Defining the Business Environment

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To succeed in business, you need a persuasive and strategic marketing plan. Find out how you can develop a Marketing and Sales Plan that drives sales and generates your business the profit it deserves.. Check out: http://www.business-plan.co.za/marketing-and-sales-plan.html

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Defining the Business Environment

  1. 1. Defining the Business Environment - A Thorough Analysis of External and Internal Environment! Successful Business Planning Defining the Business Environment - A Thorough Analysis of External and Internal Environment!
  2. 2. Defining the Business Environment - A Thorough Analysis of External and Internal Environment! Successful Business PlanningTo succeed in business, you need a persuasive and strategic marketingplan. Find out how you can develop a Marketing and Sales Plan that drivessales and generates your business the profit it deserves.Click hereBusiness firms wishing to adopt an open system ofmanagement approach, find it difficult to define thebusiness environment. The management has to limit itsconsideration of the environment, only to those aspects ofthe outside world which are of major importance to thesuccess of an organization. The concept of businessenvironment is too broad and it would be hopelesslyconfusing to consider each and every aspect in it.Customers, competitors, government units, suppliers,financial institutions and labor pool are part and parcel ofthe external environment, and available resources, be itphysical or human, behavior, synergy, strengths andweaknesses and distinctive competence determine thenature of the internal environment of a business firm.
  3. 3. Defining the Business Environment - A Thorough Analysis of External and Internal Environment! Successful Business PlanningFurther, you can divide the business environment into twocategories, the direct-action environment, that has animmediate effect and influence on the organisationsdecisions, say, government regulations, labor unions,suppliers, customers and competitors. The other category,namely, the indirect environment does not have a directeffect, but nevertheless influence the operations of a firm.These would include factors such as, technological,economical, socio-cultural and political, to name a few.Each and every organization is bound to form its ownstrategies to define the scope or network of operations, ina business environment. What is a general environmentalfactor, may be specific for another. Precisely speaking, afirm has to consider both the macro and microenvironments, that affect its life and development.Corporate strategists must be aware of the fundamentalfeatures of the current environment to plan accordingly.
  4. 4. Defining the Business Environment - A Thorough Analysis of External and Internal Environment! Successful Business PlanningSWOT analysis or environmental scanning, is the basicmonitoring system, that helps a firm to compile, processand forecast the necessary information gathered from theexternal environment. This is also helpful in determiningthe opportunities available for the success of the firm inthe market, and gives a clear picture about the threats tobe handled. As the business environment is highlydynamic and volatile, it is inevitable for a businessorganization to visualize and perceive the opportunitiesand constraints in store for it.While swot analysis is a tool that helps in scanning theexternal environment, using the value chain in internalanalysis, proves to be an useful approach to determine theorganisations strength and weaknesses. It is equallyimportant, that a firm must be competent both externallyand internally. Adoption of a disintegrated view of the firmhelps in diagnosing a companys key strengths andweaknesses. The value chain is a framework that
  5. 5. Defining the Business Environment - A Thorough Analysis of External and Internal Environment! Successful Business Planningdisintegrates a firm into its strategically relevant activities,to understand the behavior of the companys cost andpotential sources of differentiation.A firm gains competitive advantage by performing thesekey internal factors or strategically important activities, inan efficient manner than its competitors. Identifying theprimary activities of a firm such as, inbound logistics,operations, outbound logistics, marketing and sales,followed by service denote the distinct activities that areperformed to design, produce, market, deliver and supportits product. The support activities such as procurement,technology development, human resource managementand the infrastructure of the firm should not beoverlooked, since they are the ones that are essentialthroughout the entire chain of operations.
  6. 6. Defining the Business Environment - A Thorough Analysis of External and Internal Environment! Successful Business PlanningIt is therefore an indispensable fact that, the managementshould attempt to predict changes in differentenvironmental forces and discern the opportunities andthreats emanating from the environment.
  7. 7. Defining the Business Environment - A Thorough Analysis of External and Internal Environment! Successful Business PlanningArticle Source:http://EzineArticles.com/?expert=Shyamala_Sankaranarayanan

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