Environmental analysis is the analysis of the external factors which can affect the prosperity and development of the company. Environmental analysis is an integral part of business and every owner of a firm has to pay attention to the numerous external factors which can cause harm or on the contrary maintain the development and improvement of business.
Very often it is not enough the create a detailed business plan for one’s company, because there are too many other factors which can influence the prosperity of the firm alongside with the quality of the product, its price and marketing strategy. Environmental analysis dwells on the research of the factors which can seem to be invisible or unnoticed but they still influence the business success.
The brightest example of the external factor is the country’s laws, which define the rules and norms of business organization. Every businessman has to follow the laws of the country if he wants to carry out his business successfully and receive the biggest profit. Moreover, he will have to pay attention to taxes, tariffs and other factors which influence the price for energy supply, transportation, cost of production and other components.
Another factor is the trend and tastes and needs of the consumers. When the company does not fit the trend of the popular products, the sales will be low, because the majority of people purchase the goods which are fashionable. Finally, there is the factor of brand new technologies which improve the cost and manner of production. Most often such technologies influence business negatively, as the owner has to renovate and reconstruct his organization to meet the requirements of the latest technology of production.
Environmental analysis is the process of the research of the complex of factors which can influence the condition of business. The student who has decided to pay attention to the detailed research of the issue on environmental analysis should dwell on the research of the case site, study the structure of the organization and its place on the market and define what problem has occurred with the firm under analysis. One should think about the cause and effect of the problem in environmental analysis and solve the problem in the professional manner.
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