Why is environmental analysis essential for organizations?
Environment produces change in organizations. An organization may become victim of change or it may be gainer of change.
Everything depends on how the organization interacts with its environment and uses the information collected from the environment.
An environment-sensitive organization collects information regarding its environments and makes a thorough analysis to enable it to use any kind of environmental change to its advantage.
Organizations must Have the ability to predict what might happen in the environment in the hear and even reasonably distant future. The forecasting ability may help organizations to turn change to their advantage.
It must analyze the factors in both the internal and external environments for understanding its present position, developing its
objectives for the coming; days and building the strategies needed to move from its present position to a desired position.
Managers must understand that competition there exists a strong relationship between an organization’s internal situations and external situations between the internal strengths and weaknesses and the external opportunities and threats.
This relationship is obvious because the organization uses its strengths to grab the available opportunities, effectively deal with the potential threats and overcome the internal weaknesses.
This Figure shows the relationship between internal and external situations of an organization. Internal environment contains the strong points (strengths) and the weak points (weaknesses) of organizations.
The external environment contains the favorable situations (opportunities) and the unfavorable situations (threats) that remain outside the organizations.
The dotted lines in Figure indicate the use of strengths to overcome the weaknesses, grab the opportunities and deal with the threats.
