Strategist should be aware of the resource capabilities and the effective utilization of scarce resource available in the company. Environment analysis is to analyze the changing pattern and its impact on business. It also considers an opportunity to use, and time to anticipate the corporate objectives through proper planning, and make optimum utilization of available resources in the company. These things help the strategist to form, develop and give early warnings to prevent threats or to develop strategies which can turn threats into advantages in the prevailing system. It clearly indicates the future of the company and assessment of the anticipated future.
According to Clifton Garvin, environment analysis is, “Positive trends in the environment breed complacency. That underscores a basic point: in change there is both opportunity and challenge”. Business environment analysis involves the analysis, the diagnosis, and the managerial decisions which are likely to be taken for the betterment of the company. It reduces the length process and the time pressure faced by the managers and the board of directors in the company. However, sometimes the strategic managers neglect the environment analysis and its impact on business changes, and are ready to face anticipated problems in future. Therefore, the strategic managers can concentrate on environmental influences on the organization or enterprise.
In general sense, Environmental analysis has three basic goals which are as follows:
• Environmental analysis must provide the current and potential changes which are understood by the strategist and its suitable place in the business environment. Strategist should be aware of the existing environment; this is most important to company. At the same time, the strategist must have to take and consider a long term perspective about the future.
• Environment analysis basically provides strategic inputs for strategic decision making. It is not a mere collection of data and it is not enough to analyze the environment. Whatever information is collected by the strategist should be useful to the company while making strategic decisions.
• Environment analysis is the basic tool and it should make, facilitate and foster strategic thinking in the organization. It is, typically, a rich resource of capabilities and ideas which understands the context and purview of the business organization. It should be about current challenges, growth, development and opportunities.