How can I perform environmental analysis?

Environmental analysis is done by a list of all possible external factors that could affect business, reviewing these factors to find opportunities or threats and prepare an impact with the Action Plan. Environmental analysis focuses on political, environmental, social and technological changes or events that the enterprise cannot control. Their potential impacts on business should be reviewed to see if changes or events are potential opportunities or threats. Business should then develop a strategy that uses opportunities or action plan to overcome or avoid potential threats.

The listing of all possible external factors is the first step in performing environmental analysis. These factors are classified as political, environmental, social and technological. Examples of external factors include waiting government legislation, tightening of environmental protection regulations, shift of demographyand release of new inventions. For example, the introduction of DVD players caused VCR to gradually become outdated. VCR manufacturers, who quickly adapted to this new technology, were able to take advantage of becoming a market leader.

Review each external factor on the list should be carried out next to the department of opportunities from threats or to see if a certain factor has both properties. Opportunities are ongoing external events or situations that the enterprise can use for relocation, cultivation or branded purposes. If technological progress has been declared in one sector, the company can find out whether the acceptance of this technology is an opportunity to create a competitive advantage in its own industry. Threats are an obstacle or a trend that can lead to a loss of market share or profit. For exampleIt would fall into the expensive equipment category.

The preparation of the impact report is the last step for performing environmental analysis. This impact report separates external factors into categories of opportunities and threats, and then states them in the order of importance. Opportunities should include how the business will take opportunities, related costs and what would happen if no measures were taken. For each factor mentioned as a threat, it should discuss why it is a threat, possible damage if no measures are taken, and a plan to avoid or reduce its effects on business. This part of the environmental analysis should also discuss the likelihood that each event occurs and noticed at any time restrictions for taking action.

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