The paper "Organizations Use of Business Analytical Models to Gain an Understanding of the Business Environment" is a wonderful example of a Management assignment. The concept of environment refers to factors that impact on the positioning, competitiveness, and effectiveness of the organization. An organization's environment constitutes external forces including opportunities and threats and internal environment that constitute the management, financial capability, human resource and so on. At its core, strategy is argued to be about effective response to the changes that occur in the environment (Eden & Ackerman, p.
136). According to Meyer & Wit (2010) the strategic process consists of strategy thinking, strategy formation and strategic change. The environment influences the strategy process at each of the different stages and hence the need for organizations to understand the business environment. The ability of an organization to identify threats and opportunities in the environment and undertake timely action is largely dependent on how well they understand their environment. Thompson (75) asserts that in today’ s increasingly turbulent world, understanding the environment is a priority for organizations. Understanding of the environment also helps firms to prevent negative effects from the threats by serving as early warning systems while aiding the organization to develop appropriate strategies that can be deployed by an organization to turn threats to organizations advantage.
For a firm to control its growth, change, and development, it must seek to control the forces that provide the opportunities for change and growth and those that pose threats and therefore require an organizations appropriate response. Thompson (75) asserts that such forces constitute the environmental forces, which the organizations management should seek to control by deploying the appropriate resources to counter the negative forces and to take advantages of the arising opportunities.
The changes occurring in the environment will shape the way resources are deployed and managed and this will further shape the way an organization handles the arising shocks. Changes in environment often lead to a new paradigm for an organization to sustain competitive advantages over competitors and to survive and thrive and such paradigm may change with the changes in competitive and environmental forces thereby creating new paradigms. In order for organizations to gain an understanding of their environment, environmental analysis is a crucial step in identifying factors that may affect the organization and the potential impact of the factors.
Environmental analysis is defined as ‘ the study of various components of the environment affecting the business, like economic, political, technological, and global and so on’ (Meyer & Wit, 2010). An analysis of the environment is also crucial in aiding an organization in utilizing its strengths and weaknesses to exploit opportunities and avoid threats. Analysis of the environments may aid in decision making especially in reference to strategy formulation and hence corporate planning and business policy decisions.
Thompson (71) argues that through analysis of the organization's environment, organizations can get insights from external partners, which may aid the organization concerning benchmarking other organizations, total quality management, and process re-engineering. According to Meyer & Wit (2010, p. 71) firms that analyze their environments are often more successful compared to firms that do not analyze their environments. The ability to manage the business environment is crucial in achieving the opportunity-driven strategy. The organization may gain an understanding of their environment by using various tools such as conducting a SWOT analysis, PESTEL analysis, and porter five analyses among other approaches.
Meyer, R., & Wit, R. (2010). Strategy: process, content. Cengage learning.
Eden, Colin. & Ackerman, Fran. (2013). Making strategy: The journey of strategic management.
Mintzberg, Henry (2007). Tracking strategies: Towards a general theory. Oxford: Oxford