on stakeholders and industry competition as integral part of the microenvironment. Looking at the stakeholders as this literally means those who have a stake in an organization. They are relevant to the day to day running of the company and therefore company need to understand them. This is so because to a large extent they have an impact on the market decision and can be affected by it at the same time. Another phenomenon that is noteworthy is competition. ‘The marketing concept states that to be successful ,a company must provide greater customer value and satisfaction than its competitors do(Kotler,2002,p121).In other words ,marketers ought to go beyond the level of market targeting, but also allow a strategic positioning to come to play in order to beat their competitors to it. This strategy must be relative to the size and industry position compared to those of its competitors. It is imperative for an organization to also build and maintain a lasting relationship with other stakeholders apart from the...