This research paper analyses the business environment concept and competitive environmental analysis in organizations. Just like humans require environments for existence, the same applies to businesses. In the case of businesses, the environment composes of the internal and external environment. These two relate to factors that businesses are in control of and ones they can’t control. The internal environment (micro) environment are intrinsic elements that the business in control of. These are factors like competitors, customers, suppliers, and creditors. On the other hand, external factors are out of the business’ control. External factors are economic, political, cultural, and technological factors. Moreover, external factors affect all businesses in the region of operation. As a result, business environment scanning is essential.
COMPETITIVE ENVIRONMENTAL ANALYSIS IN BUSINESS ORGANIZATIONS.
Comprehension of the business environment concept is essential for the thriving of any given business venture. The determination of the sales turnover of a business solely relies on customer consumption behavior. As a result, firms must assess their expansion strategies. Moreover, conducting a competitive environmental analysis is similarly essential. Michael Porter’s model of competition aids organizations in analyzing their position in the industry. Porters five competitive forces assess the completion levels, profitability, and attractiveness of the firm. The elements are new entrants, suppliers, buyers, substitutes, and industry competitors. Apart from profitability insights, the model also provides supportive decisions for entry or exit in a market.
THE IMPORTANCE OF BUSINESS ENVIRONMENT SCANNING
Competitive environmental analysis is a crucial tool in understanding the various aspect of the business environment. Additionally, general environment analysis gives the firm a clear view of the business’s intrinsic and external factors. Moreover, it gives the organization a basis for increasing their profit levels. Also, scanning is essential because the factors are dynamic hence keep changing over time. The following include the importance of business environment scanning. Firstly, identification of the strengths, weaknesses, opportunities, and threats the business faces. Secondly, it ensures optimal use of resources, thus preventing wastage. Thirdly, it improves enhances the chances of a firm’s growth and survival. Additionally, it provides firms with a clear base for proper decision making.